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 June 30, 1994
---------------------------------------
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 Number: 1-9046
----------------------
Cablevision Systems Corporation
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2776686
- - ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Media Crossways, Woodbury, New York 11797
- - --------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 364-8450
------------------
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
----- -----
Number of shares of common stock outstanding as of August 2, 1994:
Class A Common Stock 11,213,501
Class B Common Stock 12,287,622
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------- ---------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues-net . . . . . . . . . . . . . . . . $ 368,177 $ 325,193 $ 192,090 $ 168,170
--------- --------- --------- ---------
Operating expenses:
Technical . . . . . . . . . . . . . . . . . 134,640 117,625 68,604 60,122
Selling, general and
administrative . . . . . . . . . . . . . . 72,404 76,636 42,585 40,873
Restructuring charge. . . . . . . . . . . . 4,306 - - -
Depreciation and amortization . . . . . . . 110,095 93,054 55,322 46,470
--------- --------- --------- ---------
321,445 287,315 166,511 147,465
--------- --------- --------- ---------
Operating profit. . . . . . . . . . . . 46,732 37,878 25,579 20,705
--------- --------- --------- ---------
Other income (expense):
Interest expense. . . . . . . . . . . . . . (118,586) (114,253) (59,918) (59,276)
Interest income . . . . . . . . . . . . . . 492 935 271 588
Share of affiliates' net losses . . . . . . (34,257) (26,229) (16,975) (7,517)
Loss on sale of programming interests, net - (330) - -
Provision for preferential payment to
related party. . . . . . . . . . . . . . . (2,800) (2,800) (1,400) (1,400)
Minority interest . . . . . . . . . . . . . - 3,000 - -
Miscellaneous . . . . . . . . . . . . . . . (3,432) (2,676) (2,281) (1,886)
--------- --------- --------- ---------
(158,583) (142,353) (80,303) (69,491)
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . (111,851) (104,475) (54,724) (48,786)
Dividend requirements applicable to preferred
stocks. . . . . . . . . . . . . . . . . . . (2,054) (442) (1,833) (221)
--------- --------- --------- ---------
Net loss applicable to common
shareholders. . . . . . . . . . . . . . . . $(113,905) $(104,917) $ (56,557) $ (49,007)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net loss per common share. . . . . . . . . . $ (4.88) $ (4.62) $ (2.42) $ (2.15)
--------- --------- --------- ---------
--------- --------- --------- ---------
Average number of common shares
outstanding (in thousands). . . . . . . . . 23,323 22,731 23,368 22,761
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes to
consolidated financial statements.
(2)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
-------- ------------
1994 1993
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents. . . . . . . . . . . . . . . $ 17,399 $ 12,944
Marketable securities. . . . . . . . . . . . . . . . . 835 835
Accounts receivable, trade (less allowance for
doubtful accounts of $6,790 and $5,055) . . . . . . . 54,505 49,211
Notes receivable, affiliates . . . . . . . . . . . . . 2,504 2,858
Notes and other receivables. . . . . . . . . . . . . . 12,373 8,730
Prepaid expenses . . . . . . . . . . . . . . . . . . . 6,749 6,236
Property, plant and equipment, net . . . . . . . . . . 733,258 643,499
Investments in affiliates. . . . . . . . . . . . . . . 33,416 27,574
Advances to affiliates . . . . . . . . . . . . . . . . 37,071 38,157
Acquisition related costs and deposits . . . . . . . . 37,279 16,737
Other investments, at cost . . . . . . . . . . . . . . 1,353 1,971
Subscriber lists, net of accumulated amortization of
$253,481 and $237,456 . . . . . . . . . . . . . . . . 23,774 39,799
Franchises, net of accumulated amortization of
$199,767 and $183,599 . . . . . . . . . . . . . . . . 115,238 131,362
Excess cost over fair value of net assets acquired
and other intangible assets, net of accumulated
amortization of $189,790 and $174,211 . . . . . . . . 305,946 221,790
Deferred financing, acquisition and other costs,
net of accumulated amortization of
$23,993 and $20,780 . . . . . . . . . . . . . . . . . 50,505 51,550
Deferred interest expense, net of accumulated
amortization of $21,071 and $14,047 . . . . . . . . . 49,167 56,191
---------- ----------
$1,481,372 $1,309,444
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to
consolidated financial statements.
(3)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
---- ----
(unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
<S> <C> <C>
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . $ 100,350 $ 100,017
Accrued liabilities:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 30,103 29,172
Payroll and related benefits . . . . . . . . . . . . . . . . 29,966 27,068
Franchise fees . . . . . . . . . . . . . . . . . . . . . . . 14,334 18,809
Litigation settlement and related matters. . . . . . . . . . 4,227 4,227
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,993 73,902
Accounts payable to affiliates . . . . . . . . . . . . . . . . 23,194 16,236
Bank debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 616,325 480,079
Senior debt. . . . . . . . . . . . . . . . . . . . . . . . . . 844,056 832,866
Senior subordinated debentures . . . . . . . . . . . . . . . . 822,855 822,781
Obligation to related party. . . . . . . . . . . . . . . . . . 88,748 91,619
Capital lease obligations and other debt . . . . . . . . . . . 15,188 8,154
----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . 2,656,339 2,504,930
----------- -----------
Deficit investment in affiliate. . . . . . . . . . . . . . . . 336,896 307,758
----------- -----------
Commitments and contingencies
Stockholders' deficiency:
8% Series C Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, 110,622 shares issued
($100 per share liquidation preference). . . . . . . . . . 1 1
8% Series D Cumulative Preferred Stock, $.01 par value,
112,500 shares authorized, none issued ($100 per
share liquidation preference). . . . . . . . . . . . . . . - -
Series E Redeemable Exchangeable Convertible Preferred
Stock, $.01 par value, 100,000 shares authorized and
issued ($1,000 per share liquidation preference) . . . . . 1 -
Class A Common Stock, $.01 par value, 50,000,000 shares
authorized, 11,022,127 and 10,853,607 shares issued. . . . 110 108
Class B Common Stock, $.01 par value, 20,000,000 shares
authorized, 12,411,532 shares issued . . . . . . . . . . . 124 124
Par value less than (in excess of) capital contributed . . . 25,028 (80,255)
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . (1,533,890) (1,419,985)
----------- -----------
(1,508,626) (1,500,007)
Less treasury stock, at cost (50,000 shares) . . . . . . . . (3,237) (3,237)
----------- -----------
Total stockholders' deficiency . . . . . . . . . . . . . . . (1,511,863) (1,503,244)
----------- -----------
$ 1,481,372 $ 1,309,444
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to
consolidated financial statements.
(4)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . $(111,851) $(104,475)
--------- ---------
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 110,095 93,054
Share of affiliates' net losses . . . . . . . . . . . . . . 34,257 26,229
Amortization of deferred financing. . . . . . . . . . . . . 2,105 1,659
Amortization of deferred interest . . . . . . . . . . . . . 7,024 7,024
Amortization of debenture discount. . . . . . . . . . . . . 74 63
Accretion of interest on debt . . . . . . . . . . . . . . . 17,190 15,582
Loss on sale of programming interests, net. . . . . . . . . - 330
Loss on sale of plant and equipment . . . . . . . . . . . . 1,405 347
Changes in assets and liabilities net of effects
of acquisition:
Increase in accounts receivable trade . . . . . . . . . (4,202) (4,526)
Decrease in notes receivable, affiliates. . . . . . . . 354 456
Decrease (increase) in notes and other
receivables . . . . . . . . . . . . . . . . . . . . . (2,513) 3,002
Decrease (increase) in prepaid expenses . . . . . . . . (360) 1,074
Decrease in advances to affiliates. . . . . . . . . . . 7 2,220
Increase (decrease) in accounts payable . . . . . . . . (6,776) 6,218
Increase in accrued interest. . . . . . . . . . . . . . 609 11,278
Increase in accrued payroll and related benefits. . . . 2,882 6,442
Decrease in accrued franchise fees. . . . . . . . . . . (4,475) (4,009)
Decrease in accrued obligation, Olympics
venture . . . . . . . . . . . . . . . . . . . . . . . - (50,000)
Increase (decrease) in accrued liabilities, other . . . (9,457) 16,374
Increase in accounts payable to affiliates. . . . . . . 6,958 2,155
--------- ---------
Total adjustments . . . . . . . . . . . . . . . . . . 155,177 134,972
--------- ---------
Net cash provided by operating activities . . . . . . . . . . 43,326 30,497
--------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(5)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(Dollars in thousands)
(Unaudited)
continued
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Cash flows from investing activities:
Capital expenditures. . . . . . . . . . . . . . . . . . . $(122,575) $ (82,896)
Proceeds from sale of plant and equipment . . . . . . . . 832 694
Additions to intangible assets. . . . . . . . . . . . . . (44) -
Increase in acquisition related costs and deposits. . . . (26,483) -
Proceeds from sale of programming interests . . . . . . . - 543
Purchase of marketable securities . . . . . . . . . . . . - (83)
Decrease (increase) in investments in affiliates. . . . . 2,513 (303)
Decrease in other investments . . . . . . . . . . . . . . 618 408
Payments for acquisition, net of cash acquired. . . . . . (120,848) -
--------- ---------
Net cash used in investing activities . . . . . . . . . (265,987) (81,637)
--------- ---------
Cash flows from financing activities:
Proceeds from bank debt . . . . . . . . . . . . . . . . . 261,325 153,908
Repayment of bank debt. . . . . . . . . . . . . . . . . . (125,079) (369,680)
Proceeds from senior debt . . . . . . . . . . . . . . . . 2,500 12,750
Repayment of senior debt. . . . . . . . . . . . . . . . . (8,500) (11,750)
Issuance of senior subordinated debentures. . . . . . . . - 348,396
Preferred stock dividends . . . . . . . . . . . . . . . . (2,054) (442)
Net proceeds from issuance of Redeemable
Exchangeable Convertible Preferred Stock. . . . . . . . 98,625 -
Issuance of common stock. . . . . . . . . . . . . . . . . 6,661 2,887
Decrease in obligation to related party . . . . . . . . . (2,871) (813)
Payments of capital lease obligations and other debt. . . (1,323) (1,372)
Reduction of minority interest. . . . . . . . . . . . . . - (3,000)
Additions to deferred financing and other costs . . . . . (2,168) (10,839)
--------- ---------
Net cash provided by financing activities. . . . . . . . 227,116 120,045
--------- ---------
Net increase in cash and cash equivalents. . . . . . . . . 4,455 68,905
Cash and cash equivalents at beginning of year . . . . . . 12,944 2,721
--------- ---------
Cash and cash equivalents at end of period . . . . . . . . $ 17,399 $ 71,626
--------- ---------
--------- ---------
</TABLE>
See accompanying notes
to consolidated financial statements.
(6)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Cablevision
Systems Corporation and its majority owned subsidiaries (the "Company") have
been prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
Note 2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The financial statements as of June 30, 1994 and for the six and three month
periods ended June 30, 1994 and 1993 are unaudited; however, in the opinion of
management, such statements include all adjustments, consisting solely of normal
recurring adjustments, necessary for a fair presentation of the results for the
periods presented.
The interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993.
The results of operations for the interim periods are not necessarily indicative
of the results that might be expected for future interim periods or for the full
year ending December 31, 1994.
Note 3. LOSS PER COMMON SHARE
Net loss per common share is computed based on the weighted average number of
common shares outstanding. Common stock equivalents were not included in the
computation as their effect would be to decrease net loss per share.
Note 4. CASH FLOWS
For purposes of the consolidated statements of cash flows, the Company considers
short-term investments with a maturity at date of purchase of three months or
less to be cash equivalents. The Company paid cash interest expense of
approximately
(7)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
Note 4. CASH FLOWS (continued)
$91,262 and $78,647 for the six months ended June 30, 1994 and 1993,
respectively. For the same periods, the Company's noncash financing activities
included capital lease obligations of $4,020 and $64, respectively, incurred
when the Company entered into leases for new equipment.
Note 5. RECENT DEVELOPMENTS
On March 11, 1994, Cablevision of Cleveland, L.P. ("Cablevision Cleveland"), a
partnership comprised of subsidiaries of the Company, purchased substantially
all of the assets and assumed certain liabilities of North Coast Cable Limited
Partnership, which operates a cable television system in Cleveland, Ohio (the
"North Coast Cable Acquisition"). The net cash purchase price for interests not
previously owned by the Company (and excluding excess liabilities assumed by the
Company) aggregated $104,200 including expenses. The cost of the acquisition
was financed principally by borrowings under the Company's Credit Agreement, as
hereinafter defined. Cablevision Cleveland is part of the Restricted Group.
On March 31, 1994, the Company issued 100,000 shares of a new series of
preferred stock (the "Preferred Shares") to Toronto-Dominion Investments, Inc.
in a private transaction. The Preferred Shares were sold for a purchase price
of $1,000 per share and carry a liquidation preference of a like amount plus
accrued and unpaid dividends.
On June 14, 1994, the Company and Cablevision of Boston Limited Partnership
("Cablevision Boston") entered into an agreement which is designed to give the
Company full ownership of Cablevision Boston. The agreement provides for the
acquisition by the Company of the interests of Cablevision Boston which it does
not already own in a series of transactions. The Company and Cablevision Boston
have filed with the Securities and Exchange Commission a Consent Solicitation
Statement/Prospectus with respect to the proposed transactions. Each of the
transactions is subject to a number of conditions, including the approval by the
limited partners of Cablevision Boston who are unaffiliated with the general
partners of Cablevision Boston. Consummation of the transactions would result
in the limited partners in Cablevision Boston receiving Class A Common Stock
with an expected aggregate market value of approximately $40.25 million.
(8)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
On June 30, 1994, A-R Cable Partners, a partnership comprised of subsidiaries of
the Company and E.M. Warburg, Pincus & Co., Inc. completed the purchase of
certain assets of Nashoba Communications, a group of three limited partnerships,
for a purchase price of approximately $90 million of which $55 million was
provided by a senior credit facility secured by the assets of such systems. The
remainder of the purchase price was provided by equity contributions and
subordinated loans from the partners in A-R Cable Partners. The Company's $13.4
million share of such funds was provided through drawings under the Restricted
Group credit facility.
On July 11, 1994, Rainbow Programming completed the purchase of Liberty Media's
50% interest in American Movie Classics Company ("AMCC") for a purchase price of
approximately $180 million, increasing Rainbow Programming's interest in AMCC to
75%, with the result that AMCC's results of operations will be consolidated with
those of the Company as of the date of acquisition. See "Liquidity and Capital
Resources - Rainbow Programming".
On August 8, 1994, Cablevision MFR, Inc. ("Cablevision MFR"), a wholly-owned
subsidiary of the Company, acquired substantially all of the assets of Monmouth
Cablevision Associates, L.P. ("Monmouth Cablevision") and Riverview Cablevision
Associates, L.P. ("Riverview Cablevision") consisting of cable television
systems in New Jersey. Also on such date Cablevision of Framingham Holdings,
Inc. ("CFHI"), a corporation jointly owned by the Company and E.M. Warburg,
Pincus Investors, L.P., acquired substantially all of the assets of Framingham
Cablevision Associates, L.P. ("Framingham Cablevision") consisting of cable
television systems in Massachusetts. Cablevision MFR is an unrestricted
subsidiary of the Company.
The aggregate purchase price for the two New Jersey systems was $391.1 million.
Approximately $237.8 million of such purchase price was financed by a senior
credit facility of newly formed unrestricted subsidiaries of Cablevision MFR
secured by the assets of the systems. The remaining $153.3 million of such
purchase price was paid by the issuance, by Cablevision MFR, of promissory notes
totalling $141.3 million due in 1998 and bearing interest at 6% until the third
anniversary and 8% thereafter (increasing to 8% and 10%, respectively, if
interest is paid in shares of the Company's Class A Common Stock) and an equity
contribution from the Restricted Group of $12 million. The aggregate purchase
price, including fees and expenses, for Framingham Cablevision's assets was
$37.8 million. Approximately $22.7 million of such purchase price was financed
by a senior credit facility of a wholly-owned subsidiary of CFHI secured by the
assets of such system. Approximately $9.7 million of such purchase price was
paid by the issuance by CFHI of a promissory note issued on the same terms as
the promissory note of Cablevision MFR described above. The remaining
approximately $5.4 million consists of a $1.0 million loan to the subsidiary
from its
(9)
<PAGE>
stockholders and an approximate $4.4 million capital contribution to CFHI from
its stockholders.
Principal and interest on the notes, which may be paid, in cash or, under
certain circumstances, at the maker's election, in shares of the Company's Class
A common stock, is guaranteed by the Company. The Company's obligations under
the guarantee rank pari passu with the Company's public subordinated debt. Under
the Company's senior credit facility, the Company is only permitted to pay such
amount in common stock. In certain circumstances, Cablevision MFR or CFHI (as
the case may be) may extend the maturity date of the promissory notes until 2003
for certain additional consideration. In the event the maturity is so extended,
the interest and principal of such note may thereafter be paid only in cash.
As of June 30, 1994, the two New Jersey systems served approximately 164,000
subscribers, in the aggregate, and Framingham Cablevision served approximately
16,300 subscribers.
(10)
<PAGE>
CABLEVISION SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
Note 6. INCOME TAXES
Effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which requires the liability method of accounting for deferred income
taxes and permits the recognition of deferred tax assets, subject to an ongoing
assessment of realizability.
The tax effects of temporary differences resulting in a net deferred tax asset
and the corresponding valuation allowance at June 30, 1994 amounted to
approximately $456,273.
The Company has provided a valuation allowance for the total amount of the net
deferred tax assets since realization of these assets was not assured due
principally to the Company's history of operating losses. The amounts of net
deferred tax assets and corresponding valuation allowance increased by $40,927
during the six month period ended June 30, 1994. Also, in connection with
acquisitions made prior to 1993, the Company recorded certain fair value
adjustments net of their tax effects.
Note 7. RESTRUCTURING CHARGE
The Company recorded a one time charge of $4,306 in the first quarter of 1994 to
provide for severance and related costs, attributable entirely to terminated
employees, resulting from a restructuring of its operations. This restructuring
was undertaken in response to recent Federal Communications Commission ("FCC")
mandated rate reductions in substantially all of the Company's cable television
systems.
(11)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
RECENT CABLE TELEVISION REGULATIONS
The Company believes that the most recent round of FCC rate regulations (which
became effective during the period July 1 to July 15, 1994) will result in a
regulated revenue decrease of approximately 4%, or less than 3% of total
revenues. The Company estimates from its analysis that the revenue reduction
will result in an approximate 6% decrease in operating profit before
depreciation and amortization.
In connection with the implementation of its revised rate structure resulting
from the initial FCC rate regulation, the Company introduced a number of
measures, including the provision of alternate service offerings and repackaging
of certain services in order to mitigate the negative impact of FCC regulation
on the Company's rate structure. Following the latest FCC rate regulation, the
Company has introduced additional marketing measures, including offering
additional services and discounted pricing of certain services and certain
service packages. The Company is not able to predict fully the extent of the
effect these measures will have in mitigating the impact of rate regulation.
The following table details the Company's results of operations for individual
income statement line items as a percentage of net revenues for each of the
periods presented, and shows the (increase) or decrease in net loss attributable
to the change in that line item.
(12)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------------------
1994 1993
------------------ ------------------ (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . . $ 368,177 100% $ 325,193 100% $ 42,984
Operating expenses:
Technical. . . . . . . . . . . . . . 134,640 37 117,625 36 (17,015)
Selling, general &
administrative . . . . . . . . . . 72,404 20 76,636 24 4,232
Restructuring charge . . . . . . . . 4,306 1 - - (4,306)
Depreciation and
amortization . . . . . . . . . . . 110,095 30 93,054 29 (17,041)
--------- --------- ---------
Operating profit . . . . . . . . . . . 46,732 13 37,878 12 8,854
Other income (expense):
Interest expense, net. . . . . . . . (118,094) (32) (113,318) (35) (4,776)
Share of affiliates' net loss. . . . (34,257) (9) (26,229) (8) (8,028)
Provision for preferential
payment to related party . . . . . (2,800) (1) (2,800) (1) -
Loss on sale of programming
interests, net . . . . . . . . . . - - (330) - 330
Minority interest. . . . . . . . . . - - 3,000 1 (3,000)
Miscellaneous, net . . . . . . . . . (3,432) (1) (2,676) (1) (756)
--------- --------- ---------
Net loss . . . . . . . . . . . . . . . $(111,851) (30)% $(104,475) (32)% $ (7,376)
--------- --------- ---------
--------- --------- ---------
Currently payable interest
expense. . . . . . . . . . . . . . . $ 92,193 25% $ 89,925 28%
--------- ---------
--------- ---------
</TABLE>
(13)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------------------------
1994 1993
------------------ ------------------ (Increase)
% of Net % of Net Decrease
Amount Revenues Amount Revenues in Net loss
------ -------- ------ -------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . . $ 192,090 100% $ 168,170 100% $ 23,920
Operating expenses:
Technical. . . . . . . . . . . . . . 68,604 36 60,122 36 (8,482)
Selling, general &
administrative . . . . . . . . . . 42,585 22 40,873 24 (1,712)
Restructuring charge . . . . . . . . - - - - -
Depreciation and
amortization . . . . . . . . . . . 55,322 29 46,470 28 (8,852)
--------- --------- ---------
Operating profit . . . . . . . . . . . 25,579 13 20,705 12 4,874
Other income (expense):
Interest expense, net. . . . . . . . (59,647) (31) (58,688) (35) (959)
Share of affiliates' net loss. . . . (16,975) (9) (7,517) (4) (9,458)
Provision for preferential
payment to related party . . . . . (1,400) (1) (1,400) (1) -
Loss on sale of programming
interests, net . . . . . . . . . . - - - - -
Minority interest. . . . . . . . . . - - - - -
Miscellaneous, net . . . . . . . . . (2,281) (1) (1,886) (1) (395)
--------- --------- ---------
Net loss . . . . . . . . . . . . . . . $ (54,724) (28)% $ (48,786) (29)% $ (5,938)
--------- --------- ---------
--------- --------- ---------
Currently payable interest
expense. . . . . . . . . . . . . . . $ 46,730 24 % $ 47,071 28 %
--------- --------- ---------
--------- --------- ---------
</TABLE>
(14)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
NET REVENUES for the six and three months ended June 30, 1994 increased by
approximately 13% and 14%, respectively over the corresponding 1993 periods.
Growth in the average number of subscribers (up 9% for each of the periods)
contributed 9% of the increase in each of the periods. Approximately 3% and 5%,
respectively, of the increase was attributable to the North Coast Cable
Acquisition, with the remaining increases primarily attributable to increases in
other revenues, consisting of pay-per-view, installation, advertising and other,
offset partially by a decrease in average revenue per subscriber attributable to
the FCC rate adjustments mentioned above.
TECHNICAL EXPENSES increased approximately 14% in each of the six and three
month periods ended June 30, 1994 as compared to the same periods in 1993.
Approximately 4% and 6%, respectively, for the six and three month periods ended
June 30, 1994 resulted from the North Coast Cable Acquisition. The remaining
increases of 10% and 8%, respectively, were due primarily to increased costs
directly associated with the growth in revenues mentioned above. As a
percentage of revenues, such expenses remained relatively constant in each of
the periods presented.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES decreased 6% for the six month
period and increased 4% for the three month period ended June 30, 1994 compared
to the same 1993 periods. Increases of approximately 2% and 4%, respectively,
for the six and three month periods were attributable to the North Coast Cable
Acquisition. The decrease for the six months ended June 30, 1994 was primarily
the result of a credit adjustment taken in the first quarter of 1994 in
connection with an incentive stock plan. Excluding the effects of incentive
stock plan expense recorded in 1993 and the related credit adjustment in 1994,
selling, general and administrative expenses would have increased by 16% and
13%, respectively, in the six and three month periods, with 8% in each period
attributable to the Company's growing New York City operations and the remaining
increases reflecting general cost increases and increases in customer service,
sales and marketing costs (a portion of which related to compliance with FCC
rate regulation). As a percentage of revenues, such expenses would have
remained relatively constant in each of the periods presented.
RESTRUCTURING CHARGE The Company recorded a one time charge of $4.3 million in
the three month period ended March 31, 1994 to provide for severance and related
costs, attributable entirely to terminated employees, resulting from a
restructuring of its operations, which was undertaken in response to recent FCC-
mandated rate reductions in substantially all of the Company's cable television
systems. The restructuring is expected to result in annualized savings of
approximately $15 million reflecting reduced payroll, benefit, programming and
other costs.
(15)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
DEPRECIATION AND AMORTIZATION EXPENSE increased 18% and 19%, respectively, for
the six and three month periods ended June 30, 1994, as compared to the same
1993 periods. Approximately 4% and 7% of the respective increases were due to
the North Coast Cable Acquisition, with the remaining 14% and 12% increases
resulting from increased depreciation charges on capital expenditures made
during 1994 and 1993, which were offset to some extent by decreased depreciation
and amortization charges on assets which became fully depreciated during the
periods.
NET INTEREST EXPENSE increased 4% and 2%, respectively, for the six and three
months ended June 30, 1994 as compared to the corresponding 1993 periods. The
increases resulted from the net effect of the Company's issuances of senior
subordinated debentures during 1993, the proceeds of which were used to repay
bank debt which bore generally lower average rates than the debentures.
SHARE OF AFFILIATES' NET LOSSES increased from $26.2 million to $34.3 million
for the six months ended June 30, 1994 compared to the same 1993 period and
increased from $7.5 million to $17.0 million for the three months ended June 30,
1994 in comparison to the same 1993 period. Such amounts consist primarily of
the Company's share in the net losses of certain cable affiliates which for the
six and three months ended June 30, 1994 amounted to $35.5 million and $18.5
million, respectively, and in the net income of certain programming businesses
in which the Company has varying ownership interests which aggregated $1.2
million and $1.5 million for the respective 1994 periods.
PROVISION FOR PREFERENTIAL PAYMENT TO RELATED PARTY consists of the expensing of
the proportionate amount due with respect to an annual payment ($5.6 million)
made in connection with the acquisition of Cablevision of New York City ("CNYC")
in 1992.
MINORITY INTEREST in 1993 represents U.S. Cable Television Group, L.P.'s ("U.S.
Cable") share of losses in a subsidiary ("VC Holding") of V Cable, Inc. ("V
Cable"), limited to its $3.0 million investment. At December 31, 1992, as part
of a restructuring and reorganization involving the Company's unrestricted
subsidiary V Cable, U.S. Cable acquired a 19% interest in VC Holding for $3.0
million.
(16)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
LIQUIDITY AND CAPITAL RESOURCES
For financing purposes, the Company is structured as the Restricted Group,
consisting of Cablevision Systems Corporation and certain of its subsidiaries
and an unrestricted group of certain subsidiaries which includes V Cable
(including VC Holding), CNYC, Rainbow Programming Holdings, Inc. ("Rainbow
Programming") and, effective August 8, 1994, Cablevision MFR, CFHI and their
subsidiaries ("MFR"). The Restricted Group, V Cable, CNYC and MFR are
individually and separately financed, and to the extent necessary, equity
funding for CNYC is provided by the Restricted Group. To date, Rainbow
Programming's financial requirements have been provided by the Restricted Group.
On July 11, 1994, Rainbow Programming entered into a $105 million credit
agreement with a group of banks in order to purchase Liberty Media's 50%
interest in AMCC. AMCC has a $60 million credit agreement with a separate group
of banks. No other entities have external financing.
(17)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
The following table presents selected historical results of operations and other
financial information related to the captioned groups or entities for the six
months ended June 30, 1994.
<TABLE>
<CAPTION>
Other Cablevision
Restricted Unrestricted Systems
Group V Cable CNYC Subsidiaries Corporation
---------- ------- ------ ------------ -----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Net revenues $212,632 $ 70,018 $ 68,402 $ 17,125 $ 368,177
Operating expenses:
Technical 75,099 26,383 31,390 1,768 134,640
Selling, general and
administrative 26,413 8,646 20,887 16,458 72,404
Restructuring charge 4,113 193 - - 4,306
Depreciation and
amortization 53,667 40,012 14,856 1,560 110,095
-------- -------- -------- -------- ----------
Operating profit
(loss) $ 53,340 (1) $ (5,216) $ 1,269 (1) $ (2,661) $ 46,732
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Currently payable
interest expense $ 64,489 $ 22,729 $ 4,962 $ 13 $ 92,193
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Total interest expense $ 66,259 $ 46,897 $ 5,417 $ 13 $ 118,586
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Senior debt $469,252 $844,091 $162,223 $ 3 $1,475,569
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Subordinated debt $822,855 $ - $ - $ - $ 822,855
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Obligation to related
party $ - $ - $ 88,748 (2) $ - $ 88,748
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Deficit investment in
affiliate $336,896 $ - $ - $ - $ 336,896
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
Capital expenditures $ 66,842 $ 6,793 $ 48,406 $ 899 $ 122,575 (3)
-------- -------- -------- -------- ----------
-------- -------- -------- -------- ----------
<FN>
(1) Includes management fees from CNYC of $2,389, payment of which is
restricted under the CNYC Credit Agreement.
(2) Obligation of NYC LP Corp., a wholly-owned Unrestricted Group subsidiary,
relating to the CNYC Acquisition, which obligation has been guaranteed
by the Company.
(3) includes intercompany elimination of $365.
</TABLE>
(18)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
At June 30, 1994, the Company's consolidated debt was $2,387.2 million
(excluding the Company's deficit investment in A-R Cable of $336.9 million), of
which $844.1 million represented V Cable's debt and $251 million represented
CNYC's debt including the $88.7 million obligation to a related party.
RESTRUCTURING
The Company recorded a one time charge of $4.3 million in the three month period
ended March 31, 1994 to provide for severance and related costs, attributable
entirely to terminated employees, resulting from a restructuring of its
operations. The restructuring was undertaken in response to recent FCC-mandated
rate reductions in substantially all of the Company's cable television systems,
and is expected to result in annualized savings of approximately $15 million
reflecting reduced benefit, programming and other costs as well as reduced
payroll costs from the terminated employees.
RESTRICTED GROUP
On March 31, 1994, the Company issued and sold 100,000 shares of a new series of
preferred stock to Toronto-Dominion Investments, Inc. in a private transaction.
The proceeds of $100 million were used to repay bank debt.
The Company is party to a credit facility with a group of banks led by
Toronto-Dominion (Texas) as agent, (the "Credit Agreement"). The maximum amount
available to the Restricted Group under the Credit Agreement is $681.9 million
with a final maturity at December 31, 2000. The facility consists of a $283.5
million term loan, which began amortizing on a scheduled quarterly basis on
December 31, 1993 with 68% being amortized by December 31, 1998 and a $398.4
million revolving loan with scheduled facility reductions starting on December
31, 1993 resulting in a 66.25% reduction by December 31, 1998. On August 10,
1994, the Restricted Group had total usage under the Credit Agreement of $466.9
million, consisting of outstanding bank borrowings of $448.5 and letters of
credit of $18.4 million issued on behalf of the Company.
Unrestricted and undrawn funds available to the Restricted Group under the
Credit Agreement amounted to approximately $215 million at August 10, 1994. The
Credit Agreement contains certain financial covenants that may limit the
Restricted Group's ability to utilize all of the undrawn funds available
thereunder, including covenants requiring the Restricted Group to maintain
certain financial ratios and restricting the permitted uses of borrowed funds.
The amount outstanding under a separate credit agreement for the Company's New
Jersey subsidiary ("CNJ"), which is part of the Restricted Group, was $57
million as
(19)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
of August 10, 1994. The Company and CNJ are jointly and severally liable for
this debt. On March 31, 1993, the CNJ revolving facility converted to an
amortizing term loan. The CNJ facility began amortizing on a scheduled
quarterly basis on June 30, 1993 with 68.25% being amortized by December 31,
1998.
As of June 30, 1994 the Company had entered into interest exchange (swap)
agreements with several of its banks on a notional amount of $200 million, on
which its pays a fixed rate of interest and receives a variable rate of interest
for periods ranging from one to four years. The average effective annual
interest rate on all bank debt outstanding at June 30, 1994 was approximately
8.2%.
The Restricted Group made capital expenditures of approximately $66.8 million
during the first six months of 1994, primarily in connection with system
rebuilds and upgrades, the expansion of existing cable plant to pass additional
homes and other general capital needs.
The cable systems located in New York State that are owned by the Restricted
Group and VC Holding are subject to agreements (the "New York Upgrade
Agreements") with the New York State Commission on Cable Television (the "New
York Cable Commission"). The New York Upgrade Agreement applicable to the
Restricted Group requires the substantial upgrade of its systems, ultimately to
a 77 channel capacity by 1995-1996, subject to certain minor exceptions. As
part of this planned upgrade of the Restricted Group's New York systems, the
Company expects to use fiber optic cable extensively in its trunk and
distribution networks. The Company believes that the remaining portion of the
upgrade as of December 31, 1993, will cost up to an additional $80 million which
would be spent during the period 1994 to 1996. In addition, the Company
anticipates upgrading certain of its New York systems beyond the level required
by the New York Upgrade Agreements along with upgrading certain other of its
Restricted Group systems. The Company anticipates that the capital costs of
these additional upgrades may be substantial.
CNYC is separately financed by a $185 million bank credit agreement. Under an
agreement with the City of New York, the Company undertook to make aggregate
equity contributions in Phases III, IV and V of CNYC of $71 million or such
lesser amount as the CNYC banks deem necessary. Recourse by the City of New
York with respect to such obligation is limited to remedies available under the
CNYC franchises. As of August 10, 1994, the Restricted Group had advanced $48.2
million of equity to CNYC and had the ability to invest the balance of the $71
million in CNYC. Under the CNYC purchase agreement, the Restricted Group has
guaranteed an annual payment to Charles F. Dolan, the chairman and chief
executive officer of the Company of $5.6 million (the "Annual Payment" as
defined) and a $40 million minimum payment (the "Minimum Payment", as defined).
The Minimum Payment can be made in either cash or stock at the Company's option.
Under its Credit Agreement, the
(20)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Company is currently prohibited from paying the Minimum Payment and any amounts
in respect of the Preferred Payment in cash.
The Company believes that, for the Restricted Group, internally generated funds
together with funds available under its existing Credit Agreement will be
sufficient through December 31, 1995 (i) to meet its debt service requirements
including its amortization requirements under the Credit Agreement, (ii) to fund
its normal capital expenditures, including the required upgrades under the New
York Upgrade Agreement, and (iii) to fund its anticipated investments including
the $5.6 million Annual Payments to Charles Dolan in connection with the CNYC
Acquisition and the equity requirements in connection with the build out of the
CNYC cable systems.
Further acquisitions and other investments by the Company, if any, will be
funded by undrawn borrowing capacity and by possible increases in the amount
available under the Credit Agreement, additional borrowings from other sources,
and/or possible future sales of debt, equity or equity related securities.
The senior secured indebtedness incurred by A-R Cable and V Cable is guaranteed
by the Restricted Group, but recourse against the Restricted Group is limited
solely to the common stock of A-R Cable and of V Cable pledged to A-R Cable's
and V Cable's senior secured lenders, respectively.
Under the terms of its Credit Agreement, as amended, the Company is permitted to
make unspecified investments of up to $200 million, which include the Company's
investment in Rainbow Programming, in any remaining equity contributions to CNYC
and any equity contributions the Company may make to A-R Cable and V Cable.
The terms of the instruments governing A-R Cable's and V Cable's indebtedness
prohibit transfer of funds (except for certain payments related to corporate
overhead allocations by A-R Cable and V Cable and pursuant to an income tax
allocation agreement with respect to V Cable) from A-R Cable and V Cable to the
Restricted Group and are expected to prohibit such transfer of funds for the
foreseeable future. Payments to the Restricted Group in respect of its
investments in and advances to Cablevision of Chicago and Cablevision of Boston
are also presently prohibited by the terms of those companies' applicable debt
instruments and are expected to be prohibited for the foreseeable future. The
Restricted Group does not expect that such limitations on transfer of funds or
payments will have an adverse effect on the ability of the Company to meet its
obligations.
(21)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
V CABLE
The existing long-term credit facilities extended by General Electric Capital
Corporation ("GECC") to V Cable and VC Holding on December 31, 1992, refinanced
all of V Cable's pre-existing debt. Under the credit agreement between V Cable
and GECC (the "V Cable Credit Agreement"), GECC has provided a term loan (the
"V Cable Term Loan") in the amount of $23.4 million, as of June 30, 1994, which
loan accretes interest at a rate of 10.62% compounded semi-annually until
December 31, 1997 (the reset date) and is payable in full on December 31, 2001.
In addition, GECC has extended to VC Holding a $505 million, as of June 30,
1994, term loan (the "Series A Term Loan"), a $25 million revolving line of
credit (the "Revolving Line") under which there were no borrowings outstanding
as of June 30, 1994 and a $233 million, as of June 30, 1994, term loan (the
"Series B Term Loan") all three of which comprise the VC Holding Credit
Agreement. The Series A Term Loan and any amounts drawn under the Revolving
Line pay current cash interest and mature on December 31, 2001. The Series B
Term Loan does not pay cash interest but rather accretes interest at a rate of
10.62% compounded semi-annually until December 31, 1997 (the reset date) and is
payable in full on December 31, 2001. On August 10, 1994 VC Holding had no
amounts outstanding under the Revolving Line and had letters of credit issued
approximating $1.8 million. Accordingly, unrestricted and undrawn funds under
the VC Holding Revolving Line amounted to approximately $23.2 million on
August 10, 1994.
The VC Holding Credit Agreement also provides for the assumption by VC Holding
of certain loans of U.S. Cable, the present value of which amounted to $82.7
million at June 30, 1994.
The outstanding principal amount of the V Cable Term Loan is payable in full,
with accreted interest, at maturity on December 31, 2001. VC Holding is
obligated to make principal payments on a portion of the Series A Term Loan
beginning on June 30, 1997 totalling $18 million, $20 million, $30 million, $40
million and $56 million for the years ending December 31, 1997, 1998, 1999, 2000
and 2001, respectively. The remaining balance of the Series A Term Loan, as
well as any amounts borrowed under the VC Holding Revolving Line, is due
December 31, 2001. In addition, VC Holding and V Cable are required to apply
all consolidated available cash flow (as defined), as well as the net proceeds
of any disposition of assets, to the reduction of the VC Holding Term Loans and
the V Cable Term Loan.
(22)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
V Cable made capital expenditures of approximately $6.8 million during the first
six months of 1994, primarily in connection with the expansion of existing cable
plant to pass additional homes and for system upgrades and other general capital
needs. The New York Upgrade Agreement applicable to V Cable requires the
substantial upgrade of its systems in New York State, ultimately to a 77 channel
capacity in 1995. In 1992 V Cable completed the first phase of this required
upgrade, under which it expanded all of its New York cable systems to a 52
channel capacity. The Company believes that the upgrade of V Cable's New York
systems from 52 to 77 channels will cost up to an additional $9.9 million, as of
December 31, 1993, which would be spent during 1994 and 1995.
V Cable anticipates that its cash flow from operations and amounts available
under the VC Holding Revolving Line will be sufficient to service its debt, to
fund its capital expenditures and to meet its working capital requirements
through 1995. However, after taking into account the anticipated reductions to
regulated revenue arising from the latest round of FCC regulation, V Cable
believes that it is likely that it will be unable to meet several of its
financial covenants during such period. To remedy the anticipated covenant
defaults, V Cable may request waivers and/or amendments to its credit agreement
and/or seek equity contributions from the Restricted Group. There can be no
assurance as to V Cable's ability to accomplish any of these alternatives or the
terms or timing of such alternatives.
CABLEVISION OF NEW YORK CITY
CNYC is party to an $185 million credit facility with a group of banks led by
the Chase Manhattan Bank, N.A. as agent (the "CNYC Credit Agreement") which is
restricted to the construction and operating needs of Phases I through V in
Brooklyn and The Bronx. In Brooklyn, CNYC has completed construction of Phases
I through IV. In The Bronx, CNYC has completed construction of Phases I, II and
III. The credit facility begins to amortize on a quarterly basis on March 31,
1995 and matures on June 30, 2000.
At August 10, 1994 CNYC had outstanding bank borrowings of $171.4 million and
had outstanding letters of credit totalling $7.2 million leaving $6.4 million of
unrestricted and undrawn funds available. CNYC expects the loan to be repaid
through cash generated from operations.
As of August 10, 1994 the Restricted Group had contributed $48.2 million to
CNYC. CNYC made capital expenditures of approximately $48.4 million in the
first six months of 1994. At June 30, 1994, the cost to complete CNYC
construction of Phases IV and V was estimated at $74 million. CNYC expects the
remaining costs for all CNYC construction will be financed by the amounts
available under the CNYC Credit Agreement, committed equity contributions and
cash flow generated from operations.
(23)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
To eliminate the need for further equity contributions, CNYC expects to
refinance the CNYC Credit Facility in 1994 to provide for additional amounts to
complete construction.
Substantially all of the assets of CNYC (as well as the interests in CNYC held
directly or indirectly by the Company and Mr. Dolan) are pledged to secure the
obligations to the banks under the CNYC Credit Facility.
The Company is party to a management agreement with CNYC which requires the
Company to provide management assistance to CNYC in exchange for 3-1/2% of gross
revenues, as defined, plus reimbursement of general and administrative expenses
and overhead. Payment of the 3-1/2% management fee is restricted under the CNYC
Credit Facility, although a one time payment of $2.4 million was made to the
Company in 1992 as permitted by the CNYC bank group. Unpaid management fees
accrue interest at a rate equal to 2% above the average borrowing rate of CNYC
under the CNYC Credit Agreement, compounded quarterly. As of June 30, 1994,
CNYC owed the Company approximately $9.8 million for unpaid management fees and
accrued interest thereon.
MONMOUTH AND RIVERVIEW
On August 8, 1994, Cablevision MFR acquired substantially all of the assets
of Monmouth Cablevision and Riverview Cablevision. Simultaneously with the
acquisition, Cablevision MFR contributed all of the acquired assets and assumed
liabilities along with the new credit facility, discussed below, to its
subsidiaries Cablevision of Monmouth Inc. and Cablevision of Riverview Inc.
(collectively "Monmouth/Riverview") and was released from any obligations under
the credit facility.
Monmouth/Riverview are party to a credit facility with a group of banks led
by NationsBank of Texas, N.A., as agent (the "Monmouth/Riverview Credit
Facility"). The maximum amount available to Monmouth/Riverview under the
Monmouth/Riverview Credit Facility is $285 million with a final maturity at June
30, 2003. The facility is a reducing revolving loan, with scheduled facility
reductions beginning on March 31, 1996 resulting in a 15% reduction by
December 31, 1998. As of August 8, 1994, the initial advance date,
Monmouth/Riverview had outstanding bank borrowings of $237.8 million.
Unrestricted and undrawn funds available to Monmouth/Riverview under the
Monmouth/Riverview Credit Facility amounted to approximately $47.2 million at
August 8, 1994. The Monmouth/Riverview Credit Facility contains certain
financial covenants that may limit Monmouth/Riverview's ability to utilize all
of the undrawn funds available thereunder, including covenants requiring
Monmouth/Riverview to maintain certain financial ratios. Under the terms of the
Monmouth/Riverview Credit Facility, Monmouth/Riverview is prohibited from
transferring funds to Cablevision MFR.
(24)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
The Company believes that for Monmouth/Riverview, internally generated
funds together with funds available under its existing credit agreement will be
sufficient (i) to meet its debt service requirements including its amortization
requirements and (ii) to fund its capital expenditures.
On August 8, 1994, Cablevision MFR issued promissory notes totalling $141.3
million due in 1998 and bearing interest at 6% until the third anniversary and
8% thereafter (increasing to 8% and 10% respectively, if interest is paid in
shares of the Company's Class A Common Stock). Principal and interest on the
notes is payable at Cablevision MFR's election, in cash or in shares of the
Company's Class A Common Stock. The promissory notes are guaranteed by the
Company and the obligations under the guarantee rank pari passu with the
Company's public subordinated debt. Under the Restricted Group's credit
facility, the Company is only permitted to pay such amount in CSC Class A Common
Stock. In certain circumstances, Cablevision MFR may extend the maturity date
of the promissory notes until 2003 for certain additional consideration.
RAINBOW PROGRAMMING
Rainbow Programming's financing needs have been funded to date by the Restricted
Group's investments in and advances to Rainbow Programming, by sales of equity
interests in the programming businesses and in the case of one of the
programming businesses, through separate external debt financing. The Company
expects that the future cash needs of Rainbow Programming's current programming
partnerships will increasingly be met by internally generated funds, although
certain of such partnerships will at least in the near future rely to some
extent upon their partners (including Rainbow Programming) for certain cash
needs. The partners' contributions may be supplemented through the sale of
additional equity interests in, or through the incurrence of indebtedness by,
such programming businesses.
On July 11, 1994, Rainbow Programming entered into a $105 million credit
facility with Toronto-Dominion (Texas), as agent, and a group of banks. The
proceeds of the loan plus $76.5 million of equity from the Company were used to
purchase Liberty Media's 50% interest in AMCC giving Rainbow Programming a 75%
ownership interest in AMCC. The credit facility is payable in full at maturity
on December 31, 1995 and bears interest at varying rates based upon the banks'
Base Rate or Eurodollar Rate, as defined in the credit agreement. Repayment of
the loan is anticipated to be made by Rainbow Programming from one or a
combination of the following: (i) internally generated funds; (ii) refinancing
the existing $60 million credit agreement of AMCC; (iii) the sale of equity
interests in the programming businesses; and (iv) advances from the Restricted
Group. The loan is secured by a pledge of the Company's stock in Rainbow
Programming and is guaranteed by the subsidiaries of Rainbow Programming.
(25)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
Part II. Other Information
Item 1. Legal Proceedings
The Company is party to various lawsuits, some involving substantial
amounts. Management does not believe that such lawsuits will have a
material adverse impact on the financial position of the Company.
Item 4. Submission of Matters to a Vote of Security-Holders.
The Company's Annual Meeting of Shareholders was held on June 14,
1994.
The following matters were voted upon at the company's Annual Meeting
of Shareholders, indicating the number of votes cast for and against
as well as the number of abstentions (there were no votes withheld or
broker non-votes on any matter):
ELECTION OF DIRECTORS:
Class A Directors:
Charles D. Ferris: For: 8,534,831
Against: 26,551
Richard H. Hochman: For: 8,535,872
Against: 25,510
Victor Oristano: For: 8,535,372
Against: 26,010
A. Jerrold Perenchio For: 8,535,831
Against: 25,551
Class B Directors: For: 123,730,320
Against: 0
Each nominee for election by the Class B common stockholders
received the same vote on each proxy.
(26)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
AUTHORIZE AND APPROVE THE AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION PERMITTING THE DISTRIBUTION OF CAPITAL STOCK OF
A SUBSIDIARY OF THE COMPANY WITH VOTING RIGHTS PROPORTIONATE TO
THOSE OF THE COMPANY'S CLASS A AND CLASS B COMMON STOCK:
Class A Common Stock:
For: 6,099,040
Against: 853,885
Abstain: 11,650
Class B Common Stock:
For: 123,730,320
Against: 0
Abstain: 0
AUTHORIZE AND APPROVE THE AMENDMENT TO THE COMPANY'S AMENDED AND
RESTATED EMPLOYEE STOCK PLAN PERMITTING THE EXERCISE OF STOCK
OPTIONS GRANTED UNDER SUCH PLAN SEPARATELY FROM THE EXERCISE OF
STOCK APPRECIATION RIGHTS GRANTED IN CONJUNCTION THEREWITH:
Class A Common Stock:
For: 7,994,022
Against: 278,494
Abstain: 15,177
Class B Common Stock:
For: 123,730,320
Against: 0
Abstain: 0
AUTHORIZE AND APPROVE THE AMENDMENT TO THE COMPANY'S AMENDED AND
RESTATED EMPLOYEE STOCK PLAN PERMITTING THE EXTENSION OF THE TEN
YEAR TERM OF AN OPTION GRANTED UNDER THE PLAN IN THE EVENT OF THE
DEATH OF AN OPTION HOLDER:
Class A Common Stock:
For: 7,984,047
Against: 289,571
Abstain: 14,075
Class B Common Stock:
For: 123,730,320
Against: 0
Abstain: 0
(27)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
RATIFICATION AND APPROVAL OF KPMG PEAT MARWICK
Class A Common Stock:
For: 8,554,070
Against: 1,935
Abstain: 5,377
Class B Common Stock
For: 123,730,320
Against: 0
Abstain: 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The index to exhibits is on page 29.
The exhibits and schedules to Exhibits 10.62, 10.63, 10.64 and
10.65 have been omitted. The Company will file any such exhibit
or schedule with the Commission upon request.
(b) The Company has not filed any Current Reports on Form 8-K with
the Commission during the quarter for which this report is filed.
(28)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. DESCRIPTION NO.
- - ------- ----------- ----
10.58 Loan Agreement, dated as of June 30, 1994 among Rainbow
Programming Holdings, Inc., the Guarantors as defined
therein, Toronto-Dominion Bank, the other banks party
thereto and Toronto-Dominion (Texas), Inc., as Agent.
10.59 Acquisition Agreement and Plan of Merger and Reorganization,
dated as of June 14, 1994, among Cablevision of Boston
Limited Partnership, Cablevision of Boston, Inc.,
Charles F. Dolan, Cablevision Systems Boston Corporation,
Cablevision Systems Corporation, COB, Inc., Cablevision
Systems Services Corporation and Cablevision Finance
Limited Partnership.
10.60 Credit Agreement, dated as of June 15, 1994, among
Cablevision of Framingham, Inc., the several lenders parties
thereto, The Chase Manhattan Bank, N.A., as Agent and CIBC
Inc., as Co-Agent.
10.61 Amendment No. 1, dated as of August 8, 1994, to the Credit
Agreement, dated as of June 15, 1994, among Cablevision of
Framingham, Inc., the several lenders parties thereto, the
Chase Manhattan Bank, N.A., as Agent and CIBC, Inc., as
Co-Agent.
10.62 Asset Purchase Agreement, dated as of October 26, 1993,
between Monmouth Cablevision Associates and Cablevision MFR,
Inc. as amended by Amendment No. 1 thereto, dated as of
April 6, 1994 and Amendment No. 2 thereto, dated as of
June 3, 1994 (restated)
10.63 Asset Purchase Agreement, dated as of October 26, 1993,
between Riverview Cablevision Associates, Limited
Partnership, and Cablevision MFR, Inc., as amended by
Amendment No. 1 thereto, dated as of April 6, 1994 and
Amendment No. 2 thereto, dated as of June 3, 1994 (restated)
10.64 Asset Purchase Agreement, dated as of October 26, 1993,
between Framingham Cablevision Associates, Limited
Partnership, and Cablevision MFR, Inc., as amended and
assigned to Cablevision Framingham Holdings, Inc. by
Amendment No. 1 thereto, dated as of April 6, 1994, and as
further amended by Amendment No. 2 thereto, dated as of
June 3, 1994 (restated)
10.65 Credit Agreement, dated as of June 15, 1994 (the "Credit
Agreement"), by and among Cablevision MFR, Inc., Cablevision
of Riverview, Inc. and Cablevision of Monmouth, Inc., the
Lenders from time to time party thereto and NationsBank of
Texas, N.A., as Administrative Lender
(29)
<PAGE>
CABLEVISION SYSTEMS CORPORATION
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 thereunto duly authorized.
CABLEVISION SYSTEMS CORPORATION
Registrant
Date: August 10, 1994 /s/William J. Bell
------------------------ -----------------------------------------
By: William J. Bell, as Vice Chairman of
Cablevision Systems Corporation
Date: August 10, 1994 /s/Barry J. O'Leary
------------------------ -----------------------------------------
By: Barry J. O'Leary, as Senior Vice
President - Finance and Treasurer
and Principal Financial Officer of
Cablevision Systems Corporation
Date: August 10, 1994 /s/Jerry Shaw
------------------------ -----------------------------------------
By: Jerry Shaw, as Vice President and
Controller and Chief Accounting
Officer of Cablevision Systems
Corporation
(30)
<PAGE>
LOAN AGREEMENT
AMONG RAINBOW PROGRAMMING HOLDINGS, INC.,
THE GUARANTORS (as defined herein),
THE TORONTO-DOMINION BANK
THE OTHER BANKS PARTY HERETO
AND
TORONTO DOMINION (TEXAS), INC.
As agent for the Banks (as defined herein)
Index Page
----- ----
ARTICLE 1 Definitions................................................ 1
ARTICLE 2 The Term Loan.............................................. 15
Section 2.1 The Term Loan..................................... 15
Section 2.2 Manner of Borrowing and Disbursement.............. 16
Section 2.3 Interest.......................................... 17
Section 2.4 Prepayment........................................ 18
Section 2.5 Repayment......................................... 19
Section 2.6 Notes; Loan Accounts.............................. 19
Section 2.7 Manner of Payment................................. 19
Section 2.8 Reimbursement..................................... 20
Section 2.9 Application of Payments........................... 20
Section 2.10 Capital Adequacy.................................. 21
ARTICLE 3 Guarantee.................................................. 22
ARTICLE 4 Conditions Precedent....................................... 25
Section 4.1 Conditions Precedent to Initial
Advance......................................... 25
ARTICLE 5 - Representations and Warranties................................. 28
Section 5.1 Representations and Warranties.................... 28
Section 5.2 Survival of Representations and
Warranties, etc................................. 34
ARTICLE 6 General Covenants.......................................... 34
Section 6.1 Preservation of Existence and Similar
Matters......................................... 35
Section 6.2 Compliance with Applicable Law.................... 35
-i-
<PAGE>
Index
(Cont'd) Page
-------- ----
Section 6.3 Maintenance of Properties......................... 35
Section 6.4 Accounting Methods and Financial
Records......................................... 35
Section 6.5 Insurance......................................... 35
Section 6.6 Payment of Taxes and Claims....................... 36
Section 6.7 Visits and Inspections............................ 36
Section 6.8 Payment of Indebtedness........................... 36
Section 6.9 Use of Proceeds................................... 37
Section 6.10 ERISA............................................. 37
Section 6.11 Further Assurances................................ 37
Section 6.12 Broker's Claims................................... 37
Section 6.13 Indemnity......................................... 37
Section 6.14 Delivery of Certificates and Documents
in the Event of an Asset
Disposition..................................... 38
Section 6.15 Pledge of Acquired Interests and Non-
Cash Proceeds from Sales, Exchanges
or other Disposition of Assets.................. 38
Section 6.16 New Subsidiaries to be Guarantors................. 39
ARTICLE 7 Information Covenants.......................................40
Section 7.1 Quarterly Financial Statements and
Information..................................... 40
Section 7.2 Annual Financial Statements and
Information; Certificate of No
Default......................................... 40
Section 7.3 Performance Certificates.......................... 41
Section 7.4 Copies of Other Reports........................... 42
Section 7.5 Notice of Litigation and Other
Matters......................................... 42
ARTICLE 8 Negative Covenants......................................... 43
Section 8.1 Indebtedness of the Borrower...................... 43
Section 8.2 Investments....................................... 44
Section 8.3 Limitation on Liens............................... 45
Section 8.4 Amendment and Waiver.............................. 45
Section 8.5 Liquidation; Disposition or
Acquisition of Assets........................... 45
Section 8.6 Limitation on Guaranties.......................... 47
Section 8.7 Restricted Payments and Purchases................. 48
Section 8.8 Total RPHI Value to Total RPHI Debt
Ratio........................................... 48
Section 8.9 Affiliate Transactions............................ 48
Section 8.10 Real Estate....................................... 48
Section 8.11 ERISA Liabilities................................. 48
Section 8.12 Change in Business................................ 49
Section 8.13 Sales and Leasebacks.............................. 49
ARTICLE 9 Default.................................................... 49
-ii-
<PAGE>
Index
(Cont'd) Page
Section 9.1 Events of Default................................. 49
Section 9.2 Remedies.......................................... 52
ARTICLE 10 - The Agent..................................................... 53
Section 10.1 Appointment and Authorization..................... 53
Section 10.2 Delegation of Duties.............................. 53
Section 10.3 Interest Holders.................................. 53
Section 10.4 Consultation with Counsel......................... 53
Section 10.5 Documents......................................... 53
Section 10.6 Agent and Affiliates.............................. 53
Section 10.7 Responsibility of the Agent....................... 54
Section 10.8 Action by Agent................................... 54
Section 10.9 Notice of Default or Event of Default............. 54
Section 10.10 Responsibility Disclaimed......................... 55
Section 10.11 Indemnification................................... 55
Section 10.12 Credit Decision................................... 56
Section 10.13 Successor Agent................................... 56
ARTICLE 11 Change in Circumstances Affecting
Eurodollar Advances........................................ 57
Section 11.1 Eurodollar Basis Determination
Inadequate or Unfair............................ 57
Section 11.2 Illegality........................................ 57
Section 11.3 Increased Costs................................... 58
Section 11.4 Effect On Other Advances.......................... 59
ARTICLE 12 Miscellaneous.............................................. 59
Section 12.1 Notices........................................... 59
Section 12.2 Expenses.......................................... 60
Section 12.3 Waivers........................................... 61
Section 12.4 Set-Off........................................... 61
Section 12.5 Assignment........................................ 62
Section 12.6 Counterparts...................................... 64
SECTION 12.7 GOVERNING LAW..................................... 64
Section 12.8 Severability...................................... 64
Section 12.9 Headings.......................................... 64
Section 12.10 Interest.......................................... 64
Section 12.11 Entire Agreement.................................. 65
Section 12.12 Amendment and Waiver.............................. 65
Section 12.13 Other Relationships............................... 65
Section 12.14 Confidentiality................................... 65
Section 12.15 Liability of General Partners and
Other Persons................................... 65
ARTICLE 13 Waiver of Jury Trial....................................... 66
-iii-
<PAGE>
Exhibits
Exhibit A - Form of Assignment and Assumption Agreement
Exhibit B - Form of Borrower Pledge Agreement
Exhibit C - Form of Interest Rate Confirmation
Exhibit D - Form of Parent Pledge Agreement
Exhibit E - Form of Request for Advance
Exhibit F - Form of Subordination Agreement
Exhibit G - Form of Subordination of Management Fees
Agreement
Exhibit H - Form of Term Note
Exhibit I - Form of Borrower's Loan Certificate
Exhibit J - Form of Parent Company's Loan Certificate
Exhibit K - Form of Guarantor Loan Certificate
Exhibit L - Form of Parent Company Availability
Certificate
Schedules
Schedule 1 - Guarantors
Schedule 2 - Operating Entities
Schedule 3 - Subsidiaries
Schedule 4 - Trademarks
Schedule 5.1 - Liabilities
Schedule 5.2 - Litigation
Schedule 6 - Trademarks Subject to Challenge
Schedule 7 - Name Changes
Schedule 8 - Indebtedness for Money Borrowed
Schedule 9 Permitted Investments
Schedule 10 - Guaranties
Schedule 11 - Affiliate Transactions
-i-
<PAGE>
LOAN AGREEMENT
RAINBOW PROGRAMMING HOLDINGS, INC., THE GUARANTORS,
THE TORONTO-DOMINION BANK
THE OTHER BANKS PARTY HERETO
and
TORONTO DOMINION (TEXAS), INC.,
as agent for the Banks,
agree as follows as of the 30th day of June, 1994:
ARTICLE 1 DEFINITIONS.
For the purposes of this Agreement:
"ADVANCE" or "ADVANCES" shall mean amounts advanced by the Banks to
the Borrower pursuant to Article 2 hereof on the occasion of any borrowing.
"AFFILIATE" shall mean any Person (other than a Person whose sole
relationship with the Borrower is as an employee) directly or indirectly
controlling, controlled by, or under common control with the Borrower, and, to
the extent not otherwise so deemed an Affiliate, Courtroom Television Network
and each Operating Entity shall be deemed an Affiliate of the Borrower. For
purposes of this definition, "control" when used with respect to any Person
includes the power to direct or cause the direction of the management and
policies of such Person, whether by control or otherwise.
"AGENT" shall mean Toronto Dominion (Texas), Inc., a Texas corporation,
acting as Agent for the Banks.
"AGENT'S OFFICE" shall mean the office of the Agent located at the
address set forth in Section 12.1 hereof, or such other office as may be
designated pursuant to the provisions of Section 12.1 hereof.
"AGREEMENT" shall mean this Loan Agreement, as amended or supplemented
from time to time.
"AGREEMENT DATE" shall mean the date as of which this Agreement is
dated.
"AMC" shall mean American Movie Classics Company, a New York general
partnership.
"AMC HOLDING CORPORATION" shall mean American Movie Classics Holding
Corporation, a New York corporation and wholly owned Subsidiary of the Borrower.
<PAGE>
"AMC INTEREST" shall mean (i) the 49.9 percent ownership interest in AMC
and (ii) the option to acquire the remaining 0.1% ownership interest in AMC.
"AMC INTEREST ASSIGNMENT AGREEMENT" shall mean, collectively, the
agreements to be entered into by AMC Holding Corporation, the Parent Company,
LMCC and Rainbow Programming Enterprises pursuant to which AMC Holding
Corporation will purchase the AMC Interest and the Parent Company will purchase
LMCC's rights under the Consulting Agreement.
"AMC LOAN AGREEMENT" shall mean that certain Loan Agreement, dated as of
June 26, 1992, by and among AMC, The Toronto-Dominion Bank and Toronto Dominion
(Texas), Inc., as agent, as amended, modified or supplemented from time to
time.
"ANNUALIZED OPERATING CASH FLOW" of any Person shall mean the product of
(a) such Person's Operating Cash Flow for the most recently completed three
calendar months, TIMES (b) four (4).
"APPLICABLE LAW" shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, including, without limitation,
all orders and decrees of all courts and arbitrators in proceedings or actions
to which the Person in question is a party or by which it is bound.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall mean each Assignment and
Assumption Agreement in substantially the form of EXHIBIT A attached hereto,
pursuant to which each Bank may, subject to Section 12.5 hereof, sell a portion
of its Term Loans or Commitment.
"AUTHORIZED SIGNATORY" shall mean, with respect to any Person, such
senior personnel of such Person as may be duly authorized and designated in
writing by the Person to execute documents, agreements, and instruments on
behalf of the Person.
"AVAILABLE CASH FLOW" means, with respect to the Borrower or any
Subsidiary, (i) cash distributions to the Borrower from any Subsidiary or to the
Borrower or any Subsidiary from any Operating Entity, (ii) cash contributions to
the Borrower from the Parent Company or (iii) net cash proceeds of any
disposition of a partnership or other equity interest held by the Borrower or
any Subsidiary in any Subsidiary or Operating Entity (other than any such
interest in AMC).
"BANKS" shall mean those banks whose names are set forth on the
signature pages hereof under the heading "Banks" and any assignees of the Banks
which hereafter become parties hereto pursuant to and in accordance with Section
12.5 hereof; and "BANK" shall mean any one of the foregoing Banks.
-2-
<PAGE>
"BASE RATE" shall mean, as of any date, a fluctuating interest rate per
annum equal to the sum of (a) the higher of (i) the Prime Rate, and (ii) the sum
of (A) the Federal Funds Rate, PLUS (B) five-eighths percent (5/8%), PLUS
(b)(1) from the date hereof through December 31, 1994, one and one-fourth
percent (1-1/4%) and (2) from January 1, 1995 and thereafter, one and
three-fourths percent (1-3/4%). The Base Rate shall be adjusted automatically
as of the opening of business on the effective date of each change in the Prime
Rate or the Federal Funds Rate, as the case may be.
"BASE RATE ADVANCE" shall mean an Advance which the Borrower requests to
be made as a Base Rate Advance or which is reborrowed as a Base Rate Advance in
accordance with the provisions of Section 2.2 hereof, and which shall be in a
principal amount of at least $500,000 or an integral multiple of $250,000 in
excess thereof, except for a Base Rate Advance which is in an amount equal to
the unused amount of the Commitment, which Advance may be in such amount.
"BORROWER" shall mean Rainbow Programming Holdings, Inc., a New York
corporation.
"BORROWER PLEDGE AGREEMENT" shall mean that certain Pledge Agreement to
be executed and delivered by the Borrower in accordance with subsection 6.15(a)
hereof, which agreement shall be substantially in the form of EXHIBIT B
attached hereto.
"BUSINESS" shall mean the creation, acquisition, use, production,
exhibition, distribution or development of (or investment in) programming and
programming services (including, without limitation, any "home-shopping"
programming services), the provision of management, uplink and transmission
facilities and services (including without limitation direct broadcast satellite
transmission and services), the distribution and sale of advertisements and
advertising services and related businesses with respect to any of the above.
"BUSINESS DAY" shall mean a day on which banks are not authorized or
required to be closed and foreign exchange markets are open for the transaction
of business required for this Agreement in London, England, and New York, New
York, as relevant to the determination to be made or the action to be taken.
"CAPITAL EXPENDITURES" shall mean expenditures for the purchase of
assets of long-term use which are capitalized in accordance with GAAP; and shall
not include expenditures for and under Programming Rights Agreements.
"CAPITALIZED LEASE OBLIGATION" shall mean that portion of any obligation
of a Person as lessee under a lease which at the time would be required to be
capitalized on the balance sheet of such lessee in accordance with GAAP.
-3-
<PAGE>
"CLOSING DATE" shall mean the date as of which all of the conditions set
forth in Section 4.1 hereof shall be satisfied.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COMMITMENT" shall mean the several obligations of the Banks to advance
the aggregate sum of up to $105,000,000 to the Borrower pursuant to the terms
hereof, as such obligations may be reduced from time to time pursuant to the
terms hereof.
"COMMITMENT RATIOS" shall mean the percentages in which the Banks are
severally bound to satisfy the Commitment to make Advances to the Borrower,
which as of the Agreement Date are as set forth below:
<TABLE>
<CAPTION>
Dollar
Bank Percentage Commitment
- - --------------------------- ------------- -------------
<S> <C> <C>
The Toronto-Dominion Bank 47.619047619% $50,000,000
CIBC Inc. 23.809523810% $25,000,000
Shawmut Bank, National 19.047619048% $20,000,000
Association
The Bank of Nova Scotia 9.523809524% $10,000,000
TOTAL: 100% $105,000,000
</TABLE>
"CONSULTING AGREEMENT" shall mean that certain Consulting Agreement
dated as of January 1, 1987 between LMCC, as assignee of TCI Networks of
Delaware, Inc., and AMC, which is being purchased by the Parent Company pursuant
to the AMC Interest Assignment Agreement.
"DEFAULT" shall mean any Event of Default, and any other event specified
in Section 9.1 hereof which with any passage of time or giving of notice (or
both) would constitute such event an Event of Default.
"DEFAULT RATE" shall mean a simple per annum interest rate equal to the
sum of the otherwise applicable Interest Rate Basis hereunder plus two percent
(2%).
"DOLAN" shall mean Charles F. Dolan, his spouse, his descendants, or any
spouse of any such descendant and trusts for the benefit of, inter alia, him,
his spouse, his descendants, or any spouse of any such descendants, and any
estate, testamentary trust, or executor, administrator, conservator or legal or
personal representative of any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as in effect on the Agreement Date and as such Act may be amended thereafter
from time to time.
-4-
<PAGE>
"ERISA AFFILIATE" shall mean (a) any corporation which is a member of
the same controlled group of corporations (within the meaning of Code Section
414(b)) as is the Borrower, (b) any other trade or business (whether or not
incorporated) under common control (within the meaning of Code Section 414(c))
with the Borrower, (c) any other corporation, partnership or other organization
which is a member of an affiliated service group (within the meaning of Code
Section 414(m)) with the Borrower, or (d) any other entity required to be
aggregated with the Borrower pursuant to regulations under Code Section 414(o).
"EURODOLLAR ADVANCE" shall mean an Advance which the Borrower requests
to be made as a Eurodollar Advance or which is reborrowed as a Eurodollar
Advance in accordance with the provisions of Section 2.2 hereof, and which shall
be in a principal amount of at least $500,000 or an integral multiple of
$250,000 in excess thereof.
"EURODOLLAR BASIS" shall mean a simple per annum interest rate equal to
the sum of (a) the quotient of (i) the Eurodollar Rate divided by (ii) one minus
the Eurodollar Reserve Percentage, stated as a decimal, PLUS (b)(1) from the
date hereof through December 31, 1994, two and one-fourth percent (2-1/4%) and
(2) from January 1, 1995 and thereafter, two and three-fourths percent (2-3/4%).
The Eurodollar Basis shall be rounded upward to the nearest one-hundredth of one
percent (1/100%) and shall apply to Interest Periods of one (1), two (2), three
(3) and six (6) months, and, subject to the last sentence of this definition,
twelve (12) months, and, once determined, shall be subject to Article 10 hereof
and shall remain unchanged during the applicable Interest Period, except for
changes to reflect adjustments in the Eurodollar Reserve Percentage. The
Borrower may not elect an Interest Period for a Eurodollar Advance in excess of
six (6) months unless the Agent has notified the Borrower (i) that each of the
Banks has available to it funds for such Bank's share of the proposed Advance
which are not required for other purposes, and (ii) that such funds are
available to each Bank at a rate (exclusive of reserves and other adjustments)
at or below the Eurodollar Rate for such proposed Advance and Interest Period,
and (iii) that each Bank has, in its sole discretion, agreed to fund such
Advance.
"EURODOLLAR RATE" shall mean, for any Interest Period, the average
(rounded upward to the nearest one-sixteenth (1/16) of one percent) of the
interest rates per annum at which deposits in United States Dollars for such
Interest Period are offered to the Agent in the New York eurodollar interbank
borrowing market at approximately 11:00 a.m. (Eastern time) two (2) Business
Days before the first day of such Interest Period, in an amount approximately
equal to the principal amount of, and for a length of time approximately equal
to the Interest Period for, the Eurodollar Advance sought by the Borrower.
-5-
<PAGE>
"EURODOLLAR RESERVE PERCENTAGE" shall mean the percentage which is in
effect from time to time under Regulation D of the Board of Governors of the
Federal Reserve System, as such regulation may be amended from time to time, as
the actual reserve requirement applicable with respect to Eurocurrency
Liabilities (as that term is defined in Regulation D), to the extent any Bank
has any Eurocurrency Liabilities subject to such reserve requirement at that
time. The Eurodollar Basis for any Eurodollar Advance shall be adjusted as of
the effective date of any change in the Eurodollar Reserve Percentage.
"EVENT OF DEFAULT" shall mean any of the events specified in Section 9.1
hereof, provided that any requirement for notice or lapse of time, or both, has
been satisfied.
"EXCESS FUNDING GUARANTOR" shall have the meaning ascribed thereto in
Article 3 of this Agreement.
"EXCESS PAYMENT" shall have the meaning ascribed thereto in Article 3 of
this Agreement.
"FEDERAL FUNDS RATE" shall mean, as of any date, the weighted average of
the rates on overnight federal funds transactions with the 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 New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three federal funds brokers of
recognized standing selected by the Agent.
"FEES AGREEMENTS" shall mean, collectively, (i) that certain agreement
of even date herewith by and among the Borrower and the Banks setting forth the
applicable bank fees relating to this Agreement, and (ii) that certain agreement
of even date herewith by and between the Agent and the Borrower setting forth
the applicable agent fees relating to this Agreement.
"GAAP" shall mean generally accepted accounting principles, as in effect
from time to time, consistently applied.
"GUARANTORS" shall mean the Persons set forth on SCHEDULE 1 attached
hereto and each new Subsidiary of the Borrower.
"GUARANTY" or "GUARANTEED," as applied to an obligation (each a
"primary obligation"), shall mean and include (a) any guaranty, direct or
indirect, in any manner, of any part or all of such primary obligation, and (b)
any agreement, direct or indirect, contingent or otherwise, the practical effect
of which is to assure in any way the payment or performance (or payment of
damages in the event of non-performance) of any part or all of such primary
obligation, including, without limiting the foregoing, any reimbursement
obligations as to amounts drawn down by beneficiaries
-6-
<PAGE>
of outstanding letters of credit, and any obligation of such Person (the
"primary obligor"), whether or not contingent, (i) to purchase any such primary
obligation or any property or asset constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment of
such primary obligation or (2) to maintain working capital, equity capital or
the net worth, cash flow, solvency or other balance sheet or income statement
condition of any other Person, (iii) to purchase property, assets, securities or
services primarily for the purpose of assuring the owner or holder of any
primary obligation of the ability of the primary obligor with respect to such
primary obligation to make payment thereof or (iv) otherwise to assure or hold
harmless the owner or holder of such primary obligation against loss in respect
thereof.
"INDEBTEDNESS" shall mean, with respect to any Person, (a) (i) all items
(EXCEPT items of shareholders' and partners' equity or capital stock or
surplus or general contingency or deferred tax reserves) which in accordance
with GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Person and (ii) the Subordinated
Indebtedness, (b) all direct or indirect obligations secured by any Lien to
which any property or asset owned by such Person is subject, whether or not the
obligation secured thereby shall have been assumed, (c) to the extent not
otherwise included, all Capitalized Lease Obligations of such Person, and (d)
all reimbursement obligations with respect to outstanding letters of credit.
"INDEBTEDNESS FOR MONEY BORROWED" shall mean, with respect to any
Person, all money borrowed by such Person and Indebtedness represented by notes
payable by such Person and drafts accepted representing extensions of credit to
such Person, all obligations of such Person evidenced by bonds, debentures,
notes, or other similar instruments, all Indebtedness of such Person upon which
interest charges are customarily paid, and all Indebtedness of such Person
issued or assumed as full or partial payment for property or services, whether
or not any such notes, drafts, obligations, or Indebtedness represent
Indebtedness for money borrowed. For purposes of this definition, interest
which is accrued but not paid on the original due date or within any applicable
cure or grace period as provided by the underlying contract for such interest
shall be deemed Indebtedness for Money Borrowed.
"INTEREST HEDGE AGREEMENT" shall mean any interest swap agreement,
interest rate cap agreement, interest rate collar agreement, or any similar
arrangement designed to hedge the risk of variable interest rate volatility,
arising at any time between the Borrower, on the one hand, and the Agent, one or
more of the Banks, or any other Person, on the other hand, as such agreement or
arrangement may be modified, supplemented, amended, and in effect from time to
time.
-7-
<PAGE>
"INTEREST PERIOD" shall mean, (a) in connection with any Base Rate
Advance, the period beginning on the date such Advance is made and ending on the
last day of the calendar quarter in which such Advance is made; PROVIDED,
HOWEVER, that if a Base Rate Advance is made on the last day of any calendar
quarter, it shall have an Interest Period ending on, and its Payment Date shall
be, the last day of the following calendar quarter; and (b) in connection with
any Eurodollar Advance, the term of such Advance selected by the Borrower or
otherwise determined in accordance with this Agreement. Notwithstanding the
foregoing, however, (i) any applicable Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next succeeding
Business Day unless, with respect to Eurodollar Advances only, such Business Day
falls in another calendar month, in which case such Interest Period shall end on
the next preceding Business Day; (ii) with respect to Eurodollar Advances only,
any applicable Interest Period which begins on a day for which there is no
numerically corresponding day in the calendar month during which such Interest
Period is to end shall (subject to clause (i) above) end on the last day of such
calendar month; and (iii) no Interest Period shall extend beyond the Maturity
Date or such earlier date as would interfere with the repayment obligations of
the Borrower under Section 2.5 hereof. Interest shall be due and payable with
respect to any Advance as provided in Section 2.3 hereof.
"INTEREST RATE BASIS" shall mean the Base Rate or the Eurodollar Basis,
as appropriate.
"INTEREST RATE CONFIRMATION" shall mean any certificate signed by an
Authorized Signatory of the Borrower with respect to any Advance after the
initial Advance under this Agreement, which shall specify the date of the
Advance which shall be a Business Day, the amount of the Advance, the type of
Advance, and with respect to a "Eurodollar Advance", the Interest Period
selected by the Borrower, which certificate shall be substantially in the form
of EXHIBIT C attached hereto.
"LICENSES" shall mean any rights, whether bound upon any agreement,
statute, order, ordinance, or otherwise, granted by any governmental authority
to Borrower or its Subsidiaries to operate their respective businesses, together
with any amendment, modification or replacement with respect thereto.
"LIEN" shall mean, with respect to any property, any mortgage, lien,
pledge, assignment, charge, security interest, title retention agreement, levy,
execution, seizure, attachment, garnishment or other encumbrance of any kind in
respect of such property, whether or not choate, vested, or perfected.
"LMCC" shall mean LMC Classics, Inc., a Nevada corporation.
"LOAN DOCUMENTS" shall mean this Agreement, the Term Notes, the Fees
Agreements, the Parent Pledge Agreement, the Subordination
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of Fees Agreement, the Subordination Agreement and all Interest Hedge Agreements
in respect of the Term Loans between the Borrower and the Agent, the Banks, or
any of them.
"MAJORITY BANKS" shall mean, at any time, (a) if there are no Term Loans
outstanding, Banks the total of whose Commitment Ratios equals or exceeds sixty
percent (60%), or (b) if there are Term Loans outstanding, Banks the total of
whose Term Loans outstanding equals or exceeds sixty percent (60%) of the total
principal amount of the Term Loans outstanding hereunder.
"MANAGEMENT AGREEMENT" shall mean, collectively, the Management
Agreement, dated as of April 20, 1989, between the Parent Company and Rainbow
Program Enterprises, a New York limited partnership, and the Management
Agreement, dated as of April 20, 1989 between the Parent Company and the
Borrower, in each case as modified, amended or supplemented from time to time.
"MATERIALLY ADVERSE EFFECT" shall mean any materially adverse effect
upon the business, assets, financial condition or results of operations of the
Borrower, on a combined basis with its Subsidiaries and taking into account the
interests of the Borrower and the Subsidiaries in the Operating Entities, taken
as a whole on a consolidated basis in accordance with GAAP, or upon the ability
of the Borrower and its Subsidiaries, taken as a whole, to perform their
Obligations under this Agreement or any other Loan Document.
"MATURITY DATE" shall mean December 31, 1995 or such earlier date as
payment of the Term Loan shall be due (whether by acceleration or otherwise).
"MSO AGREEMENT" shall mean any agreement between the Borrower or any of
its Subsidiaries or any of the Operating Entities and a cable television
operator covering 1,000,000 or more subscribers pursuant to which such operator
agrees, among other things, to distribute and exhibit to its subscribers
programming of the Borrower or such Subsidiary.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"NET INCOME" shall mean, with respect to any Person for any period, the
aggregate amount of net income of such Person, after taxes (unless such Person
is a partnership), for such period as determined in accordance with GAAP.
"OBLIGATIONS" shall mean (a) all payment and performance obligations of
the Borrower and all other obligors to the Banks and the Agent under this
Agreement and the other Loan Documents, as they may be amended from time to
time, or as a result of making the Term Loan, including, without limitation,
obligations of the Borrower under Interest Hedge Agreements (only to the extent
that such Interest Hedge Agreements are permitted pursuant to Section
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8.1(c)) with the Agent, the Banks, or any of them and (b) the obligation
pursuant to Section 6.13 to pay an amount equal to the amount of any and all
damages which the Banks and the Agent, or any of them, may suffer by reason of a
breach by the Borrower or any other obligor of any obligation, covenant, or
undertaking with respect to this Agreement or any other Loan Document.
"OPERATING ADVANCES" shall mean all intercompany charges incurred by the
Borrower, or any of its Subsidiaries, to the Parent Company in the ordinary
course of their respective Business as and consistent with past practices.
"OPERATING CASH FLOW" shall mean, with respect to AMC in respect of any
period, (a) the sum of (x) the Net Income of AMC and (y) interest expense,
depreciation, amortization (other than Programming Rights Amortization), and
other non-cash expenses (other than Programming Rights Amortization) deducted in
determining the Net Income of AMC, PLUS (b) operating expenses for the Romance
Classics Channel in an aggregate amount not to exceed $5,000,000 per year during
such period.
"OPERATING ENTITIES" shall mean the partnerships and corporations listed
on SCHEDULE 2 attached hereto and any additional partnerships and corporations
that may be entered into or formed by the Borrower or its Subsidiaries from time
to time; PROVIDED, HOWEVER, that the term Operating Entity shall not include
Courtroom Television Network.
"PARENT COMPANY" shall mean Cablevision Systems Corporation, a Delaware
corporation.
"PARENT COMPANY LOAN AGREEMENT" shall mean that certain Third Amended
and Restated Credit Agreement, dated as of June 24, 1992, as amended, by and
among the Parent Company, Toronto Dominion (Texas), Inc., as agent, Bank of
Montreal, Chicago Branch, The Bank of New York, The Bank of Nova Scotia and The
Canadian Imperial Bank of Commerce, as co-agents, and certain lenders, as
further amended, restated, modified or supplemented from time to time.
"PARENT PLEDGE AGREEMENT" shall mean that certain Stock Pledge
Agreement, dated as of the Closing Date, between the Parent Company and the
Agent, pursuant to which the Parent Company has pledged to the Agent on behalf
of the Banks all of the issued and outstanding stock of the Borrower to secure
the Obligations and in substantially the form of EXHIBIT D attached hereto.
"PAYMENT DATE" shall mean the last day of each Interest Period.
"PERMITTED LIENS" shall mean, as applied to any Person:
(a) Any Lien in favor of the Agent or the Banks given to secure
the Obligations;
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(b) (i) Liens on real estate for real estate taxes not yet
delinquent and (ii) Liens for taxes, assessments, judgments, governmental
charges or levies, or claims the non-payment of which is being contested in good
faith by appropriate proceedings and for which adequate reserves have been set
aside on such Person's books, but only so long as no foreclosure, distraint,
sale, or similar proceedings have been commenced with respect thereto and remain
unstayed for a period of thirty (30) days after their commencement;
(c) Liens of carriers, warehousemen, mechanics, laborers, and
materialmen incurred in the ordinary course of business for sums not yet due or
being contested in good faith, if such reserve or appropriate provision, if any,
as shall be required by GAAP shall have been made therefor;
(d) Liens incurred in the ordinary course of business in
connection with worker's compensation and unemployment insurance;
(e) Restrictions on the transfer of assets imposed by any
agreement, or by any federal, state or local statute, regulation or ordinance
applicable to such Person;
(f) Easements, rights-of-way, restrictions, and other similar
encumbrances on the use of real property which do not interfere with the
ordinary conduct of the business of such Person, or Liens incidental to the
conduct of the business of such Person or to the ownership of its properties
which were not incurred in connection with Indebtedness or other extensions of
credit and which do not in the aggregate materially detract from the value of
such properties or materially impair their use in the operation of the business
of such Person;
(g) Purchase money mortgages or security interests, conditional
sale arrangements, other similar security interests or capital leases, on any
property or assets hereinafter acquired by the Borrower (hereinafter referred to
individually as a "Purchase Money Security Interest"); PROVIDED, HOWEVER,
that:
(i) the transaction in which any Purchase Money Security
Interest is proposed to be created is not otherwise prohibited by this
Agreement;
(ii) any Purchase Money Security Interest shall attach only
to the property or asset acquired in such transaction and shall not extend
to or cover any other assets or properties of the Borrower;
(iii) the Indebtedness secured or covered by any Purchase
Money Security Interest shall not exceed the cost of the property or asset
acquired and shall not be renewed or extended by the Borrower; and
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(iv) the aggregate outstanding amount of all Indebtedness
secured by Purchase Money Security Interests shall not at any time exceed
an amount equal to $5,000,000.
"PERSON" shall mean an individual, corporation, partnership, trust, or
unincorporated organization, or a government or any agency or political
subdivision thereof.
"PLAN" shall mean an employee benefit plan within the meaning of Section
3(3) of ERISA maintained by or contributed to by the Borrower or any ERISA
Affiliate.
"PRIME RATE" shall mean, at any time, the rate of interest adopted by
The Toronto-Dominion Bank, New York Branch, as its reference rate for the
determination of interest rates for loans of varying maturities in United States
dollars to United States residents of varying degrees of creditworthiness and
being quoted at such time by such bank as its "prime rate." The Prime Rate is
not necessarily the lowest rate of interest charged to borrowers of The
Toronto-Dominion Bank, New York Branch.
"PROGRAMMING RIGHTS AGREEMENTS" shall mean any agreement between the
Borrower or any of its Subsidiaries and any other Person for the right to use,
produce, exhibit or distribute programming.
"PROGRAMMING RIGHTS AMORTIZATION" shall mean the amortization of the
Borrower's and the Borrower's Subsidiaries' expenditures for the acquisition of
programming, which expenditures shall, at all times, be amortized in accordance
with GAAP.
"PRO RATA SHARE" shall have the meaning ascribed thereto in Article 3 of
this Agreement.
"REGULATORY CHANGE" shall mean, with respect to any Bank, any change on
or after the date of this Agreement in United States Federal, state or foreign
laws or regulations (including Regulation D of the Board of Governors of the
Federal Reserve System) or the adoption or making on or after such date of any
interpretations, directives or requests applying to a class of banks including
such Bank of or under any United States Federal or state, or any foreign, laws
or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"REPORTABLE EVENT" shall have the meaning set forth in Section 4043(b)
of ERISA.
"REQUEST FOR ADVANCE" shall mean any certificate signed by an Authorized
Signatory of the Borrower requesting the initial Advance hereunder which
certificate shall be in substantially the form of EXHIBIT E attached hereto.
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"RESTRICTED PAYMENT" shall mean (a) any direct or indirect distribution,
dividend, or other payment to any Person on account of any shares of capital
stock or other securities of, the Borrower, (b) any consulting or management
fees, or any interest thereon, payable by the Borrower or any of its
Subsidiaries to the Parent Company, or to any other Affiliate of the Borrower
and (c) any direct or indirect payment to any Person on account of the
Subordinated Indebtedness.
"RESTRICTED PURCHASE" shall mean any payment on account of the purchase,
redemption, or other acquisition or retirement of any partnership interest in,
or shares of capital stock or other securities of, the Borrower or any of its
Subsidiaries.
"SOLVENT" shall mean, with respect to the Borrower on any date, that on
such date the fair value of the assets of the Borrower (including, without
limitation, the direct or indirect interests of the Borrower in the equity of
its Subsidiaries and the Operating Entities) is greater than the amount of the
Indebtedness (excluding Subordinated Indebtedness and those Guaranties set forth
on Schedule 10 hereto as amended from time to time) of the Borrower.
"SUBORDINATED INDEBTEDNESS" shall mean Indebtedness the payment of which
is subordinated to the Obligations pursuant to the Subordination Agreement or
such other terms of subordination as shall be acceptable to the Agent and to the
Majority Banks.
"SUBORDINATION AGREEMENT" shall mean that certain Subordination
Agreement, dated as of the Closing Date, among the Parent Company, the Borrower,
the Borrower's Subsidiaries and the Agent, pursuant to which payment by the
Borrower or any of its Subsidiaries of the Subordinated Indebtedness has been
subordinated to the Obligations as provided therein, which Agreement is
substantially in the form of EXHIBIT F attached hereto.
"SUBORDINATION OF FEES AGREEMENT" shall mean that certain Subordination
of Management Fees Agreement, dated as of the Closing Date, among the Parent
Company, Rainbow Program Enterprises, the Borrower and the Agent, pursuant to
which payment of management fees under the Management Agreement has been
subordinated to the Obligations as provided therein, which Agreement is
substantially in the form of EXHIBIT G attached hereto.
"SUBSIDIARY" shall mean, as applied to any Person, (a) any corporation
of which fifty percent (50%) or more of the outstanding stock (other than
directors' qualifying shares) having ordinary voting power to elect a majority
of its board of directors, regardless of the existence at the time of a right of
the holders of any class or classes of securities of such corporation to
exercise such voting power by reason of the happening of any contingency, or any
partnership of which fifty percent (50%) or more of the outstanding partnership
interests is at the time owned
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by such Person, or by one or more Subsidiaries of such Person, or by such Person
and one or more Subsidiaries of such Person, and (b) any other entity which is
controlled or capable of being controlled by such Person, or by one or more
Subsidiaries of such Person, or by such Person and one or more Subsidiaries of
such Person PROVIDED that, in the case of the Borrower and its Subsidiaries,
the term "Subsidiary" shall not include the Operating Entities.
"TERM LOAN" shall mean the amount advanced by the Banks to the Borrower
under the Commitment, not to exceed the Commitment, and evidenced by the Term
Notes.
"TERM NOTES" shall mean those certain promissory notes in the aggregate
principal amount of $105,000,000, one such note issued to each of the Banks by
the Borrower, each one in substantially the form of EXHIBIT H attached hereto,
and any extensions, renewals or amendments to any of the foregoing.
"TOTAL AMC DEBT" shall mean, as of any date, (a) all outstanding
Indebtedness for Money Borrowed of AMC and its Subsidiaries, on a consolidated
basis as of such date, (b) all obligations Guaranteed by AMC or any of its
Subsidiaries with respect to Indebtedness for Money Borrowed, and (c) all
Capitalized Lease Obligations of AMC and its Subsidiaries, on a consolidated
basis as of such date.
"TOTAL AMC ENTERPRISE VALUE" shall mean, as of any date, the product of
(a) Annualized Operating Cash Flow of AMC and its Subsidiaries, on a
consolidated basis as of such date, MULTIPLIED BY (b)(i) from the date hereof
through December 31, 1994, twelve (12) or (ii) from January 1, 1995 and
thereafter, eleven (11).
"TOTAL RPHI DEBT" shall mean, as of any date, (a) all outstanding
Indebtedness for Money Borrowed (other than Subordinated Indebtedness) of the
Borrower and its Subsidiaries on a consolidated basis, (b) all obligations
Guaranteed by the Borrower and its Subsidiaries in respect of Indebtedness for
Money Borrowed, and (c) all Capitalized Lease Obligations of the Borrower and
its Subsidiaries on a consolidated basis (excluding Subordinated Indebtedness,
Operating Advances and those Guaranties set forth on Schedule 10 hereto as
amended from time to time).
"TOTAL RPHI VALUE" shall mean, as of any date, the sum of (a)(i) Total
AMC Enterprise Value less Total AMC Debt multiplied by (ii) the Borrower's
direct and indirect ownership interest percentage in AMC, expressed as a
decimal, PLUS, (b) except in the case of bankruptcy or other similar
proceeding or event of the type described in Sections 9.1(g) or 9.1(h) hereof
with respect to Bravo Company, SportsChannel New England Partnership,
SportsChannel Associates, SportsChannel Chicago Associates, SportsChannel Prism
Associates or SportsChannel Philadelphia, $25,000,000.
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"TRADEMARKS" shall mean all registered trademarks and pending
applications for trademarks of the Borrower and its Subsidiaries which are more
fully described on SCHEDULE 4 attached hereto.
Each definition of an agreement in this Article 1 shall include such
agreement as modified, amended, or supplemented from time to time with the prior
written consent of the Majority Banks, except as provided in Section 12.12
hereof, and except where the context otherwise requires, definitions imparting
the singular shall include the plural and vice versa. Except where otherwise
specifically restricted, reference to a party to a Loan Document includes that
party and its successors and assigns. All terms used herein which are defined
in Article 9 of the Uniform Commercial Code in effect in the State of New York
on the date hereof and which are not otherwise defined herein shall have the
same meanings herein as set forth therein.
All accounting terms used herein without definition shall be used as
defined under GAAP. Unless otherwise expressly stated herein, all references to
financial information and results of the Borrower shall be determined on a
consolidated basis with the Borrower's Subsidiaries taking into account the
interests of the Borrower and the Borrower's Subsidiaries in the Operating
Entities.
ARTICLE 2 - THE TERM LOAN.
Section 2.1 THE TERM LOAN.
(a) TERM LOAN. The Banks agree, severally in accordance with
their respective Commitment Ratios and not jointly, upon the terms and subject
to the conditions of this Agreement, to lend to the Borrower, on the Closing
Date, an amount which in the aggregate does not exceed the Commitment. Subject
to the terms hereof, Advances under the Commitment may be repaid and then
reborrowed as provided in Sections 2.2(b)(ii), 2.2(c)(ii) and 2.2(d)(ii) hereof
so as to change the Interest Rate Bases or Interest Periods for Advances
outstanding, PROVIDED, HOWEVER, that there shall be no increase in the
principal amount of the Term Loan outstanding after the Closing Date.
(b) USE OF PROCEEDS. The Agent, the Banks, and the Borrower
agree that the proceeds of the Term Loan shall be used solely to finance the
acquisition by AMC Holding Corporation of the AMC Interest and for working
capital purposes.
Section 2.2 MANNER OF BORROWING AND DISBURSEMENT.
(a) CHOICE OF INTEREST RATE, ETC. Any Advance under the
Commitment shall, at the option of the Borrower, be made as a Base Rate Advance
or a Eurodollar Advance; PROVIDED, HOWEVER, that (i) if the Borrower fails
to give the Agent written notice specifying whether an Advance is to be repaid
or reborrowed on a Payment Date,
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such Advance shall be repaid and then reborrowed as a Base Rate Advance on the
Payment Date and (ii) the Borrower may not select a Eurodollar Advance if, at
the time of such selection, a Default or Event of Default has occurred and is
continuing. Eurodollar Advances shall in all cases be subject to Section 2.3(e)
and Article 11 hereof. Any notice given to the Agent in connection with a
requested Advance hereunder shall be given to the Agent prior to 11:00 a.m.
(Eastern time) in order for such Business Day to count toward the minimum number
of Business Days required.
(b) BASE RATE ADVANCES.
(i) INITIAL ADVANCES. The Borrower shall give the Agent
in the case of Base Rate Advances irrevocable written notice not later than
11:00 a.m. (Eastern time) on the date of the requested Advance in the form of a
Request for Advance, or notice by telephone or telecopy followed immediately by
a Request for Advance; PROVIDED, HOWEVER, that the failure by the Borrower
to confirm any notice by telephone or telecopy with a Request for Advance shall
not invalidate any notice so given. Upon receipt of such notice from the
Borrower, the Agent shall promptly notify each Bank by telephone or telecopy of
the contents thereof.
(ii) REPAYMENTS AND REBORROWINGS. Subject to the
provisions of Section 2.3(e) hereof, the Borrower may repay or prepay a Base
Rate Advance without regard to its Payment Date and (a) upon irrevocable written
notice not later than 11:00 a.m. (Eastern time) on the date of such reborrowing,
reborrow all or a portion of the principal amount thereof as one or more Base
Rate Advances, (b) upon at least three (3) Business Days' irrevocable prior
written notice in the form of an Interest Rate Confirmation, reborrow all or a
portion of the principal thereof as one or more Eurodollar Advances, or (c) upon
at least one (1) Business Day's irrevocable prior written notice and subject to
Section 2.4 hereof, not reborrow all or any portion of such Base Rate Advance.
On the date indicated by the Borrower, such Base Rate Advance shall be so repaid
and, as applicable, reborrowed.
(c) EURODOLLAR ADVANCES.
(i) INITIAL ADVANCES. The Borrower shall give the Agent
in the case of Eurodollar Advances at least three (3) Business Days' irrevocable
written notice in the form of a Request for Advance, or notice by telephone or
telecopy followed immediately by a Request for Advance; PROVIDED, HOWEVER,
that the failure of the Borrower to confirm any notice by telephone or telecopy
with a Request for Advance shall not invalidate any notice so given. The Agent,
whose determination shall be conclusive, shall determine the available
Eurodollar Bases and shall notify the Borrower of such Eurodollar Bases. The
Borrower shall promptly notify the Agent by telecopy or by telephone, and shall
immediately confirm any such telephonic notice in writing, of its selection of a
Eurodollar Basis and Interest Period for such Advance. Upon
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receipt of such notice from the Borrower, the Agent shall promptly notify each
Bank by telephone or telecopy of the contents thereof.
(ii) REPAYMENTS AND REBORROWINGS. At least three (3)
Business Days prior to each Payment Date for a Eurodollar Advance, subject to
Section 2.3(e) hereof, the Borrower shall give the Agent written notice in the
form of an Interest Rate Confirmation specifying whether all or a portion of any
Eurodollar Advance outstanding on the Payment Date (a) is to be repaid and then
reborrowed in whole or in part as a Eurodollar Advance, (b) is to be repaid and
then reborrowed in whole or in part as one or more Base Rate Advances, or (c)
subject to Section 2.4 hereof, is to be repaid and not reborrowed. Upon such
Payment Date such Eurodollar Advance will, subject to the provisions hereof, be
so repaid and, as applicable, reborrowed.
(d) NOTIFICATION OF BANKS. Upon receipt of a written notice
under this Section 2.2 from the Borrower with respect to a reborrowing of any
then outstanding Advance on the Payment Date for such Advance, the Agent shall
promptly notify each Bank by telephone or telecopy of the contents thereof and
the amount of such Bank's portion of the applicable Advance.
Section 2.3 INTEREST.
(a) ON BASE RATE ADVANCES. Interest on each Base Rate Advance
shall be computed on the basis of a year of 365/366 days for the actual number
of days elapsed and shall be payable at the Base Rate for such Advance in
arrears on the applicable Payment Date. Interest on Base Rate Advances then
outstanding shall also be due and payable on the Maturity Date.
(b) ON EURODOLLAR ADVANCES. Interest on each Eurodollar Advance
shall be computed on the basis of a 360-day year for the actual number of days
elapsed and shall be payable at the Eurodollar Basis for such Advance in arrears
on the applicable Payment Date, and, in addition, if the Interest Period for a
Eurodollar Advance exceeds three (3) months, interest on such Eurodollar Advance
shall also be due and payable in arrears on each three (3) month anniversary of
the making of such Advance. Interest on Eurodollar Advances then outstanding
shall also be due and payable on the Maturity Date.
(c) IF NO NOTICE OF SELECTION OF INTEREST RATE BASIS. If the
Borrower shall fail to elect to reborrow any Eurodollar Advance then outstanding
prior to the last Payment Date applicable thereto in accordance with the
provisions of Section 2.2(c)(ii) hereof, as applicable, the Base Rate shall
apply to such Advance commencing on and after such Payment Date, until timely
notice of the Borrower's selection of a Eurodollar Basis is given.
(d) UPON DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, the Majority Banks shall have
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the option (but shall not be required to give prior notice thereof to the
Borrower to accelerate the maturity of the Term Loans, or exercise any other
rights or remedies hereunder in connection with the exercise of this right), to
charge interest on the outstanding principal balance of the Term Loans at the
Default Rate from the date of such Event of Default. Such interest shall be
payable on the earlier of DEMAND or the Maturity Date and shall accrue until the
earlier of (i) waiver or cure (to the satisfaction of the Majority Banks) of the
applicable Event of Default, (ii) agreement by the Majority Banks to rescind the
charging of interest at the Default Rate, or (iii) payment in full of the
Obligations.
(e) EURODOLLAR CONTRACTS; CONVERSIONS. At no time may the
number of outstanding Eurodollar Advances exceed eight (8).
Section 2.4 PREPAYMENT.
(a) The principal amount of any Base Rate Advance may be prepaid in
full or in part at any time, upon irrevocable written notice to the Agent no
later than 11:00 a.m. (Houston time) one (1) Business Day before the date of
such prepayment, without penalty and without regard to the Payment Date for such
Advance. Eurodollar Advances may be prepaid prior to the applicable Payment
Date, upon three (3) Business Days' prior written notice to the Agent, provided
that the Borrower shall reimburse the Banks and the Agent, on the earlier of
demand or the Maturity Date as set forth in Section 2.8 hereof. Each notice of
prepayment shall be irrevocable, and all amounts prepaid on the Term Loans shall
be applied as provided in Section 2.9 hereof. Partial prepayments shall be in a
principal amount of not less than $500,000 or an integral multiple of $100,000
in excess thereof. Upon receipt of any notice of prepayment, the Agent shall
promptly notify each Bank of the contents thereof by telephone or telecopy and
of such Bank's portion of the prepayment.
(b) Upon the receipt of any cash proceeds distributed to the
Borrower under Section 8.5(a)(2) or 8.5(a)(3), the Borrower shall apply such
cash proceeds, to the extent required in such Sections, toward the prepayment of
the Term Loans in accordance with the prepayment procedures set forth in Section
2.4(a).
Section 2.5 REPAYMENT.
The principal balance of the Term Loan and all other Obligations then
outstanding shall be due and payable, in full, on the Maturity Date.
Section 2.6 NOTES; LOAN ACCOUNTS.
(a) The Term Loan shall be repayable in accordance with the terms
and provisions set forth herein, and shall be evidenced by the Term Notes. One
of the Term Notes shall be payable to the order of each Bank in accordance with
the respective Commitment
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Ratios of the Banks. The Term Notes shall be issued by the Borrower to the
Banks and shall be duly executed and delivered by Authorized Signatories of the
Borrower.
(b) Each Bank may open and maintain on its books in the name of
the Borrower a loan account with respect to the Term Loans and interest thereon.
Each Bank which opens such loan account or accounts shall debit the applicable
loan account for the principal amount of each Advance made by it and accrued
interest thereon, and shall credit such loan account for each payment on account
of principal of or interest on the Term Loans. The records of each Bank with
respect to the loan accounts maintained by it shall be prima facie evidence of
the Term Loans and accrued interest thereon, but the failure to maintain such
records shall not impair the obligation of the Borrower to repay Indebtedness
hereunder.
(c) Each Advance from the Banks under this Agreement shall be made
pro rata by the Banks on the basis of their respective Commitment Ratios.
Section 2.7 MANNER OF PAYMENT.
(a) Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Term Loans, fees, and any other
amount owed to the Banks or the Agent under this Agreement, the Term Notes, or
the other Loan Documents shall be made not later than 12:00 noon (Eastern time)
on the date specified for payment under this Agreement or such other Loan
Document to the Agent to an account designated by the Agent at Morgan Guaranty
Trust or such other member bank of the Federal Reserve System designated by the
Agent, for the account of the Banks or the Agent, as the case may be, in lawful
money of the United States of America in immediately available funds. Any
payment received by the Agent after 1:00 p.m. (Eastern time) shall be deemed
received on the next Business Day for purposes of interest accrual. In the case
of a payment for the account of a Bank, the Agent will promptly thereafter
distribute the amount so received in like funds to such Bank. If the Agent
shall not have received any payment from the Borrower as and when due, the Agent
will promptly notify the Banks accordingly.
(b) If any payment under this Agreement or any of the Term Notes
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, and such extension
of time shall in such case be included in computing interest and fees, if any,
in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees, and all
other amounts due hereunder or under the Term Notes without set-off or
counterclaim or any deduction whatsoever.
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Section 2.8 REIMBURSEMENT. Whenever any Bank shall actually incur any
losses or out-of-pocket expenses in connection with (i) failure by the Borrower
to borrow any Eurodollar Advance after having given notice of its intention to
borrow in accordance with Section 2.2 hereof (whether by reason of the election
of the Borrower not to proceed or the non-fulfillment of any of the conditions
set forth in Article 3) other than a failure to borrow resulting from an
unavailability which occurs after notice from the Agent to the Borrower pursuant
to Section 11.1 or 11.2 hereof, or (ii) prepayment of any Eurodollar Advance in
whole or in part (including a prepayment pursuant to Sections 11.2 and 11.3(b)
hereof), the Borrower agrees to pay to such Bank, upon the earlier of such
Bank's demand or the Maturity Date, an amount sufficient to compensate such Bank
for all such losses and out-of-pocket expenses, but excluding any Bank's loss of
margin due to such prepayment. Such Bank's good faith determination of the
amount of such losses and out-of-pocket expenses, absent manifest error, shall
be binding and conclusive. Upon request of the Borrower, any Bank seeking
reimbursement under this Section 2.8 shall provide a certificate setting forth
the amount to be paid to it by the Borrower hereunder and calculations therefor.
Section 2.9 APPLICATION OF PAYMENTS.
(a) Payments made to the Agent or the Banks, or any of them, or
otherwise received by the Agent or the Banks, or any of them (from realization
on collateral for the Obligations or otherwise), shall be distributed as
follows: FIRST, to the costs and expenses, if any, incurred by the Agent or
the Banks, or any of them, to the extent permitted by Section 12.2 hereof, in
the collection of such amounts under this Agreement or any of the other Loan
Documents, including, without limitation, any reasonable costs incurred in
connection with the sale or disposition of any collateral for the Obligations;
SECOND, pro rata among the Agent and the Banks based on the total amount of
fees then due and payable, to any Agent's fees then due and payable hereunder or
under any other Loan Document and to any other fees then due and payable to the
Banks under this Agreement or any Loan Document; THIRD, pro rata among the
Banks based on the outstanding principal amount of the Term Loans outstanding
immediately prior to such payment, to any unpaid interest which may have accrued
on the Term Loans; FOURTH, pro rata among the Banks based on the outstanding
principal amount of the Term Loans outstanding immediately prior to such
payment, to any unpaid principal of the Term Loan then due; FIFTH, to any
other Obligations not otherwise referred to in this Section 2.9 until all such
Obligations are paid in full; SIXTH, to damages incurred by the Agent or the
Banks, or any of them, by reason of any breach hereof or of any other Loan
Documents as provided in Section 6.13; and SEVENTH, upon satisfaction in full
of all Obligations, to the Borrower or as otherwise required by law.
(b) If any Bank shall obtain any payment (whether involuntary or
otherwise) on account of the Term Loans made by it in excess of
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its ratable share of the Term Loans then outstanding and such Bank's share of
any expenses, fees and other items due and payable to it hereunder, such Bank
shall forthwith purchase from the other Banks such participation in the Term
Loans made by such other Banks as shall be necessary to cause such purchasing
Bank to share the excess payment ratably with each of them; PROVIDED,
HOWEVER, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Bank, such purchase from each Bank shall be
rescinded and such Bank shall repay to each purchasing Bank the purchase price
to the extent of such recovery. The Borrower agrees that any Bank so purchasing
a participation from another Bank pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation so long as the Borrower's Obligations are
not increased.
Section 2.10 CAPITAL ADEQUACY. In the event that any Bank shall have
determined that a Regulatory Change has the effect of reducing the rate of
return on such Bank's capital as a consequence of its obligations hereunder to a
level below that which such Bank could have achieved but for such adoption,
change or compliance (taking into consideration such Bank's policies with
respect to capital adequacy) by an amount deemed by such Bank to be material,
then from time to time, ten (10) days after submission by such Bank to the
Borrower (with a copy to the Agent) of a written request therefor, together with
a certificate (which shall be conclusive absent manifest error), setting forth
the calculations evidencing such requested additional amount, and the law or
regulation with respect thereto and certifying that such request is consistent
with such Bank's treatment of other similar customers having similar provisions
generally in their agreements with such Bank and that such request is being made
on the basis of a reasonable allocation of the costs resulting from such law or
regulation, the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction. Allocations shall not
be deemed reasonable unless made ratably, to the extent practicable, to all
affected assets, commitments, activities or other relevant aspects of such
Bank's business, whether or not the Bank is entitled to compensation with
respect thereto. Notwithstanding the foregoing, the Borrower shall only be
obligated to compensate such Bank for any amount under this subsection arising
or occurring during (i) in the case of each such request for compensation, any
time or period commencing not more than ninety (90) days prior to the date on
which such Bank submits such request and (ii) any other time or period during
which, because of the unannounced retroactive application of such law,
regulation, interpretation, request or directive, such Bank reasonably could not
have known that the resulting reduction in return might arise. Each Bank will
notify the Borrower that it is entitled to compensation pursuant to this
subsection as promptly as practicable after it determines to request such
compensation; PROVIDED, HOWEVER, that the failure to
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provide such notice shall not restrict the ability of such Bank to be reimbursed
under this Section 2.10.
ARTICLE 3 - GUARANTEE
(a) Each of the Guarantors, jointly and severally, hereby
unconditionally guarantees to the Banks and the Agent and their respective
permitted successors and assigns and the subsequent holders of the Term Notes,
irrespective of the validity and enforceability of this Agreement, the Term
Notes or the other Loan Documents or the Obligations of the Borrower or any of
the other Guarantors hereunder or thereunder, the value or sufficiency of any
collateral or any other circumstance that might otherwise affect the liability
of a guarantor, that: (i) the principal of and interest on the Term Loan, the
Term Notes and all other Obligations of the Borrower and the other Guarantors to
the Banks and the Agent under this Agreement, the Term Notes and the other Loan
Documents shall be promptly paid in full when due, whether at stated maturity,
by acceleration or otherwise, in accordance with the terms hereof and thereof;
and (ii) in case of any extension of time of payment or renewal of any Term
Notes or any of such other Obligations, the same shall be promptly paid in full
when due in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed for whatever reason, the Guarantors will be obligated,
jointly and severally, to pay the same immediately. Each of the Guarantors
hereby waives notice of, and consents to, any extension of time of payment,
renewals, releases of collateral, delays in obtaining or realizing upon or
failures to obtain, perfect, or maintain perfection of, or realize upon
collateral or other indulgence from time to time granted by any of the Banks or
the Agent in respect of this Agreement, the Term Notes or any other Loan
Document. Each of the Guarantors hereby releases the Borrower from all, and
agrees not to assert or enforce (whether by or in a legal or equitable
proceeding or otherwise), any "claims" (as defined in 11 U.S.C. Section 101(4)),
whether arising under Applicable Law or otherwise, to which such Guarantors are
or would be entitled by virtue of their obligations hereunder, any payment made
pursuant hereto or the exercise by the Banks or the Agent of their rights with
respect to any collateral, including any such claims to which such Guarantors
may be entitled as a result of any right of subrogation, exoneration or
reimbursement. To the extent not released by such Guarantors under this Article
3, each of the Guarantors agrees that it shall not be entitled to any right of
subrogation, exoneration, reimbursement or contribution in respect of any
Obligations guaranteed hereby. With respect to this Agreement and the Term
Notes, each of the Guarantors hereby waives presentment, protest, demand of
payment, notice of dishonor and all other notices and demands whatsoever. Each
of the Guarantors further agrees that, as between such Guarantor, on the one
hand, and the Agent and the Banks, on the other hand, (i) the maturity of the
Obligations guaranteed hereby may be accelerated as provided in Section 9.2
hereof for the purposes of this Guarantee,
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notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (ii) in the
event of any declaration of acceleration of such Obligations as provided in
Section 9.2 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by each of the Guarantors for purposes of this
guarantee. The Obligations of the Guarantors under this Article 3 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of the Borrower is rescinded or must otherwise be restored by any
holder of any of the Obligations guaranteed hereunder, whether as a result of
any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor
agrees that it will indemnify the Banks and the Agent on demand for reasonable
costs and expenses (including, without limitation, reasonable fees and expenses
of counsel) incurred by the Banks or the Agent in connection with such
rescission or restoration.
(b) Each Guarantor further agrees with the Borrower for the benefit of
each of its creditors (including, without limitation, the Agent and the Banks)
that any payment referred to in Article 3 by a Guarantor shall constitute a
contribution of capital by such Guarantor to the Borrower (or an investment in
the equity capital of the Borrower by such Guarantor).
(c) If a claim is ever made upon the Agent or any of the Banks for the
repayment or recovery of any amount or amounts received by such Person in
payment of any of the Obligations and such Person repays all or part of such
amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such Person or any of its property,
or (ii) any settlement or compromise of any such claim effected by such Person
with any such claimant, including the Borrower, then in such event the
Guarantors agree that any such judgment, decree, order, settlement or compromise
shall be binding upon the Guarantors, notwithstanding any revocation hereof or
the cancellation of any promissory note or other instrument evidencing any of
the Obligations, and the Guarantors shall be and remain obligated to such
Person hereunder for the amount so repaid or recovered to the same extent as if
such amount had never originally been received by such Person.
(d) The Guarantors expressly represent and acknowledge that any
financial accommodations by the Agent and the Banks, or any of them, to the
Borrower, including without limitation the extension of the Term Loan, are and
will be of direct interest, benefit and advantage to the Guarantors.
(e) The Guarantors hereby agree, among themselves that if any Guarantor
shall become an Excess Funding Guarantor by reason of the payment by such
Guarantor of any Obligations, each other Guarantor shall, on demand of such
Excess Funding Guarantor (but subject to the next sentence), pay to such Excess
Funding Guarantor an amount
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equal to such Guarantor's Pro Rata Share (as determined, for this purpose,
without reference to the properties, debts and liabilities of such Excess
Funding Guarantor) of the Excess Payment in respect of such Obligations. The
payment obligation of a Guarantor to any Excess Funding Guarantor under this
Section 3(e) shall be subordinate and subject in right of payment to the prior
payment in full of the obligations of such Guarantor under the other provisions
of this Article 3, and such Excess Funding Guarantor shall not exercise any
right or remedy with respect to such excess until payment and satisfaction in
full of all Obligations. For purposes of this Section 3(e), (i) "EXCESS
FUNDING GUARANTOR" shall mean, in respect of any Obligations, a Guarantor that
has paid an amount in excess of its Pro Rata Share of such Obligations, (ii)
"EXCESS PAYMENT" shall mean, in respect of any Obligations, the amount paid by
an Excess Funding Guarantor in excess of its Pro Rata Share of such Obligations
and (iii) "PRO RATA SHARE" shall mean, for any Guarantor, the ratio (expressed
as a percentage) of (x) the amount by which the aggregate present fair saleable
value of all properties of such Guarantor (excluding any shares of stock of any
other Guarantor) exceeds the amount of all the debts and liabilities of such
Guarantor (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of such Guarantor hereunder and any
obligations of any other Guarantor that have been guaranteed by such Guarantor)
to (y) the amount by which the aggregate fair saleable value of all properties
of the Borrower and all of the Guarantors exceeds the amount of all the debts
and liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Borrower and the Guarantors
hereunder) of the Borrower and all of the Guarantors, all as of the Agreement
Date. If any Subsidiary becomes a Guarantor hereunder subsequent to the
Agreement Date, then for purposes of this Section 3(e) such subsequent Guarantor
shall be deemed to have been a Guarantor as of the Agreement Date and the
aggregate present fair saleable value of the properties, and the amount of the
debts and liabilities, of such subsequent Guarantor as of the Agreement Date
shall be deemed to be equal to such value and amount on the date such subsequent
Guarantor becomes a Guarantor hereunder.
ARTICLE 4 - CONDITIONS PRECEDENT.
Section 4.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation
of the Banks to undertake the Commitment and to make the initial Advance
hereunder is subject to the prior fulfillment of each of the following
conditions:
(a) The Agent shall have received each of the following, in form
and substance reasonably satisfactory to the Agent and to the Majority Banks:
(i) the loan certificate of the Borrower, including a
certificate of incumbency with respect to the signature of each Authorized
Signatory thereof, which loan certificate shall be in
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substantially the form of EXHIBIT I attached hereto, together with the
specified attachments thereto, which shall include without limitation the
following items: (A) a copy of the certificate of incorporation of the Borrower
certified by the Secretary of State of the State of New York and a copy of the
by-laws of the Borrower certified by an Authorized Signatory thereof, (B) a good
standing certificate for the Borrower, issued by the Secretary of State of the
State of New York, (C) a copy of the corporate resolutions of the Borrower
authorizing the execution, delivery and performance by the Borrower of each of
the Loan Documents to which it is a party in accordance with their respective
terms and of any other documents contemplated hereunder and the consummation of
the transactions contemplated hereby and thereby, and (D) a true, complete and
correct copy of the Management Agreements.
(ii) the loan certificate of the Parent Company on the
Closing Date, including a certificate of incumbency with respect to the
signature of each Authorized Signatory thereof, which loan certificate shall be
in substantially the form of EXHIBIT J attached hereto, together with the
specified attachments thereto, which shall include without limitation the
following items: (A) a copy of the certificate of incorporation of the Parent
Company certified by the Secretary of State of the State of Delaware and a copy
of the by-laws of the Parent Company certified by an Authorized Signatory
thereof, (B) good standing certificate for the Parent Company, issued by the
Secretary of State of the State of Delaware, and (C) a copy of the corporate
resolutions of the Parent Company authorizing the Parent Company with respect to
the execution, delivery and performance by the Parent Company of each of the
Loan Documents to which it is a party in accordance with their respective terms
and of any other documents contemplated hereunder and the consummation of the
transactions contemplated hereby and thereby;
(iii) the loan certificate of each Guarantor on the Closing
Date, including a certificate of incumbency with respect to the signature of
each Authorized Signatory thereof, which loan certificate shall be in
substantially the form of EXHIBIT K attached hereto, together with appropriate
attachments thereto, which shall include without limitation the following items:
(A) a copy of the certificate of incorporation or partnership agreement of such
Guarantor certified (if applicable) by the Secretary of State of the state of
its jurisdiction of incorporation or organization and a copy of the by-laws (if
applicable) of such Guarantor certified by an Authorized Signatory thereof, (B)
good standing certificates for such Guarantor, issued by the Secretary of State
of the state of its jurisdiction of incorporation, and (C) a copy of the
corporate resolutions of such Guarantor (or a general partner thereof)
authorizing such Guarantor with respect to the execution, delivery and
performance by such Guarantor of each of the Loan Documents to which it is a
party in accordance with their respective terms and of any other documents
contemplated hereunder
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and the consummation of the transactions contemplated hereby and thereby;
(iv) duly executed Term Notes;
(v) duly executed (A) Parent Pledge Agreement, together with
appropriate stock certificates and stock powers relating thereto, (B) Borrower
Pledge Agreement, together with appropriate stock certificates and stock powers
relating thereto, (C) Subordination Agreement and (D) Subordination of Fees
Agreement;
(vi) duly executed Fees Agreements;
(vii) opinions of counsel to the Borrower, the Parent Company
and the Guarantors addressed to each Bank and the Agent;
(viii) the duly executed Request for Advance for the initial
Advance of the Term Loans;
(ix) audited financial statements for the Borrower for the
calendar year ended December 31, 1993 and the unaudited financial statements for
the calendar quarter ended March 31, 1994;
(x) copies of certificates of insurance covering the assets
of the Borrower and otherwise meeting the requirements of Section 6.5 hereof to
the extent required by Section 6.5 hereof;
(xi) evidence reasonably satisfactory to the Agent that the
Parent Company has, prior to or simultaneously with the making of such Advance,
made an additional capital contribution to the Borrower in an amount of not
less than $70,000,000 and shall have acquired the rights of LMCC under the
Consulting Agreement;
(xii) receipt of all fees due at such time from the Borrower
to the Agent and the Banks in accordance with the Fees Agreements;
(xiii) evidence reasonably satisfactory to the Agent and its
counsel that (x) AMC Holding Corporation, simultaneously with the making of such
Advance, has completed the purchase of the AMC Interests from LMCC pursuant to
the AMC Interest Assignment Agreement for an aggregate amount not to exceed
$175,620,454, (y) after giving affect to the purchase of AMC Interests as
described in clause (x) above, the Borrower shall hold, directly or indirectly,
at least 74.9% of the partnership interests in AMC and (z) the Parent Company
has completed the Purchase of LMCC's rights under the Consulting Agreement for
an aggregate amount not to exceed $4,808,233;
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(xiv) a certificate of the Borrower in form and substance
satisfactory to the Agent and duly executed by an Authorized Signatory of the
Borrower certifying that the fair value of the assets of the Borrower (excluding
any interests of the Borrower in AMC) is not less than $25,000,000 as of the
Closing Date; and
(xv) a certificate of the Parent Company in form and
substance satisfactory to the Agent and duly executed by an Authorized Signatory
of the Parent Company certifying that (i) (A) the Parent Company has sufficient
borrowing availability under the revolving credit facility provided for under
the Parent Company Loan Agreement, and sufficient borrowing availability under
the covenant set forth in Section 9.16 of the Parent Company Loan Agreement to
make the interest payments on the Term Loans due under this Agreement or the
Term Notes for the next succeeding twelve (12) months following the date of such
certificate or (B) at the sole option of the Parent Company, that an escrow
account has been established with The Toronto-Dominion Bank on such terms as
shall be reasonably satisfactory to the Majority Banks and in an amount
sufficient to make the interest payments on the Term Loans due under this
Agreement or the Term Notes for the next succeeding twelve (12) months following
the date of such certificate, (ii) payment by the Parent Company of interest on
the Term Loans due under this Agreement or the Term Notes for the next
succeeding three (3) months following the date of such certificate will not
cause the Parent Company to be in default of Section 9.26 (or any comparable
covenant of the Parent Company Loan Agreement, if the same is amended) of the
Parent Company Loan Agreement and (iii) there is no event of default, or any
event which with the giving of notice or the passage of time would constitute an
event of default, under the Parent Company Loan Agreement as of the Closing
Date.
(b) All of the representations and warranties of the Borrower
under this Agreement shall be true and correct in all material respects, both
before and after giving effect to the application of the proceeds of the initial
Advance.
(c) No material litigation shall have been commenced against the
Borrower since March 31, 1994.
(d) There shall have been no material adverse change in the
Borrower's business, assets or financial condition from that reflected in the
Borrower's December 31, 1993 audited financial statements or March 31, 1994
unaudited financial statements, copies of which have been provided to the Agent.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES.
Section 5.1 REPRESENTATIONS AND WARRANTIES. The Borrower hereby
agrees, represents, and warrants that:
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(a) ORGANIZATION; POWER; QUALIFICATION. The Borrower is a
corporation duly organized and validly existing under the laws of the State of
New York, having the Parent Company as its sole shareholder. Each of the
Guarantors is duly organized and validly existing under the laws of the
jurisdiction of its organization. Each of the Borrower and the Guarantors has
the power and authority to own or lease and operate its properties and to carry
on its business as now being and hereafter proposed to be conducted, and is duly
qualified and authorized to do business in each jurisdiction in which such
qualification is necessary in view of the character of its properties or the
nature of its business requires such qualification or authorization, except for
qualifications and authorizations, the lack of which, singly or in the
aggregate, has not had and is not likely to have a Materially Adverse Effect.
There are no shareholders' or voting trust agreements in effect with respect to
the Borrower.
(b) AUTHORIZATION; ENFORCEABILITY. The Borrower and each
Guarantor has all corporate power and has taken all necessary corporate action
to authorize it to execute, deliver, and perform this Agreement and each of the
other Loan Documents to which it is a party in accordance with the terms thereof
and to consummate the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Borrower and each
Guarantor, and is, and the Notes, when issued for value received will be, and
each of the other Loan Documents to which the Borrower or such Guarantor is a
party is, a legal, valid and binding obligation of the Borrower or such
Guarantor enforceable in accordance with its terms, subject to limitations on
enforceability under bankruptcy, reorganization, insolvency and similar laws
affecting creditors' rights generally and limitations on the availability of the
remedy of specific performance imposed by the application of general equity
principles.
(c) SUBSIDIARIES. Except as listed on SCHEDULE 3 attached
hereto (as amended by the Borrower upon written notice to the Banks from time to
time), the Borrower has no Subsidiaries. With respect to each Subsidiary of the
Borrower, SCHEDULE 3 also sets forth (i) the direct owners of such Subsidiary
and the extent of such ownership; (ii) the state of its incorporation or
organization; (iii) all jurisdictions in which such Subsidiary is qualified to
do business as a foreign corporation or partnership; and (iv) the address of the
principal place of business of such Subsidiary. Except as set forth on Schedule
2 attached hereto (as amended by the Borrower upon written notice to the Banks
from time to time), there are no Operating Entities. With respect to each
Operating Entity, Schedule 2 sets forth (i) the direct owners of such Operating
Entity and the extent of such ownership, (ii) the state of its organization;
(iii) all jurisdictions in which such Operating Entity is qualified to do
business as a foreign partnership or corporation, as the case may be; and (iv)
the address of the principal place of business of such Operating Entity.
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(d) COMPLIANCE WITH LAWS, ETC., OF AGREEMENT, OTHER LOAN
DOCUMENTS, AND CONTEMPLATED TRANSACTIONS. The execution, delivery, and
performance of this Agreement and each of the other Loan Documents in accordance
with the terms and the consummation of the transactions contemplated hereby and
thereby do not and will not (i) violate any Applicable Law, (ii) result in a
breach of, or constitute a default under the certificate of incorporation or
by-laws or partnership agreement, as the case may be and as amended, of the
Borrower or any Guarantor, or under any indenture, agreement, or other
instrument to which the Borrower or any Guarantor or any of its or their
Subsidiaries is a party or by which it or any of its or their properties may be
bound, or (iii) result in or require the creation or imposition of any Lien upon
or with respect to any property now owned or hereafter acquired by the Borrower
or any Guarantor except Permitted Liens; except where such violations, breaches,
defaults or Liens, if any, singly or in the aggregate, has not had and is not
likely to have a Materially Adverse Effect.
(e) NECESSARY AUTHORIZATIONS. No approval or consent of, or
filing or registration with, any federal, state or local commission or other
regulatory authority is required in connection with (i) the execution, delivery
and performance by the Borrower of this Agreement, the Term Notes, and the other
Loan Documents to which it is a party, (ii) the execution and delivery of this
Agreement by the Borrower on behalf of the Guarantors and the performance by
each Guarantor of its obligations hereunder. All such described action required
to be taken as a condition to the execution and delivery of each of this
Agreement, the Term Notes and other Loan Documents to which the Borrower or any
Guarantor is a party has been duly taken by all such commissions and authorities
or other Persons, as the case may be, and all such action required to be taken
as a condition to the initial Advance hereunder has been or will be duly taken
prior to such initial Advance.
(f) TITLE TO PROPERTIES. Each of the Borrower and its
Subsidiaries has good and legal title to, or a valid leasehold interest in, all
of their respective material properties and assets free and clear of all Liens,
except Permitted Liens and rights, if any, of third parties under the
partnership agreements or other organization documents of the Operating
Entities.
(g) COLLECTIVE BARGAINING. Except as disclosed to the Agent in
writing prior to the Closing Date, there are no collective bargaining agreements
between the Borrower, any of its Subsidiaries or any of the Operating Entities
and any trade or labor union or other employee collective bargaining agent.
(h) TAXES. All federal, state, and other tax returns of the
Borrower and each of its Subsidiaries required by law to be filed have been duly
filed, and all federal, state, and other taxes, assessments, and other
governmental charges or levies upon the Borrower, each of its Subsidiaries and
any of their respective
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properties, income, profits, and assets, which are due and payable, have been
paid, except any such tax payment of which the Borrower or its Subsidiary, as
the case may be, is contesting in good faith by appropriate proceedings, and as
to which neither any Lien other than a Permitted Lien has attached nor any
foreclosure, distraint, sale, or similar proceedings have been commenced, and
except any such tax payments which the failure to pay, singly or in the
aggregate, has not had and is not likely to have a Materially Adverse Effect.
The charges, accruals, and reserves on the books of the Borrower and each of its
Subsidiaries in respect of taxes are, in the reasonable judgment of the
Borrower, adequate.
(i) FINANCIAL STATEMENTS.
(1) The Borrower has furnished, or caused to be furnished, to the
Banks audited financial statements for the Borrower and its Subsidiaries on a
consolidated basis as at December 31, 1993 and unaudited financial statements
for the Borrower and its Subsidiaries as at March 31, 1994, all of which are
complete and correct in all material respects and present fairly in accordance
with GAAP the financial position of the Borrower as at such dates, and the
results of operations for the periods then ended, subject to normal year-end
adjustments with respect to the March 31, 1994 statements. Except as disclosed
in such financial statements or Schedule 5.1, the Borrower had no material
liabilities, contingent or otherwise, and there are no material unrealized or
anticipated losses of the Borrower which have not heretofore been disclosed in
writing to the Banks.
(2) The Borrower has furnished, or caused to be furnished, to the
Banks audited financial statements for the Parent Company on a consolidated
basis as at December 31, 1993 and unaudited financial statements for the Parent
Company as at March 31, 1994, all of which are complete and correct in all
material respects and present fairly in accordance with GAAP the financial
position of the Parent Company as at such dates, and the results of operations
for the periods then ended, subject to normal year-end adjustments with respect
to the March 31, 1994 statements. Except as disclosed in such financial
statements, the Parent Company had no material liabilities, contingent or
otherwise, and there are no material unrealized or anticipated losses of the
Parent Company which have not heretofore been disclosed in writing to the Banks.
(j) NO ADVERSE CHANGE. Since March 31, 1994, there has occurred
no event which would have a Materially Adverse Effect.
(k) INVESTMENTS AND GUARANTIES. Neither the Borrower nor any
of its Subsidiaries has made investments in, advances to, or guaranties of, the
obligations of any Person, except as reflected in the financial statements
referred to in Section 5.1(i)(1) above, Schedule 10 or disclosed to the Banks in
writing.
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(l) LIABILITIES, LITIGATION, ETC. Except (i) as disclosed on
Schedule 5.1 hereto, (ii) liabilities incurred in the normal course of business
and (iii) as disclosed or referred to in the financial statements described in
Section 5.1(i) above, neither the Borrower nor any of its Subsidiaries has any
material (individually or in the aggregate) direct or contingent liabilities.
Except as disclosed on SCHEDULE 5.2 attached hereto, there is no litigation,
legal or administrative proceeding, investigation, or other action of any nature
pending or, to the knowledge of the Borrower, threatened against the Borrower,
any of its Subsidiaries, any of the Operating Entities or any of its or their
respective properties which involves the possibility of any judgment or
liability not fully covered by insurance that, singly or in the aggregate, could
reasonably be expected to have a Materially Adverse Effect.
(m) ERISA. The Borrower and each ERISA Affiliate and each of
their respective Plans are in substantial compliance with ERISA and the Code and
neither the Borrower nor any of its ERISA Affiliates has incurred any
accumulated funding deficiency with respect to any such Plan within the meaning
of ERISA or the Code. The Borrower and each of its ERISA Affiliates have
complied with all requirements of ERISA Sections 601 through 608 and Code
Section 4980B in all material respects. The Borrower has incurred no material
liability to the Pension Benefit Guaranty Corporation in connection with any
Plan. The assets of each Plan which is subject to Title IV of ERISA are
sufficient to provide the benefits under such Plan, the payment of which the
Pension Benefit Guaranty Corporation would guarantee if such Plan were
terminated, and such assets are also sufficient to provide all other "benefit
liabilities" (as defined in ERISA Section 4001(a)(16)) due under the plan upon
termination. No Reportable Event has occurred and is continuing with respect to
any Plan. No Plan or trust created thereunder, or party in interest (as defined
in Section 3(14) of ERISA), or fiduciary (as defined in Section 3(21) of ERISA),
has engaged in a "prohibited transaction" (as such term is defined in Section
406 of ERISA or Section 4975 of the Code) which would subject the Borrower or
any ERISA Affiliate to a material penalty or tax on "prohibited transactions"
imposed by Section 502 of ERISA or Section 4975 of the Code. Neither the
Borrower nor any of its ERISA Affiliates is a participant in or is obligated to
make any payment to a Multiemployer Plan.
(n) PATENTS, TRADEMARKS, ETC. Except as disclosed on SCHEDULE
6 attached hereto (as amended by the Borrower upon written notice to the Banks
from time to time), or where the lack of ownership, right to use or possession
of which is not likely to have a Materially Adverse Effect, the Borrower, each
of its Subsidiaries and the Operating Entities owns, possesses or has the right
to use all licenses and rights to all patents, Trademarks, trademark rights,
trade names, trade name rights, service marks, and copyrights, and rights with
respect thereto, necessary to conduct its business in all material respects as
now conducted,
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without known conflict with any patent, trademark, trade name, service mark,
license or copyright of any other Person, and in each case, with respect to
patents, Trademarks, trademark rights, trade names, trade name and copyrights
and licenses with respect thereto owned by the Borrower, its Subsidiaries or the
Operating Entities, subject to no mortgage, pledge, lien, lease, encumbrance,
charge, security interest, title retention agreement or option other than as
otherwise permitted hereunder. Except to the extent that there is not likely to
be a Materially Adverse Effect resulting from such ineffectiveness or
non-compliance, all such licenses and rights with respect to patents,
Trademarks, trademark rights, trade names, trade name rights, service marks and
copyrights are in full force and effect, and to the extent applicable, the
Borrower, its Subsidiaries and the Operating Entities are in full compliance in
all material respects with all of the provisions thereof. Except as set forth
on SCHEDULE 6 attached hereto (as amended by the Borrower upon written notice
to the Banks from time to time), no such patent, Trademark, trademark rights,
trade names, trade name rights, service marks, copyrights or licenses is subject
to any pending or, to the best of the Borrower's knowledge, threatened attack or
revocation. Except as set forth on SCHEDULE 6 attached hereto, neither the
Borrower nor any of its Subsidiaries nor any of the Operating Entities owns any
registered patents and the Borrower's business is not subject to any License.
(o) COMPLIANCE WITH LAW; ABSENCE OF DEFAULT. The Borrower, each
of its Subsidiaries and each of the Operating Entities is in compliance with all
Applicable Laws the non-compliance with which is likely to have a Materially
Adverse Effect and with all of the provisions of its certificate of
incorporation and by-laws, or partnership agreement, as applicable, which would
adversely affect the Borrower's or any Guarantor's ability to perform the
Obligations, and no event has occurred or has failed to occur which has not been
remedied or waived, the occurrence or non-occurrence of which constitutes (i) a
Default or (ii) a default by the Borrower, any of its Subsidiaries or any of the
Operating Entities under any other indenture, agreement, or other instrument, or
under any MSO Agreement or Programming Rights Agreement, or any judgment,
decree, or order to which the Borrower, any of its Subsidiaries, or any of the
Operating Entities is a party or by which the Borrower, any of its Subsidiaries,
any of the Operating Entities or any of its or their properties may be bound,
which default, judgment, decree or order could reasonably be considered to have
a Materially Adverse Effect.
(p) CASUALTIES; TAKING OF PROPERTIES, ETC. Since the date of
the most recent financial statements provided to the Agent and the Banks by the
Borrower, neither the business nor the properties of the Borrower, its
Subsidiaries or the Operating Entities have been materially and adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of property or cancellation of contracts, permits or
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concessions by any domestic or foreign government or any agency thereof, riot,
activities of armed forces, or acts of God or of any public enemy.
(q) ACCURACY AND COMPLETENESS OF INFORMATION. None of the
financial statements or any written statements delivered to the Agent or the
Banks pursuant to this Agreement contains, as at the date of delivery thereof,
any untrue statement of material fact nor do such financial statements, and such
written statements, taken as a whole, omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
(r) COMPLIANCE WITH REGULATIONS G, T, U, AND X. Neither the
Borrower nor any of its Subsidiaries is engaged principally or as one of its
important activities in the business of extending credit for the purpose of
purchasing or carrying, and the Borrower does not own or presently intend to
acquire, any "margin security" or "margin stock" as defined in Regulations G, T,
U, and X (12 C.F.R. Parts 207, 220, 221 and 224) of the Board of Governors of
the Federal Reserve System (herein called "margin stock"). None of the proceeds
of the Term Loans will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
margin stock or for any other purpose which would constitute this transaction a
"purpose credit" within the meaning of said Regulations G, T, U, and X. The
Borrower has not taken and will not take any action which would cause this
Agreement or the Term Notes to violate Regulation G, T, U, or X or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Securities Exchange Act of 1934. If so requested by the Agent, the Borrower
will furnish the Agent with (i) a statement or statements in conformity with the
requirements of Federal Reserve Forms G-3 and/or U-1 referred to in Regulations
G and U of said Board of Governors and (ii) other documents evidencing its
compliance with the margin regulations, including without limitation an opinion
of counsel in form and substance reasonably satisfactory to the Banks.
(s) SOLVENCY. The Borrower is and after giving effect to the
transactions contemplated hereby and by the Loan Documents will be, Solvent.
(t) BROKER'S OR FINDER'S COMMISSIONS. No broker's or finder's
fee or commission will be payable with respect to the issuance of the Term
Notes, and no other similar fees or commissions will be payable by the Borrower
for any other services rendered to the Borrower ancillary to the transactions
contemplated herein.
(u) BUSINESS. The Borrower is primarily a holding/management
company whose assets consist of the equity interests of its Subsidiaries and the
Operating Entities and other
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tangible assets used in the foregoing activities and whose business consists
primarily of the Business.
(v) NAME OF BORROWER. Except as set forth on SCHEDULE 7
hereto, neither the Borrower, nor any of the Guarantors or Operating Entities
has changed its name within the preceding five (5) years from the Agreement
Date, and has not transacted business under any other name or trade name and has
not acquired any assets except for valid consideration.
(w) INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is required to register under the provisions of the Investment
Company Act of 1940, as amended, and neither the entering into or performance by
the Borrower of this Agreement nor the issuance of the Term Notes violates any
provision of such Act or requires any consent, approval, or authorization of, or
registration with, any governmental or public body or authority pursuant to any
of the provisions of such Act.
Section 5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties made under this Agreement shall survive, and not
be waived by, the execution hereof by the Banks and the Agent, any investigation
or inquiry by any Bank or the Agent, or the making of any Advance under this
Agreement.
ARTICLE 6 - GENERAL COVENANTS.
So long as any of the Obligations is outstanding and unpaid or the
Borrower shall have the right to borrow hereunder (whether or not the conditions
to borrowing have been or can be fulfilled), and unless the Majority Banks shall
otherwise consent in writing:
Section 6.1 PRESERVATION OF EXISTENCE AND SIMILAR MATTERS. The
Borrower will, and will cause each of its Subsidiaries to, (i) preserve and
maintain their respective existences, rights, Licenses, and privileges in their
respective jurisdictions of incorporation and (ii) qualify and remain qualified
and authorized to do business in each jurisdiction in which such qualification
is necessary in view of the character of their respective properties or in which
the nature of their respective businesses requires such qualification or
authorization, except for qualifications and authorizations, the lack of which,
singly or in the aggregate, has not had and is not likely to have a Materially
Adverse Effect; PROVIDED that the Borrower or any of its Subsidiaries may (1)
liquidate, dissolve, or cause the liquidation or dissolution of any Subsidiary
or Operating Entity that holds no assets and conducts no business activities,
and (2) liquidate, sell or otherwise dispose of any Subsidiary or Operating
Entity as permitted by Section 8.5 hereof.
Section 6.2 COMPLIANCE WITH APPLICABLE LAW. The Borrower will
comply, and will cause each of its Subsidiaries and Operating
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Entities to comply, with the requirements of all Applicable Law, except where
failure to comply has not had and is not likely to have a Materially Adverse
Effect.
Section 6.3 MAINTENANCE OF PROPERTIES. The Borrower will maintain,
and will cause each of its Subsidiaries to maintain, or cause to be maintained
in the ordinary course of business in good repair, working order, and condition
all properties necessary in their respective businesses (whether owned or held
under lease).
Section 6.4 ACCOUNTING METHODS AND FINANCIAL RECORDS. The Borrower,
or the Parent Company on the Borrower's behalf, will maintain, and will cause
each of its Subsidiaries and Operating Entities to maintain, or will maintain on
their behalf, a system of accounting established and administered in accordance
with GAAP, and will (or the Parent Company on the Borrower's, Borrower's
Subsidiaries' and Operating Entities' behalf will), keep and cause each of its
Subsidiaries and Operating Entities to keep adequate records and books of
account in which complete entries will be made in accordance with such
accounting principles consistently applied and reflecting all transactions
required to be reflected by such accounting principles.
Section 6.5 INSURANCE. The Borrower, or the Parent Company on the
Borrower's behalf, will maintain or cause to be maintained insurance on the
assets and properties and on the operations of the Borrower, its Subsidiaries
and the Operating Entities including, but not limited to, public liability,
business interruption and fidelity coverage insurance, from responsible
insurance companies in such amounts and against such risks as shall be
reasonably acceptable to the Majority Banks. The Borrower, or the Parent
Company on the Borrower's behalf, shall at all times maintain insurance coverage
comparable to that in place on the Agreement Date, taking into account the
growth of the Borrower's business and operations after the Agreement Date.
Section 6.6 PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and
discharge, and will cause each of its Subsidiaries to pay and discharge, all
taxes, assessments, and governmental charges or levies imposed upon them or upon
their respective incomes or profits or upon any properties belonging to them
prior to the date on which penalties attach thereto, and all lawful claims for
labor, materials, and supplies which, if unpaid, would become a Lien other than
a Permitted Lien upon any of their respective properties; except that no such
tax, assessment, charge, levy, or claim need be paid which is being contested in
good faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the appropriate books, but only so long as such tax,
assessment, charge, levy, or claim does not become a Lien or charge other than a
Permitted Lien and no foreclosure, distraint, sale, or similar proceedings shall
have been commenced and remain unstayed for a period of thirty (30) days after
such commencement.
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Section 6.7 VISITS AND INSPECTIONS. The Borrower will permit, and
will cause each of its Subsidiaries to permit, representatives of (a) prior to a
Default, the Agent upon three (3) Business Days' written notice to the Borrower,
and (b) subsequent to a Default, the Agent and each Bank, upon notice prior to
10:00 a.m. (Eastern time) on such date, to (i) visit and inspect the properties
of the Borrower and each of its Subsidiaries during normal business hours, (ii)
inspect and make extracts from and copies of their respective books and records,
and (iii) discuss with their respective principal officers its businesses,
assets, liabilities, financial positions, results of operations, and business
prospects relating to the Borrower and each of its Subsidiaries.
Section 6.8 PAYMENT OF INDEBTEDNESS. The Borrower will pay, and
will cause each of its Subsidiaries to pay, subject to any provisions therein
regarding subordination, any and all of their respective Indebtedness for Money
Borrowed when and as the same becomes due, other than amounts duly disputed in
good faith the non-payment of which is not likely to have a Materially Adverse
Effect.
Section 6.9 USE OF PROCEEDS. The Borrower will use the proceeds of
the Term Loans solely as provided in Section 2.1(b) hereof.
Section 6.10 ERISA. The Borrower shall (a) promptly after the
filing thereof, furnish to the Agent copies of any annual report required to be
filed pursuant to ERISA in connection with each Plan of it and its ERISA
Affiliates; (b) notify the Banks as soon as practicable of any Reportable Event
and of any additional act or condition arising in connection with any such Plan
which the Borrower believes would constitute grounds for the termination thereof
by the Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan;
and (c) furnish to the Banks, promptly upon the Banks' request therefor, such
additional information concerning any such Plan as may be reasonably requested
by the Banks.
Section 6.11 FURTHER ASSURANCES. The Borrower will promptly cure,
or cause to be cured, defects in the creation and issuance of the Term Notes and
the execution and delivery of the Loan Documents (including this Agreement),
resulting from any act or failure to act by the Borrower or any of its
Subsidiaries or any employee or officer thereof. The Borrower at its expense
will promptly execute and deliver to the Agent and the Banks, or cause to be
executed and delivered to the Agent and the Banks, all such other and further
documents, agreements, and instruments in compliance with or for the
accomplishment of the covenants and agreements of the Borrower in the Loan
Documents, including this Agreement, or to correct any omissions in the Loan
Documents, or more fully to state the obligations set out herein or in any of
the Loan Documents, or to
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obtain any consents, all as may be necessary or appropriate in connection
therewith and as may be reasonably requested.
Section 6.12 BROKER'S CLAIMS. The Borrower hereby indemnifies and
agrees to hold the Agent and each of the Banks harmless from and against any and
all losses, liabilities, damages, costs and expenses which may be suffered or
incurred by the Agent and each of the Banks in respect of any claim, suit,
action or cause of action now or hereafter asserted by a broker or any Person
acting in a similar capacity arising from or in connection with the execution
and delivery of this Agreement or any other Loan Document or the consummation of
the transactions contemplated herein or therein.
Section 6.13 INDEMNITY. The Borrower and each of the Guarantors,
jointly and severally, will indemnify and hold harmless the Agent and each of
the Banks and each of their respective employees, representatives, officers and
directors from and against any and all claims, liabilities, losses, damages,
actions, and demands by any party (other than with respect to any claims,
actions or demands made by other such indemnified parties or any liabilities,
losses or damages caused thereby) against the Agent, the Banks, or any of them
resulting from any breach or alleged breach by the Borrower or any of its
Subsidiaries of any representation or warranty made hereunder, or otherwise
arising out of the Commitment or the making, administration or enforcement of
the Loan Documents and the Term Loan; unless, with respect to any of the above,
the Agent, the Banks, or any of them are finally judicially determined to have
acted or failed to act with gross negligence or wilful misconduct. This Section
6.13 shall survive termination of this Agreement.
Section 6.14 DELIVERY OF CERTIFICATES AND DOCUMENTS IN THE EVENT OF
AN ASSET DISPOSITION. With respect to any transaction permitted by subsection
8.5(a)(2) hereof, the Borrower shall, or, if applicable, shall cause the
appropriate Subsidiary to, deliver to the Agent (a) as soon as practicable and
in no event less than 10 days prior to the closing date of any such transaction
a certificate of the Borrower or such Subsidiary, as the case may be, signed by
an Authorized Signatory thereof setting forth (i) a description of the
transaction in such reasonable detail so as to permit the Agent and the Banks to
obtain an accurate understanding of all of the essential features of such
transaction (which description shall include, without limitation, a summary of
the consideration to be received and how the Business of the Borrower, or such
Subsidiary, as the case may be, will benefit from such transaction) and (ii) a
certification by such Authorized Signatory on behalf of the Borrower or such
Subsidiary, as the case may be, that the total value received by the Borrower or
such Subsidiary, as the case may be, is not less than the total value of the
assets and/or properties sold, exchanged or otherwise disposed and (b) as soon
as available and in no event more than 30 days after the closing date of such
transaction, copies of all agreements,
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instruments, opinions and other documents executed and delivered in connection
with such transaction, together with a certificate of the Borrower or such
Subsidiary, as the case may be, signed by an Authorized Signatory thereof
certifying that the copies so delivered are true and complete copies of all
agreements, instruments, opinions and documents executed and delivered with
respect to such transaction.
Section 6.15 PLEDGE OF ACQUIRED INTERESTS AND NON-CASH PROCEEDS FROM
SALES, EXCHANGES OR OTHER DISPOSITION OF ASSETS. (a) As soon as available and
in any event on the date of acquisition or receipt thereof, all shares of
capital stock, partnership interests and any other interest or benefit acquired
by the Borrower from time to time in any Subsidiary or Operating Entity, and all
non-cash proceeds received by the Borrower under any transaction permitted by
subsection 8.5(a)(2) hereof, shall be pledged by the Borrower to the Agent for
the ratable benefit of the Banks pursuant to a pledge agreement substantially in
the form of EXHIBIT "B" attached hereto and made a part hereof (modified as
appropriate for pledge of partnerships or interests other than capital stock) as
additional security for the Borrower's Obligations under the Loan Documents to
the extent that the pledge of any such shares, partnership interests or other
interests or non-cash proceeds will not violate the articles of incorporation,
partnership agreement or any stockholder agreement, as the case may be,
applicable thereto (and if the pledge of any such shares, partnership
interests or other interests or non-cash proceeds shall violate any such
applicable documents, such shares, partnership interests or other interests or
non-cash proceeds shall be held by the Borrower subject to the terms and
conditions of this Agreement and the other Loan Documents). In connection with
such pledge, the Borrower shall execute and deliver to the Agent for the ratable
benefit of the Banks the Borrower Pledge Agreement (if such agreement has not
been delivered previously) and all such other agreements, instruments and
documents as the Agent may reasonably request. Unless prohibited by the related
articles of incorporation, partnership agreement or any stockholder agreement,
as the case may be, any Operating Entity with respect to which an acquisition
contemplated by this Section 6.15(a) is consummated shall also become a
Guarantor hereunder, and the Borrower shall modify, or cause to be modified,
Schedule 1 hereto accordingly.
(b) As soon as available and in any event on the date of receipt
thereof, all non-cash proceeds received by any Subsidiary under any transaction
permitted by subsection 8.5(a)(2) hereof shall be pledged by any such Subsidiary
to the Agent for the ratable benefit of the Banks as additional security for the
Borrower's Obligations under the Loan Documents (the Borrower hereby agrees to
cause such pledge and to cause such Subsidiary to execute and deliver in
connection therewith all such documents or instruments as the Agent may
reasonably deem appropriate in form and substance reasonably satisfactory to the
Agent) to the extent that the pledge of any such non-cash proceeds will not
violate the
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articles of incorporation, partnership agreement or any stockholder agreement,
as the case may be, applicable thereto; PROVIDED that if the pledge of any
such non-cash proceeds shall violate any such applicable documents, the Borrower
shall cause such Subsidiary, or, if applicable, the appropriate Operating
Entity, to hold such non-cash proceeds, in each case subject to the terms and
conditions of this Agreement and the other Loan Documents.
Section 6.16 NEW SUBSIDIARIES TO BE GUARANTORS. With respect to
each Subsidiary formed or acquired by the Borrower after the date of this
Agreement, the Borrower shall, on the date of such acquisition or formation,
take all necessary action, and shall cause such Subsidiary to take all necessary
action, to add such Subsidiary to the list of Guarantors on Schedule 1 to this
Agreement.
ARTICLE 7 - INFORMATION COVENANTS.
So long as any of the Obligations is outstanding and unpaid or the
Borrower has a right to borrow hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks shall
otherwise consent in writing, the Borrower will furnish or cause to be furnished
to each Bank and to the Agent at their respective offices:
Section 7.1 QUARTERLY FINANCIAL STATEMENTS AND INFORMATION. Within
ninety (90) days after the last day of each quarter in each calendar year of
each of the Parent Company, Borrower and AMC, respectively, except the last
quarter in each calendar year, the balance sheet of each of the Parent Company,
Borrower and AMC as at the end of such quarter, and the related statement of
income and retained earnings and related statement of cash flows of each of the
Parent Company and Borrower, and, in the case of AMC, related statement of
income and retained earnings and related statement of Operating Cash Flow, for
such quarter and for the elapsed portion of the year ended with the last day of
such quarter (all of which, in the case of the Parent Company and the Borrower,
shall be on a consolidated basis with their respective Subsidiaries) and
certified by an Authorized Signatory of each of the Parent Company, Borrower and
AMC, respectively, to, in his or her opinion, present fairly, in accordance with
GAAP, the financial position of the Parent Company, Borrower and AMC,
respectively, as at the end of such period, and the results of operations for
such period, and for the elapsed portion of the year ended with the last day of
such period, subject only to normal year-end adjustments. In addition, the
financial statements delivered under this Section 7.1 with respect to AMC shall
set forth the operating expenses of the Romance Classics Channel as a separate
line item in the statements themselves or the footnotes thereto.
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Section 7.2 ANNUAL FINANCIAL STATEMENTS AND INFORMATION; CERTIFICATE
OF NO DEFAULT. Within one hundred twenty (120) days after the end of each
calendar year of each of the Parent Company, Borrower and AMC respectively, the
audited balance sheets of each of the Parent Company, Borrower and AMC as at the
end of such calendar year (all of which, in the case of the Parent Company and
the Borrower, shall be on a consolidated basis with their respective
Subsidiaries), and the related audited statements of income and retained
earnings and related audited statements of cash flows of each of the Parent
Company and Borrower, and, in the case of AMC, related audited statements of
income and retained earnings and related audited statements of Operating Cash
Flow, for such calendar year, which financial statements shall set forth in
comparative form such figures as at the end of and for the previous calendar
year, and shall be accompanied by an opinion of KPMG Peat Marwick or a firm of
independent certified public accountants of recognized standing selected by the
Parent Company, Borrower and AMC and satisfactory to the Majority Banks (and, in
the case of the Borrower, together with a statement of such accountants
certifying that no Default or Event of Default, including, without limitation,
any Default under Section 8.8 hereof, was detected during the examination of the
Borrower), and that such accountants have authorized the Parent Company,
Borrower and AMC, respectively, to deliver such financial statements and opinion
thereon to the Agent and the Banks pursuant to this Agreement. In addition, the
financial statements delivered under this Section 7.2 with respect to AMC shall
set forth the operating expenses of the Romance Classics Channel as a separate
line item in the statements themselves of the footnotes thereto.
Section 7.3 PERFORMANCE CERTIFICATES. At the time the financial
statements are furnished pursuant to Sections 7.1 and 7.2 hereof,
(a) a certificate of an Authorized Signatory of the Borrower in
form and substance reasonably satisfactory to the Majority Banks (i) setting
forth as at the end of such quarter or calendar year, as the case may be, the
arithmetical calculations required to establish whether or not the Borrower was
in compliance with the requirements of Section 8.8 hereof; (ii) stating that, to
the best of his or her knowledge, no Default or Event of Default has occurred as
at the end of such quarter or year, as the case may be, or, if a Default or an
Event of Default has occurred, disclosing each such Default or Event of Default
and its nature, when it occurred, whether it is continuing, and the steps being
taken by the Borrower with respect to such Default or Event of Default; and
(iii) stating that the fair value of the assets of the Borrower, (excluding any
interests of the Borrower in AMC) as at the end of such quarter or year, as the
case may be, is greater than $25,000,000; and
(b) a certificate of an Authorized Signatory of the Parent Company
substantially in the form of EXHIBIT L attached
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hereto (i) stating that (x) the Parent Company has sufficient borrowing
availability under the revolving credit facility provided for under the Parent
Company Loan Agreement, and sufficient borrowing availability under the covenant
set forth in Section 9.16 of the Parent Company Loan Agreement to make the
interest payments on the Term Loans due under this Agreement or the Term Notes
for the next succeeding twelve (12) months following the date of such
certificate or (y) at the sole option of the Parent Company, that an escrow
account has been established with The Toronto-Dominion Bank on such terms as
shall be reasonably satisfactory to the Majority Banks and in an amount
sufficient to make the interest payments on the Term Loans due under this
Agreement or the Term Notes for the next succeeding twelve (12) months following
the date of such certificate; (ii) stating that payment by the Parent Company of
interest on the Term Loans due under this Agreement or the Term Notes for the
next succeeding three (3) months following the date of such certificate will not
cause the Parent Company to be in default of Section 9.26 (or any comparable
covenant of the Parent Company Loan Agreement, if the same is amended) of the
Parent Company Loan Agreement; and (iii) stating that no event of default, or
event which with the giving of notice or the passage of time will constitute an
event of default, has occurred under the Parent Company Loan Agreement as at the
end of such quarter or year, as the case may be, which will prevent the Parent
Company from making any borrowing thereunder.
Section 7.4 COPIES OF OTHER REPORTS.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower by its independent public accountants regarding the
Borrower or any of its Subsidiaries, including, without limitation, any
management report prepared in connection with the annual audit referred to in
Section 7.2 hereof.
(b) Promptly after the preparation of the same, copies of all
material reports or financial information filed with any governmental agency,
department, bureau, division or other governmental authority or regulatory body,
or evidencing facts or containing information which could have a Materially
Adverse Effect.
(c) From time to time and promptly upon each request, such data,
certificates, reports, statements, documents, or further information regarding
the business, assets, liabilities, financial position, projections or results of
operations of the Borrower or any of its Subsidiaries as the Agent, upon request
of the Majority Banks, may reasonably request.
Section 7.5 NOTICE OF LITIGATION AND OTHER MATTERS. Prompt notice
of the following events as to which the Borrower has received notice or
otherwise become aware thereof:
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(a) The commencement of all material proceedings and
investigations by or before any governmental body and all actions and
proceedings in any court or before any arbitrator (i) against or (ii) to the
extent known to the Borrower, in any other way relating adversely and directly
to the Borrower or any of its Subsidiaries, or any of the Operating Entities or
any of their respective properties, assets, or businesses, or which calls into
question the validity of this Agreement or any other Loan Document, except where
the adverse outcome of such proceeding or investigation is not likely to have a
Materially Adverse Effect;
(b) Any notice of (i) termination or partial termination of any
MSO Agreement (other than in accordance with its terms) which results in a
reduction of 1,000,000 or more subscribers in the aggregate in any calendar
quarter when added to all other terminations in such quarter, or (ii)
termination of any of the Programming Rights Agreements (other than in
accordance with its terms) the loss of which would cause a Materially Adverse
Effect.
(c) Any material adverse change with respect to the business,
assets, liabilities, financial position, or results of operations of the
Borrower or any of its Subsidiaries, other than changes in the ordinary course
of business which have not had and are not likely to have a Materially Adverse
Effect;
(d) Any Default or default by the Borrower under any agreement
(other than this Agreement) to which the Borrower or any of its Subsidiaries is
party or by which any of their respective properties is bound or the occurrence
of any other event which could have a Materially Adverse Effect, giving in each
case the details thereof and specifying the action proposed to be taken with
respect thereto; and
(e) The occurrence of any Reportable Event or a "prohibited
transaction" (as such term is defined in Section 406 of ERISA or Section 4975 of
the Code) with respect to any Plan of the Borrower or any of its ERISA
Affiliates or the institution or threatened institution by the Pension Benefit
Guaranty Corporation of proceedings under ERISA to terminate or to partially
terminate any such Plan or the commencement or threatened commencement of any
litigation regarding any such Plan or naming it or the Trustee of any such Plan
with respect to such Plan.
ARTICLE 8 - NEGATIVE COVENANTS.
So long as any of the Obligations is outstanding and unpaid or the
Borrower has a right to borrow hereunder (whether or not the conditions to
borrowing have been or can be fulfilled) and unless the Majority Banks shall
otherwise give their prior consent in writing:
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Section 8.1 INDEBTEDNESS OF THE BORROWER. The Borrower shall not
create, assume, incur or otherwise become or remain obligated in respect of, or
permit to be outstanding, and, except with respect to AMC to the extent
permitted by the AMC Loan Agreement so long as it remains in effect and any
obligation of any Subsidiary arising solely from such Subsidiary being a partner
of an Operating Entity, shall not permit any of its Subsidiaries to create,
assume, incur or otherwise become or remain obligated in respect of, or permit
to be outstanding, any Indebtedness for Money Borrowed except:
(a) Indebtedness under this Agreement, the Term Notes and the
other Loan Documents;
(b) Capitalized Lease Obligations (whether or not secured) in an
aggregate amount for the Borrower and its Subsidiaries not in excess of
$2,000,000 at any one time outstanding over the remainder of the term of such
obligations;
(c) Indebtedness with respect to Interest Hedge Agreements,
provided that the aggregate notional amount thereof does not exceed $105,000,000
and the term of any such Interest Hedge Agreement does not extend beyond the
Maturity Date; and
(d) Intercompany Indebtedness among any of the Borrower, the
Borrower's Subsidiaries and the Operating Entities, PROVIDED that repayment of
any such Indebtedness owed by the Borrower or any of its Subsidiaries to any
Operating Entity shall be subordinated to the prior payment in full of the
Obligations;
(e) Subordinated Indebtedness in an aggregate amount not to exceed
$202,500,000;
(f) Operating Advances; and
(g) as set forth on SCHEDULE 8 attached hereto.
Section 8.2 INVESTMENTS. The Borrower shall not and, shall not
permit any of its Subsidiaries to, make any loan, advance, or otherwise acquire
evidences of Indebtedness, capital stock or other securities of any Person,
except (i) that the Borrower may purchase or otherwise acquire and own (A)
marketable, direct obligations of the United States of America maturing within
three hundred sixty-five (365) days of the date of purchase, (B) commercial
paper issued by any Bank or by corporations, each of which shall have a
consolidated net worth of at least $250,000,000 and each of which conducts a
substantial part of its business in the United States of America, maturing
within one hundred eighty (180) days from the date of the original issue
thereof, and rated "P-1" or better by Moody's Investors Service, Inc., (C)
repurchase agreements in such amounts and with such financial institutions
having a rating of Baa or better from Moody's Investors Service, Inc., as the
Borrower may select from time to time and (D) certificates of deposit maturing
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within three hundred sixty-five (365) days of the date of purchase which are
issued by any Bank or by a United States national or state bank or foreign bank
having capital, surplus and undivided profits totaling more than $100 million,
and having a rating of Baa or better from Moody's Investors Service, Inc., (ii)
that the Borrower may make investments in and loans to its Subsidiaries,
PROVIDED, HOWEVER, that any such investments or loans shall be funded solely
from Available Cash Flow and may not be made by Borrower following the
occurrence and during the continuance of an Event of Default; (iii) that
Subsidiaries may make investments in and loans to the Borrower; (iv) that
Borrower or any of its Subsidiaries may acquire the remaining 0.1% interest in
AMC pursuant to the exercise of the option acquired by AMC Holding Corporation
as a part of the AMC Interest; (v) that Borrower and its Subsidiaries may make
investments and/or acquire interests in any businesses or ventures related to
the Business, PROVIDED, HOWEVER, that any such investments or acquisitions
shall be funded solely from Available Cash Flow and may not be made after the
occurrence and during the continuance of an Event of Default; (vi) that the
Borrower and its Subsidiaries may make investments in and loans to any Operating
Entity, PROVIDED, HOWEVER, that any such investments or loans shall be
funded solely from Available Cash Flow and may not be made after the occurrence
and during the continuance of an Event of Default; and (vii) as set forth on
SCHEDULE 9 attached hereto.
Section 8.3 LIMITATION ON LIENS. The Borrower shall not create,
assume, incur or permit to exist or to be created, assumed, incurred or
permitted to exist, directly or indirectly, and shall not permit any of its
Subsidiaries to create, assume, incur, or permit to exist or to be created,
assumed, incurred or permitted to exist, directly or indirectly, any Lien on any
of its properties or assets, whether now owned or hereafter acquired, except for
Permitted Liens.
Section 8.4 AMENDMENT AND WAIVER. The Borrower shall not, without
the prior written consent of the Majority Banks, enter into any material
amendment of, or agree to or accept any material waiver, which would adversely
affect the rights of the Agent and the Banks under this Agreement or any other
Loan Document or which would have a Materially Adverse Effect, of any of the
provisions of, (a) its certificate of incorporation or by-laws, (b) the
certificate of incorporation or by laws, or partnership agreement, as applicable
of any Subsidiary or (c) the Management Agreement. The Borrower shall give
written notice to the Agent of any amendment or waiver of any material provision
in the AMC Loan Agreement or any partnership agreement, articles of
incorporation, by-laws, stockholder agreement or any document of similar import
of an Operating Entity, in each case not less than five (5) Business Days prior
to the effectiveness thereof.
Section 8.5 LIQUIDATION; DISPOSITION OR ACQUISITION OF
ASSETS.(a)Unless otherwise permitted hereunder, the Borrower
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shall not and shall not permit any of its Subsidiaries to, at any time, (i)
liquidate or dissolve itself (or suffer any liquidation or dissolution) or
otherwise wind up, (ii) sell, lease, abandon, transfer, exchange or otherwise
dispose of any capital stock or partnership interests of any of the Borrower's
Subsidiaries or any other assets or business in excess of $1,000,000 in the
aggregate during the term of this Agreement or (iii) enter into any merger or
consolidation except, in each case, for:
(1) sales, dispositions, mergers, consolidations or exchanges by
any Subsidiary of Borrower of its business, assets, or rights (including
any interest of any Subsidiary of the Borrower in an Operating Entity) to
or with the Borrower or another Subsidiary of Borrower;
(2) liquidations, mergers, consolidations, exchanges, sales or
dispositions of any assets or properties (including, without limitation,
any interest of the Borrower or any Subsidiary in any Operating Entity),
other than any direct or indirect interest of the Borrower or any
Subsidiary of Borrower in AMC, which is provided for in Section 8.5(a)(3)
hereof, conducted strictly in accordance with the following requirements:
(A) any cash proceeds received by the Borrower from any such
transaction shall be either (x) applied by the Borrower promptly
after the receipt thereof towards the prepayment of the Term Loan in
accordance with Section 2.4 hereof or (y) so long as an Event of
Default has not occurred and is continuing, reinvested by the
Borrower in its Business or the Business of any Subsidiary of
Borrower or any Operating Entity;
(B) any cash proceeds received by any Subsidiary of Borrower
from any such transaction shall be either (x) distributed to the
Borrower promptly after the receipt thereof (and the Borrower hereby
agrees to cause such Subsidiary to make such distribution) to be
applied by the Borrower in accordance with Clause (A) immediately
above or (y) so long as an Event of Default has not occurred and is
continuing, reinvested by such Subsidiary in its Business or the
Business of any other Subsidiary of Borrower or any Operating
Entity;
(C) comply with the requirements of Section 6.14 hereof in
all respects; and
(D) any non-cash proceeds received by the Borrower or, if
applicable, any Subsidiary shall be pledged or held in accordance
with Section 6.15 hereof; and
(3) With respect to AMC, the sale in the aggregate of partnership
interests which would not reduce the Borrower's
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interests, directly or indirectly, in AMC after giving effect thereto to an
amount less than 50% of the then outstanding partnership interests of AMC,
provided that:
(A) no such single sale shall be for less than 10% of the
outstanding partnership interests of AMC;
(B) each such sale shall be for cash, and the cash proceeds
received by the Borrower or any of its Subsidiaries from any such
sale shall be applied by the Borrower (or distributed to the
Borrower for such application, by such Subsidiary if applicable) and
applied promptly after the receipt thereof towards the prepayment of
the Term Loan in accordance with Section 2.4 hereof;
(C) the payment received by the Borrower or its Subsidiary
for such interests shall not be less than an amount determined on
the basis of an aggregate value for AMC of not less than
$390,000,000;
(D) the Borrower or any of its Subsidiaries shall remain the
managing general partner of AMC; and
(E) the Borrower shall notify the Agent in writing as soon as
reasonably practicable after reaching an agreement for the sale of
any such interest in AMC and, in any event, at least ten (10) days
prior to the closing of any such sale.
(4) sales or dispositions in the ordinary course of obsolete or
worn-out property and other property reasonably determined by the
management of the disposing entity to be not used or useful in its
business; and
(5) liquidations, dissolutions, sales or dispositions of any
Subsidiary or Operating Entities that holds no assets and conducts no
business activities; or
(b) the Borrower shall not, and shall not permit any of its
Subsidiaries to, at any time acquire assets, property, stock or business of any
other Person, except for (i) Capital Expenditures in the ordinary course of the
Borrower's or such Subsidiary's Business, (ii) Programming Rights Agreements,
(iii) acquisitions and investments from Available Cash Flow permitted under
Section 8.2 (v) hereof, and (iv) acquisitions of assets, property, stock or
businesses by the Borrower or such Subsidiary solely in exchange for equity
interests in a Subsidiary or an Operating Entity.
Section 8.6 LIMITATION ON GUARANTIES. The Borrower shall not, and
shall not permit any of its Subsidiaries to, at any time Guaranty, or assume, be
obligated with respect to, or permit to be outstanding any Guaranty of, any
obligation of any other Person
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other than (a) under any Loan Document, (b) obligations under agreements to
indemnify Persons who have issued bid or performance bonds or letters of credit
issued in lieu of such bonds in the ordinary course of business of the Borrower
or such Subsidiary securing performance by the Borrower or any Subsidiary of
activities otherwise permissible hereunder, (c) a guaranty by endorsement of
negotiable instruments for collection in the ordinary course of business and (d)
those Guaranties described on SCHEDULE 10 attached hereto (as such schedule
may be amended by the Borrower from time to time), undertaken in the ordinary
course of the Borrower's Business or any such Subsidiary's Business for purposes
of (i) securing programming or transponder rights, (ii) production, sports team
and product related arrangements, (iii) affiliation agreements or (iv)
advertising representation agreements, and extensions, replacements and
modifications of the foregoing, PROVIDED that the aggregate amount of such
Guaranties at any time outstanding does not exceed $150,000,000.
Section 8.7 RESTRICTED PAYMENTS AND PURCHASES. The Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
declare or make any Restricted Payment or Restricted Purchase, except (i) that
Borrower's Subsidiaries may make Restricted Payments to the Borrower, (ii) for
amounts received by the Borrower from the Parent Company pursuant to Section
6(e) of the Parent Pledge Agreement relating to payments made to the Parent
Company under the Consulting Agreement and (iii) so long as no Event of Default
then exists or would be caused thereby and subject to the terms of the
Subordination of Fees Agreement, for payment of fees under the Management
Agreements.
Section 8.8 TOTAL RPHI VALUE TO TOTAL RPHI DEBT RATIO. As of the
end of any calendar quarter, the Borrower shall not permit the ratio of (x)
Total RPHI Value to (y) Total RPHI Debt to be less than 2.00 to 1.00.
Section 8.9 AFFILIATE TRANSACTIONS. The Borrower shall not, and
shall not permit any of its Subsidiaries to, at any time engage in any
transaction with an Affiliate, nor make an assignment or other transfer of any
of its assets to any Affiliate, on terms less advantageous to the Borrower or
such Subsidiary than would be the case if such transaction had been effected
with a non-Affiliate, in each case other than as set forth on SCHEDULE 11
attached hereto or as otherwise permitted under this Agreement.
Section 8.10 REAL ESTATE. Neither the Borrower nor any of its
Subsidiaries shall purchase or become obligated to purchase real estate in an
amount in excess of $500,000 in the aggregate during the term of this Agreement.
Section 8.11 ERISA LIABILITIES. The Borrower shall not, and shall
not permit any ERISA Affiliate to, fail to meet all of the applicable minimum
funding requirements of ERISA and the Code, without regard to any waivers
thereof, and, to the extent that the
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assets of any of its Plans would be less than an amount sufficient to provide
all accrued benefits payable under such Plans, shall make the maximum deductible
contributions allowable under the Code. The Borrower shall not, and shall not
permit any ERISA Affiliate to, become a participant in any Multiemployer Plan.
Section 8.12 CHANGE IN BUSINESS. The Borrower shall not, and shall
not permit any of its Subsidiaries to, engage in any businesses other than the
Business.
Section 8.13 SALES AND LEASEBACKS. Neither the Borrower nor any of its
Subsidiaries will enter into any arrangement, directly or indirectly, with any
Person whereby the Borrower or any of its Subsidiaries shall sell or transfer
any property, real or personal, whether now owned or hereafter acquired, and
whereby the Borrower or any of its Subsidiaries shall then or thereafter rent or
lease as lessee such property or any part thereof or other property which the
Borrower or any such Subsidiary intends to use for substantially the same
purpose or purposes as the property sold or transferred unless, in each case,
the proceeds of any such transaction received by the Borrower or any such
Subsidiary shall be applied to the prepayment of the Term Loan in accordance
with Section 2.4 hereof.
ARTICLE 9 - DEFAULT.
Section 9.1 EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default, whatever the reason for such event and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule, or regulation
of any governmental or non-governmental body:
(a) Any representation or warranty made under this Agreement shall
prove incorrect or misleading in any material respect when made or deemed to
have been made;
(b) The Borrower shall default (i) in the payment of any interest
and fees payable hereunder or under the Term Notes, or any of them, or under the
other Loan Documents and such Default shall not have been cured by payment of
such overdue amounts in full within five (5) days from the date such payment
became due, or (ii) in the payment of any principal when due under the Term
Notes, or any of them.
(c) The Borrower shall default in the performance or observance of
any agreement or covenant contained in Article 8;
(d) There shall occur any Default in the performance or observance
of any agreement or covenant or breach of any representation or warranty
contained in any of the Loan Documents (other than this Agreement or as
otherwise provided in Section 9.1
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of this Agreement), which shall not be cured to the Majority Banks' satisfaction
within the applicable cure period, if any, provided for in such Loan Document;
(e) The Borrower shall default in the performance or observance of
any other agreement or covenant contained in this Agreement not specifically
referred to elsewhere in this Section 9.1, and such Default shall not be cured
to the Majority Banks' satisfaction within a period of thirty (30) days from the
occurrence of such default;
(f) The Parent Company shall cease to own all of the issued and
outstanding capital stock of the Borrower;
(g) There shall be entered a decree or order for relief in respect
of the Borrower, any of its Subsidiaries, AMC, or the Parent Company under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy law or other similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or similar official of the Borrower, any of its Subsidiaries, AMC or the Parent
Company, or of any substantial part of their respective properties, or ordering
the winding-up or liquidation of the affairs of any of the Borrower, any of its
Subsidiaries, AMC or the Parent Company, or an involuntary petition shall be
filed against any of the Borrower, any of its Subsidiaries, AMC or the Parent
Company, and a temporary stay entered, and (i) such petition and stay shall not
be diligently contested, or (ii) any such petition and stay shall continue
undismissed for a period of thirty (30) consecutive days;
(h) The Borrower, any of its Subsidiaries, AMC, or the Parent
Company shall file a petition, answer, or consent seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy law or other similar law, or the
Borrower, any of its Subsidiaries, AMC or the Parent Company shall consent to
the institution of proceedings thereunder or to the filing of any such petition
or to the appointment or taking of possession of a receiver, liquidator,
assignee, trustee, custodian, sequestrator, or other similar official of the
Borrower, any of its Subsidiaries, AMC or the Parent Company, or of any
substantial part of their respective properties, or the Borrower, any of its
Subsidiaries, AMC or the Parent Company shall fail generally to pay their
respective debts as they become due, or the Borrower, any of its Subsidiaries,
AMC or the Parent Company shall take any action in furtherance of any such
action;
(i) A final judgment shall be entered by any court against any of
the Borrower, any of its Subsidiaries or AMC for the payment of money which
exceeds $1,000,000, or a warrant of attachment or execution or similar process
shall be issued or levied against property of any of the Borrower, any of its
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Subsidiaries or AMC which, together with all other property of the Borrower, its
Subsidiaries and AMC subject to other such process, exceeds in value $1,000,000
in the aggregate, and if, within thirty (30) days after the entry, issue, or
levy thereof, such judgment, warrant, or process shall not have been paid or
discharged or stayed pending appeal, or if, after the expiration of any such
stay, such judgment, warrant, or process shall not have been paid or discharged;
(j) (i) There shall be at any time any "accumulated funding
deficiency," as defined in ERISA or in Section 412 of the Code, with respect to
any Plan; or (ii) a trustee shall be appointed by a United States District Court
to administer any Plan; or the Pension Benefit Guaranty Corporation shall
institute proceedings to terminate any Plan; or (iii) any of the Borrower and
its ERISA Affiliates shall incur any liability to the Pension Benefit Guaranty
Corporation in connection with the termination of any Plan; or (iv) any Plan or
trust created under any Plan of any of the Borrower and its ERISA Affiliates
shall engage in a non-exempt "prohibited transaction" (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) which would subject the
Borrower or any ERISA Affiliate to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; and
by reason of any or all of the events described in clauses (i) through (iv), as
applicable, the Borrower shall have waived (and/or is likely to incur) and/or
incurred liability in excess of $1,000,000 in the aggregate and, if any such
default shall occur in respect of any Subsidiary of the Borrower, such default
would have a Materially Adverse Effect;
(k) There shall occur any default (which default is not cured or
waived within any applicable cure period) under any material indenture,
agreement, or instrument evidencing Indebtedness for Money Borrowed of the
Borrower, any of its Subsidiaries or AMC, including but not limited to the AMC
Loan Agreement, and, if any such default shall occur in respect of any
Subsidiary of the Borrower, such default would have a Materially Adverse Effect;
(l) There shall occur any default under the Parent Company Loan
Agreement which prohibits the Parent Company from obtaining advances under the
Parent Company Loan Agreement in an aggregate amount sufficient to pay, and
which aggregate amount shall be permitted under the Parent Company Loan
Agreement for use in the payment of, interest on the Term Loans in accordance
with Section 2.3 of this Agreement and the Term Notes;
(m) All or any portion of any Loan Document shall at any time and
for any reason be declared by a court of competent jurisdiction in a suit with
respect to such Loan Document to be null and void, or a proceeding shall be
commenced by any governmental authority involving a legitimate dispute or by the
Borrower or any of its Subsidiaries, having jurisdiction over the
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Borrower or any of its Subsidiaries, seeking to establish the invalidity or
unenforceability thereof (exclusive of questions of interpretation of any
provision thereof), or the Borrower or any of its Subsidiaries shall deny that
it has any liability or obligation for the payment of principal or interest
purported to be created under any Loan Document;
(n) Dolan shall cease to own stock of the Parent Company having at
least 51% of the votes that may be cast by the holders of all classes of stock
of the Parent Company.
Section 9.2 REMEDIES. If an Event of Default shall have occurred
and shall be continuing:
(a) With the exception of an Event of Default specified in
Sections 9.1(g) or (h) hereof, the Agent, at the direction of the Majority
Banks, shall (i) terminate the Commitment or (ii) declare the principal of and
interest on the Term Loans and the Term Notes and all other obligations to be
forthwith due and payable without presentment, demand, protest, or notice of any
kind, all of which are hereby expressly waived, anything in this Agreement or in
the Term Notes to the contrary notwithstanding, or both.
(b) Upon the occurrence and continuance of an Event of Default
specified in Sections 9.1(g) or (h) hereof, such principal, interest, and other
obligations shall thereupon and concurrently therewith become due and payable,
and the Commitment of the Banks shall forthwith terminate, all without any
action by the Agent or the Banks or the Majority Banks or the holders of the
Term Notes and without presentment, demand, protest, or other notice of any
kind, all of which are expressly waived, anything in this Agreement or in the
Term Notes to the contrary notwithstanding.
(c) The Agent, with the concurrence of the Majority Banks, shall
exercise all of the post-default rights granted to it and to them under the Loan
Documents or under Applicable Law.
(d) The rights and remedies of the Agent and the Banks hereunder
shall be cumulative, and not exclusive.
ARTICLE 10 - THE AGENT.
Section 10.1 APPOINTMENT AND AUTHORIZATION. Each Bank hereby
irrevocably appoints and authorizes, and hereby agrees that it will require any
transferee of any of its interest in its Term Loan and in its Term Notes
irrevocably to appoint and authorize, the Agent to take such actions as its
agent on its behalf and to exercise such powers hereunder as are delegated by
the terms hereof, together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers, employees, or
agents shall be liable for any action taken or omitted to be taken
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by it or them hereunder or in connection herewith, except for its or their own
gross negligence or willful misconduct.
Section 10.2 DELEGATION OF DUTIES. The Agent may execute any of its
duties under the Loan Documents by or through agents or attorneys selected by it
using reasonable care and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible to any
Bank for the negligence or misconduct of any agents or attorneys selected by it
with reasonable care.
Section 10.3 INTEREST HOLDERS. The Agent may treat each Bank, or
the Person designated in the last notice filed with the Agent under this Section
10.3, as the holder of all of the interests of such Bank in its Term Loan and in
its Term Note until written notice of transfer, signed by such Bank (or the
Person designated in the last notice filed with the Agent) and by the Person
designated in such written notice of transfer, in form and substance
satisfactory to the Agent, shall have been filed with the Agent.
Section 10.4 CONSULTATION WITH COUNSEL. The Agent may consult with
legal counsel selected by it and shall not be liable for any action taken or
suffered by it in good faith in reliance thereon.
Section 10.5 DOCUMENTS. The Agent shall be under no duty to
examine, inquire into, or pass upon the validity, effectiveness, or genuineness
of this Agreement, any Note, or any instrument, document, or communication
furnished pursuant hereto or in connection herewith, and the Agent shall be
entitled to assume that they are valid, effective, and genuine, have been signed
or sent by the proper parties, and are what they purport to be.
Section 10.6 AGENT AND AFFILIATES. With respect to the Commitment
and the Term Loan, the Bank which is an Affiliate of the Agent shall have the
same rights and powers hereunder as any other Bank, and the Agent and its other
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Borrower or any Affiliates of, or Persons doing
business with, the Borrower, as if it were not affiliated with the Agent and
without any obligation to account therefor.
Section 10.7 RESPONSIBILITY OF THE AGENT. The duties and
obligations of the Agent under this Agreement are only those expressly set forth
in this Agreement. The Agent shall be entitled to assume that no Default or
Event of Default has occurred and is continuing unless it has actual knowledge,
or has been notified by the Borrower, of such fact, or has been notified by a
Bank that such Bank considers that a Default or an Event of Default has occurred
and is continuing, and such Bank shall specify in detail the nature thereof in
writing. The Agent shall not be liable to the Banks hereunder for any action
taken or omitted to be taken
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except for its own gross negligence or willful misconduct. The Agent shall
provide each Bank with copies of such documents received from the Borrower as
such Bank may reasonably request.
Section 10.8 ACTION BY AGENT.
(a) Except for action requiring the approval of the Majority Banks
or all of the Banks, the Agent shall be entitled to use its discretion with
respect to exercising or refraining from exercising any rights which may be
vested in it by, and with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement,
unless the Agent shall have been instructed by the Majority Banks to exercise or
refrain from exercising such rights or to take or refrain from taking such
action, provided that the Agent shall not exercise any rights under Section
9.2(a) of this Agreement without the request of the Majority Banks. The Agent
shall incur no liability under or in respect of this Agreement with respect to
anything which it may do or refrain from doing in the reasonable exercise of its
judgment or which may seem to it to be necessary or desirable in the
circumstances, except for its gross negligence or willful misconduct.
(b) The Agent shall not be liable to the Banks or to any Bank in
acting or refraining from acting under this Agreement in accordance with the
instructions of the Majority Banks, and any action taken or failure to act
pursuant to such instructions shall be binding on all Banks unless the action or
refraining from action requires the consent of all of the Banks.
Section 10.9 NOTICE OF DEFAULT OR EVENT OF DEFAULT. In the event
that the Agent or any Bank shall acquire actual knowledge, or shall have been
notified in writing, of any Default or Event of Default, the Agent or such Bank
shall promptly notify the Banks and the Agent, and the Agent shall take such
action and assert such rights under this Agreement as the Majority Banks shall
request in writing, and the Agent shall not be subject to any liability by
reason of its acting pursuant to any such request. If the Majority Banks shall
fail to request the Agent to take action or to assert rights under this
Agreement in respect of any Default or Event of Default within ten (10) days
after their receipt of the notice of any Default or Event of Default from the
Agent, or shall request inconsistent action with respect to such Default or
Event of Default, the Agent may, but shall not be required to, take such action
and assert such rights (other than rights under Article 9 hereof) as it deems in
its discretion to be advisable for the protection of the Banks, except that, if
the Majority Banks have instructed the Agent not to take such action or assert
such right, in no event shall the Agent act contrary to such instructions.
Section 10.10 RESPONSIBILITY DISCLAIMED. The Agent shall be under
no liability or responsibility whatsoever as Agent:
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(a) To the Borrower or any other Person or entity as a consequence
of any failure or delay in performance by or any breach by, any Bank or Banks of
any of its or their obligations under this Agreement;
(b) To any Bank or Banks, as a consequence of any failure or delay
in performance by, or any breach by, the Borrower or any other obligor of any of
its obligations under this Agreement or the Term Notes or any other Loan
Document; or
(c) To any Bank or Banks for any statements, representations, or
warranties in this Agreement, or any other document contemplated by this
Agreement or any information provided pursuant to this Agreement, any other Loan
Document, or any other document contemplated by this Agreement, or for the
validity, effectiveness, enforceability, or sufficiency of this Agreement, the
Term Notes, any other Loan Document, or any other document contemplated by this
Agreement.
Section 10.11 INDEMNIFICATION. The Banks agree to indemnify the
Agent (to the extent not reimbursed by the Borrower) pro rata according to their
respective Commitment Ratios, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including fees and expenses of experts, agents, consultants, and
counsel), or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement, any other Loan Document, or any other document
contemplated by this Agreement or any action taken or omitted by the Agent under
this Agreement, any other Loan Document, or any other document contemplated by
this Agreement, except that no Bank shall be liable to the Agent for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements resulting from the gross
negligence or willful misconduct of the Agent. The provisions of this Section
10.11 shall survive the termination of this Agreement.
Section 10.12 CREDIT DECISION. Each Bank represents and warrants to
each other and to the Agent that:
(a) In making its decision to enter into this Agreement and to
make Advances it has independently taken whatever steps it considers necessary
to evaluate the financial condition and affairs of the Borrower and that it has
made an independent credit judgment, and that it has not relied upon information
provided by the Agent; and
(b) So long as any portion of the Term Loans remains outstanding,
it will continue to make its own independent evaluation of the financial
condition and affairs of the Borrower.
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Section 10.13 SUCCESSOR AGENT. Subject to the appointment and
acceptance of a successor Agent (which shall be any Bank or a commercial Bank
organized under the laws of the United States of America or any political
subdivision thereof which has a combined capital and reserves in excess of
$250,000,000) as provided below, the Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower and may be removed at any
time for cause by the Majority Banks. Upon any such resignation or removal, the
Majority Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Banks, and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent which shall be any Bank or a commercial bank organized under the
laws of the United States of America or any political subdivision thereof which
has combined capital and reserves in excess of $250,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, duties, and obligations of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 10.13 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent.
ARTICLE 11 - CHANGE IN CIRCUMSTANCES
AFFECTING EURODOLLAR ADVANCES
Section 11.1 EURODOLLAR BASIS DETERMINATION INADEQUATE OR UNFAIR.
Notwithstanding anything contained herein which may be construed to the
contrary, if with respect to any proposed Eurodollar Advance for any Interest
Period, the Agent determines after consultation with the Banks that deposits in
dollars (in the applicable amount) are not being offered to each of the Banks in
the relevant market for such Interest Period, the Agent shall forthwith give
notice thereof to the Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such situation no longer
exist, the obligations of the Banks to make such type of Eurodollar Advances
shall be suspended.
Section 11.2 ILLEGALITY. If any applicable law, rule, or
regulation, or any change therein, or any interpretation or change in
interpretation or administration thereof by any governmental authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank, or comparable
agency,
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shall make it unlawful or impossible for any Bank to make, maintain, or fund its
Eurodollar Advances, such Bank shall so notify the Agent, and the Agent shall
forthwith give notice thereof to the other Banks and the Borrower. Before
giving any notice to the Agent pursuant to this Section 10.2, such Bank shall
designate a different lending office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. Upon receipt of such notice, notwithstanding
anything contained in Article 2 hereof, the Borrower shall repay in full the
then outstanding principal amount of each affected Eurodollar Advance of such
Bank so affected, together with accrued interest thereon, either (a) on the last
day of the then current Interest Period applicable to such Advance if such Bank
may lawfully continue to maintain and fund such Advance to such day or (b)
immediately if such Bank may not lawfully continue to fund and maintain such
Advance to such day. Concurrently with repaying each affected Eurodollar
Advance of such Bank, notwithstanding anything contained in Article 2 or Article
3 hereof, the Borrower shall borrow a Base Rate Advance from such Bank, and such
Bank shall make such Base Rate Advance in an amount such that the outstanding
principal amount of the Note held by such Bank shall equal the outstanding
principal amount of such Note immediately prior to such repayment.
Section 11.3 INCREASED COSTS.
(a) If any Regulatory Change:
(i) Shall subject any Bank to any tax, duty, or other charge with
respect to its obligation to make Eurodollar Advances, or its Eurodollar
Advances, or shall change the basis of taxation of payments to any Bank of
the principal of or interest on its Eurodollar Advances or in respect of
any other amounts due under this Agreement in respect of its Eurodollar
Advances or its obligation to make Eurodollar Advances (except for changes
in the rate of tax on the overall net income of such Bank imposed by the
jurisdiction in which such Bank's principal executive office is located);
or
(ii) Shall impose, modify, or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of
the Federal Reserve System, but excluding any included in an applicable
Eurodollar Reserve Percentage) special deposit, assessment or other
requirement or condition against assets of, deposits with or for the
account of, or commitments or credit extended by any Bank, or shall impose
on any Bank or the eurodollar interbank borrowing market any other
condition affecting such Bank's obligation to make such Eurodollar
Advances or its Eurodollar Advances;
and the result of any of the foregoing is to increase the cost to such Bank of
making or maintaining any such Eurodollar Advances, or to reduce the amount of
any sum received or receivable by such Bank
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under this Agreement or under its Term Notes with respect thereto, then, on the
earlier of demand by such Bank or the Maturity Date, the Borrower agrees to pay
to such Bank such additional amount or amounts as will compensate such Bank for
such increased costs. Each Bank will promptly notify the Borrower and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section 11.3 and
will designate a different lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
judgment of such Bank, be otherwise disadvantageous to such Bank.
(b) A certificate of any Bank claiming compensation under this
Section 11.3 and setting forth the additional amount or amounts to be paid to it
hereunder and calculations therefor shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods. If any Bank demands compensation under this
Section 11.3, the Borrower may at any time, upon at least five (5) Business
Days' prior notice to such Bank, prepay in full the then outstanding affected
Eurodollar Advances of such Bank, together with accrued interest thereon to the
date of prepayment, along with any reimbursement required under Section 2.7
hereof. Concurrently with prepaying such Eurodollar Advances the Borrower shall
borrow a Base Rate Advance from such Bank, and such Bank shall make such Base
Rate Advance in an amount such that the outstanding principal amount of the Term
Notes held by such Bank shall equal the outstanding principal amount of such
Term Notes immediately prior to such prepayment.
Section 11.4 EFFECT ON OTHER ADVANCES. If notice has been given
pursuant to Section 11.1, 11.2 or 11.3 hereof suspending the obligation of any
Bank to make any type of Eurodollar Advance, or requiring Eurodollar Advances of
any Bank to be repaid or prepaid, then, unless and until such Bank notifies the
Borrower that the circumstances giving rise to such repayment no longer apply,
all Advances which would otherwise be made by such Bank as Eurodollar Rate
Advance shall, at the option of the Borrower, be made instead as Base Rate
Advances.
ARTICLE 12 - MISCELLANEOUS.
Section 12.1 NOTICES.
(a) All notices and other communications under this Agreement
shall be in writing and shall be deemed to have been given three (3) days after
deposit in the mail, designated as certified mail, return receipt requested,
post-prepaid, or one (1) day after being entrusted to a reputable commercial
overnight delivery service, or sent by telecopy addressed to the party to which
such notice is directed at its address determined as provided in this Section
12.1 All notices and other communications under
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this Agreement shall be given to the parties hereto at the following addresses:
(i) If to the Borrower, to it at:
Rainbow Programming Holdings, Inc.
150 Crossways Park West
Woodbury, New York 11797
Attn: President
Telecopy No.: (516) 364-2297
with copies to:
Rainbow Programming Holdings, Inc.
150 Crossways Park West
Woodbury, New York 11797
Attn: Executive Vice President,
Legal and Business Affairs
Telecopy No.: (516) 364-4085
and
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Attn: Chief Financial Officer and
General Counsel
Telecopy No.: (516) 496-1780
(ii) If to the Agent, to it at:
Toronto Dominion (Texas), Inc.
909 Fannin, Suite 1700
Houston, Texas 77010
Attn: Manager, Agency
Telecopy No.: (713) 951-9921
with a copy to:
Paul, Hastings, Janofsky & Walker
133 Peachtree Street, N.E.
42nd Floor
Atlanta, Georgia 30303
Attn: Chris D. Molen, Esq.
Telecopy No.: (404) 523-1542
(iii) If to the Banks, to them at:
The Toronto-Dominion Bank
USA Division
31 West 52nd Street
New York, New York 10019-6101
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Attn: Vice President, Communications Finance
Telecopy No.: (212) 262-1928
Copies shall be provided to persons other than parties hereto only in the case
of notices under Article 8 hereof.
(b) Any party hereto may change the address to which notices shall
be directed under this Section 12.1 by giving ten (10) days' written notice of
such change to the other parties.
Section 12.2 EXPENSES. The Borrower agrees to promptly pay:
(a) All reasonable out-of-pocket expenses of the Agent on the
Closing Date in connection with the preparation, negotiation, execution, and
delivery of this Agreement and the other Loan Documents executed on the
Agreement Date, the transactions contemplated hereunder and thereunder, and the
making of the initial Advance hereunder, including, but not limited to, the
reasonable fees and disbursements of counsel for the Agent;
(b) All reasonable out-of-pocket expenses of the Agent in
connection with the preparation and negotiation of any waiver, amendment, or
consent by the Banks relating to this Agreement or the other Loan Documents
whether or not executed, including, but not limited to, the reasonable fees and
disbursements of counsel for the Agent;
(c) All reasonable out-of-pocket expenses of the Agent in
connection with the syndication of the Term Loans; and
(d) From and after the occurrence of an Event of Default, all
reasonable out-of-pocket costs and expenses of the Agent in respect of such
Event of Default, irrespective of whether suit or other proceeding has commenced
in respect thereto, which shall include reasonable fees and out-of-pocket
expenses of counsel for the Agent, and the reasonable fees and out-of-pocket
expenses of any experts, agents, or consultants engaged by the Agent.
Section 12.3 WAIVERS. The rights and remedies of the Agent and the
Banks under this Agreement and the other Loan Documents shall be cumulative and
not exclusive of any rights or remedies which they would otherwise have. No
failure or delay by the Agent, the Majority Banks, or the Banks in exercising
any right shall operate as a waiver of such right. The Agent and the Banks
expressly reserve the right to require strict compliance with the terms of this
Agreement in connection with any funding of a request for an Advance. In the
event the Banks decide to fund a request for an Advance at a time when the
Borrower is not in strict compliance with the terms of this Agreement, such
decision by the Banks shall not be deemed to constitute an undertaking by the
Banks to fund any further requests for Advances or preclude the Banks from
exercising any rights available to the Banks under the Loan Documents or at law
or equity. Any waiver or indulgence granted by
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the Banks or by the Majority Banks shall not constitute a modification of this
Agreement, except to the extent expressly provided in such waiver or indulgence,
or constitute a course of dealing by the Banks at variance with the terms of the
Agreement such as to require further notice by the Banks of the Banks' intent to
require strict adherence to the terms of the Agreement in the future.
Section 12.4 SET-OFF. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
after the Maturity Date (whether by acceleration or otherwise), the Banks and
any subsequent holder or holders of the Term Notes are hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set-off and
to appropriate and apply any and all deposits (general or special, time or
demand, including, but not limited to, Indebtedness evidenced by certificates of
deposit, in each case whether matured or unmatured) and any other Indebtedness
at any time held or owing by the Banks or such holder to or for the credit or
the account of the Borrower, against and on account of the obligations and
liabilities of the Borrower, to the Banks or such holder under this Agreement,
the Term Notes, and any other Loan Document, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement, the Term Notes, or any other Loan Document, irrespective of whether
or not (a) the Banks or the holder of the Term Notes shall have made any demand
hereunder or (b) the Banks shall have declared the principal of and interest on
the Term Loans and Term Notes and other amounts due hereunder to be due and
payable as permitted by Section 9.2 hereof and although said obligations and
liabilities, or any of them, shall be contingent or unmatured. Any sums
obtained by any Bank or by any subsequent holder of the Term Notes shall be
subject to the application of payments provisions of Article 2 hereof. Upon
direction by the Agent, with the consent of the Majority Banks, after the
Maturity Date (whether by reason of acceleration or otherwise) each Bank holding
deposits of the Borrower shall exercise its set-off rights as so directed.
Section 12.5 ASSIGNMENT.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the Term Notes without the prior written consent
of each Bank.
(b) Each of the Banks may at any time enter into assignment
agreements or participations with respect to its interest hereunder and under
the other Loan Documents with one or more other banks or other Persons provided
that, except after the occurrence and during the continuance of an Event of
Default, any such assignment shall not be in an amount less than $10,000,000 and
each Bank shall retain an interest in not less than $10,000,000 of such Bank's
pro rata share of the Commitment. Notwithstanding the
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foregoing, each Bank may sell assignments or participations of up to one hundred
percent (100%) of its interest hereunder and under the other Loan Documents to
one or more Affiliates of such Bank. All of the foregoing assignments and
participants shall be done on a pro rata basis with respect to the Term Loan,
and shall be subject to the following:
(i) Except for assignments made to any Federal Reserve Bank, no
assignment or participation (including any assignment or participation to
an Affiliate of such Bank) shall be sold without the consent of the
Borrower and the Agent, which consent shall not be unreasonably withheld.
(ii) Any Person purchasing a participation or an assignment of the
Term Loan from any Bank shall be required to represent and warrant that
its purchase shall not constitute a "prohibited transaction" (as defined
in Section 5.1(m) hereof).
(iii) The Borrower, the Banks, and the Agent agree that assignments
permitted hereunder (including the assignment of any Advance or portion
thereof) may be made with all voting rights, and shall be made pursuant to
an Assignment and Assumption Agreement. An administrative fee of $2,500
shall be payable to the Agent by the assigning Bank at the time of any
assignment hereunder.
(iv) No participation agreement shall confer any rights under this
Agreement or any other Loan Document to any purchaser thereof, or relieve
any issuing Bank from any of its obligations under this Agreement, and all
actions hereunder shall be conducted as if no such participation had been
granted; PROVIDED, HOWEVER, that any participation agreement may
confer on the participant the right to approve or disapprove changes in
the interest rate and principal amount, fees and the Maturity Date for the
Term Loan and the release of any collateral.
(v) Each Bank agrees to provide the Agent and the Borrower with
prompt written notice of any issuance of participations or assignments of
its interests hereunder.
(vi) No assignment, participation or other transfer of any rights
hereunder or under the Term Notes shall be effected that would result in
any interest requiring registration under the Securities Act of 1933, as
amended, or qualification under any state securities law.
(vii) No such assignment, participation or transfer may be made to
any bank or other financial institution (x) with respect to which a
receiver or conservator (including, without limitation, the Federal
Deposit Insurance Corporation, the Resolution Trust Company or the Office
of Thrift Supervision)
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has been appointed or (y) that has failed to meet any of the capital
requirements of its primary regulator or insurer.
(viii) If applicable, each Bank shall, and shall cause each of its
assignees to provide to the Agent on or prior to the Agreement Date or
effective date of any assignment, as the case may be, an appropriate
Internal Revenue Service form as required by Applicable Law supporting
such Bank's position that no withholding by the Borrower or the Agent for
U.S. income tax payable by the Bank in respect of amounts received by it
hereunder is required. For purposes of this Agreement, an appropriate
Internal Revenue Service form shall mean Form 1001 (Ownership Exemption or
Reduced Rate Certificate of the U.S. Department of Treasury), or Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with
the Conduct of a Trade or Business in the United States), or any successor
or related forms adopted by the relevant U.S. taxing authorities.
(c) Except as specifically set forth in Section 12.5(b) hereof,
nothing in this Agreement or the Term Notes, expressed or implied, is intended
to or shall confer on any Person other than the respective parties hereto and
thereto and their successors and assignees permitted hereunder and thereunder
any benefit or any legal or equitable right, remedy or other claim under this
Agreement or the Term Notes.
Section 12.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument.
SECTION 12.7 GOVERNING LAW. THIS AGREEMENT AND THE TERM NOTES SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
Section 12.8 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 12.9 HEADINGS. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 12.10 INTEREST.
(a) In no event shall the amount of interest due or payable
hereunder or under the Term Notes exceed the maximum rate of interest allowed by
Applicable Law, and in the event any such payment is inadvertently made by the
Borrower or any Guarantor or
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is inadvertently received by any Bank, then such excess sum shall be credited as
a payment of principal, unless the Borrower or such Guarantor shall notify such
Bank in writing that it elects to have such excess sum returned forthwith. It
is the express intent hereof that the Borrower and the Guarantors not pay and
the Banks not receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may legally be paid by the Borrower and the Guarantors
under Applicable Law.
(b) Notwithstanding the use by the Banks of the Prime Rate, the
Eurodollar Rate, and the Federal Funds Rate as reference rates for the
determination of interest on the Term Loan, the Banks shall be under no
obligation to obtain funds from any particular source in order to charge
interest to the Borrower at interest rates tied to such reference rates.
Section 12.11 ENTIRE AGREEMENT. Except as otherwise expressly
provided herein, this Agreement, the Term Notes, and the other Loan Documents
embody the entire agreement and understanding among the parties hereto and
thereto and supersede all prior agreements, understandings, and conversations
relating to the subject matter hereof and thereof.
Section 12.12 AMENDMENT AND WAIVER. Neither this Agreement nor any
term hereof may be amended orally, nor may any provision hereof be waived orally
but only by an instrument in writing signed by the Majority Banks and, in the
case of an amendment, also by the Borrower, except that in the event of (a) any
change in the principal amount of the Term Loan, (b) any change in the timing
of, or reduction of the amount of, payments of principal, interest, and fees due
hereunder or under any other Loan Document, (c) any release or impairment of
collateral or any guaranty issued in favor of the Agent and the Banks, (d) any
waiver of any Event of Default due to the failure by the Borrower to pay any sum
due hereunder, (e) any change to the priority of payments applicable to
distributions to the Agent and the Banks of proceeds realized from dispositions
of collateral, (f) any change in the sharing of payment procedures described in
Section 2.9(b) hereof or (g) any amendment of this Section 12.12 or of the
definition of Majority Banks, any amendment or waiver may be made only by an
instrument in writing signed by each of the Banks and, in the case of an
amendment, also by the Borrower.
Section 12.13 OTHER RELATIONSHIPS. No relationship created hereunder
or under any other Loan Document shall in any way affect the ability of the
Agent and each Bank to enter into or maintain business relationships with the
Borrower, or any of its Affiliates, beyond the relationships specifically
contemplated by this Agreement and the other Loan Documents.
Section 12.14 CONFIDENTIALITY. The parties hereto shall preserve in
a confidential manner all information received from any other party pursuant to
the Loan Documents and the transactions
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contemplated thereunder, and shall not disclose such information except to those
Persons with which a confidential relationship is maintained (including
designated agents, legal counsel, accountants and regulators), or where required
by law.
Section 12.15 LIABILITY OF GENERAL PARTNERS AND OTHER PERSONS.
Notwithstanding anything else in this Agreement to the contrary, the parties
hereto expressly agree that no partner, officer, director or other holder of an
ownership interest of or in the Borrower, any Subsidiary of the Borrower, any
Operating Entity, any Guarantor or the Parent Company, or any partnership,
corporation or other entity which is a partner, stockholder or holder of an
ownership interest of or in the Borrower, any Subsidiary of the Borrower, any
Operating Entity, any Guarantor or the Parent Company shall have any personal or
individual liability or responsibility in respect of Obligations of the
Borrower, any Subsidiary of the Borrower, any Guarantor or the Parent Company
pursuant to this Agreement or any other Loan Document solely by reason of his or
her status as such partner, officer, director, stockholder or holder.
ARTICLE 13 - WAIVER OF JURY TRIAL.
Section 13.1 WAIVER OF JURY TRIAL. THE BORROWER, EACH OF THE
GUARANTORS AND EACH OF THE AGENT AND THE BANKS HEREBY AGREE TO WAIVE THE RIGHT
TO A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION OR PROCEEDING OF ANY TYPE IN
WHICH THE BORROWER, ANY OF THE GUARANTORS, ANY OF THE BANKS, THE AGENT, OR ANY
OF THEIR RESPECTIVE SUCCESSORS OR ASSIGNS IS A PARTY, AS TO ALL MATTERS AND
THINGS ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT, ANY OF THE TERM
NOTES OR THE OTHER LOAN DOCUMENTS AND THE RELATIONS AMONG THE PARTIES LISTED IN
THIS SECTION 13.1.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed under seal by their duly authorized officers, all as of
the day and year first above written.
BORROWER: RAINBOW PROGRAMMING HOLDINGS, INC.,
a New York corporation, on behalf of itself
and as attorney-in-fact for each of the
Guarantors set forth on Schedule 1 hereto.
By: /s/ Andrew Risey
--------------------------------------
Title: SVP, Finance & Administration
& Treasurer
[CORPORATE SEAL]
Attest: /s/
----------------------------------
Title: Secretary
GUARANTORS:
AGENT: TORONTO DOMINION (TEXAS), INC.
By: /s/ Melissa B. Nigro
--------------------------------------
Title: Vice President
BANKS: THE TORONTO-DOMINION BANK
By: /s/ Melissa B. Nigro
--------------------------------------
Title: Mgr. Syndications & Credit
Admin
CIBC INC.
By: /s/ D. Strek
--------------------------------------
Title: VP
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SHAWMUT BANK, NATIONAL ASSOCIATION
By: /s/
------------------------------------
Title: Director
THE BANK OF NOVA SCOTIA
By: /s/
------------------------------------
Title: Relationship Manager
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is made and entered into as of
________ __, 1994, by and among [BANK] (the "Assignor"),
___________________ (the "Assignee"), and Rainbow Programming Holdings, Inc., a
New York corporation (the "Borrower").
RECITALS
A. The Assignor and Toronto Dominion (Texas), Inc. (the "Agent") are
parties to that certain Loan Agreement dated as of ___________ __, 1994 (the
"Loan Agreement") with the other banks and financial institutions party thereto
(the "Banks"), the Borrower and certain of its Subsidiaries, as Guarantors.
Pursuant to the Loan Agreement, the Assignor and the Banks have agreed to extend
credit to the Borrower under a Commitment in the aggregate principal amount of
$105,000,000, as such amount may be reduced pursuant to the Loan Agreement, of
which the Assignor's commitment is the amount specified in Item 1 of Schedule 1
hereto (the "Assignor's Commitment"). The aggregate principal amounts of the
outstanding Loan made by the Assignor to the Borrower pursuant to the Assignor's
Commitment are specified in Item 2 of Schedule 1 hereto (the "Assignor's Loan").
All capitalized terms not otherwise defined herein are used herein as defined in
the Loan Agreement.
B. The Assignor wishes to sell and assign to the Assignee, and the
Assignee wishes to purchase and assume from the Assignor, (i) the portion of the
Assignor's Commitment specified in Item 3 of Schedule 1 hereto which is
equivalent to the percentage specified in Item 4 of Schedule 1 of the Commitment
(the "Assigned Commitment"), and (ii) a portion of the Assignor's Loan under the
Commitment specified in Item 5 of Schedule 1 hereto (the "Assigned Loan").
The parties agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions set forth herein, the
Assignor hereby sells and assigns to the Assignee, and the Assignee purchases
and assumes from the Assignor, on the date set forth above (the "Assignment
Date") (a) all right, title and interest of the Assignor to the Assigned Loan
and (b) all obligations of the Assignor under the Loan Agreement with respect to
the Assigned Commitment. As full consideration for the sale of the Assigned
Loan and the Assigned Commitment, the Assignee shall pay to the Assignor on the
Assign-
<PAGE>
ment Date the principal amount of the Assigned Loan (the "Purchase Price").
2. CONSENT AND UNDERTAKING. The Borrower hereby consents to the
assignment made herein, and undertakes as soon as practicable to provide new
Term Loan Notes to the Assignee and the Assignor, as appropriate to reflect the
portion of the Commitment held by each of the Assignee and the Assignor after
giving effect to the assignment contemplated by this Agreement. The Assignor
agrees that upon receipt of an executed replacement Note via telecopier, it will
or will cause the cancelled Note to be telecopied to the Borrower. The Assignor
further agrees within three (3) Business Days following receipt of its new Note,
to return its superseded Note to the Borrower.
3. REPRESENTATIONS AND WARRANTIES. Each of the Assignor and the Assignee
represents and warrants to the other that (a) it has full power and legal right
to execute and deliver this Agreement and to perform the provisions of this
Agreement; (b) the execution, delivery and performance of this Agreement have
been authorized by all action, corporate or otherwise, and do not violate any
provisions of its charter or by-laws or any contractual obligations (including,
without limitation, Section 12.5 of the Loan Agreement) or requirement of law
binding on it; and (c) this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
4. CONDITION PRECEDENT. The obligations of the Assignor and the Assignee
hereunder shall be subject to the fulfillment of the condition that (i) the
Assignor shall have (A) received payment in full of the Purchase Price, and
(B) complied with all other applicable provisions of Section 12.5 of the Loan
Agreement, and (ii) the Assignee shall have complied with the applicable
provisions of Section 12.5 of the Loan Agreement.
5. NOTICE OF ASSIGNMENT. The Assignor agrees to give notice of the
assignment and assumption of the Assigned Loan and the Assigned Commitment to
the Agent and hereby informs the Borrower the offices specified in Item 6 on
Schedule 1 hereto shall be the Assignee's address for notices pursuant to
Section 12.1 of the Loan Agreement; PROVIDED, HOWEVER, that the Borrower and the
Agent shall be entitled to continue to deal solely and directly with the
Assignor in connection with the interests so assigned until (i) the Agent shall
have received notice of the assignment duly executed by the Assignor, the
Assignee and the Borrower, and, if applicable, the documents referred to in the
last sentence of this paragraph, and (ii) the Assignor shall have delivered to
the Borrower any Notes that shall be subject to such assignment. From and after
the date (the "Effective Date") on which the Agent shall notify the Borrower and
the Assignor that the requirements set forth in clauses (i) and (ii) shall have
been met and all consents (if any) required shall have been given, the Assignee
shall be deemed to be a party to the Loan
-2-
<PAGE>
Agreement and, to the extent that rights and obligations thereunder shall have
been assigned to Assignee as provided in such notice of assignment to the Agent,
shall have the rights and obligations of a Bank under the Loan Agreement. After
the Effective Date, and with respect to all such amounts accrued from the
Assignment Date, (a) all interest, principal, fees and other amounts that would
otherwise be payable to the Assignor in respect of the Assigned Loan and the
Assigned Commitment shall be paid to the Assignee, and (b) if the Assignor
receives any payment on account of the Assigned Loan or the Assigned Commitment,
the Assignor shall promptly deliver such payment to the Assignee. The Assignee
agrees to deliver to the Borrower and the Agent such Internal Revenue Service
forms as may be required to establish that the Assignee is entitled to receive
payments under the Loan Agreement without deduction or withholding of tax.
6. INDEPENDENT INVESTIGATION. The Assignee acknowledges that it is
purchasing the Assigned Loan and the Assigned Commitment from the Assignor
totally without recourse and, except as provided in Section 3 hereof, without
representation or warranty. The Assignee further acknowledges that it has made
its own independent investigation and credit evaluation of the Borrower in
connection with its purchase of the Assigned Loan and the Assigned Commitment.
Except for the representations or warranties set forth in Section 3, the
Assignee acknowledges that it is not relying on any representation or warranty
of the Assignor, expressed or implied, including without limitation, any
representation or warranty relating to the legality, validity, genuineness,
enforceability, collectibility, interest rate, repayment schedule or accrual
status of the Assigned Loan or the Assigned Commitment, the legality, validity,
genuineness or enforceability of the Loan Agreement, the related Notes, or any
other Loan Document referred to in or delivered pursuant to the Loan Agreement,
or financial condition or creditworthiness of the Borrower. The Assignor has
not and will not be acting as either the representative, agent or trustee of the
Assignee with respect to matters arising out of or relating to the Loan
Agreement or this Agreement. From and after the Effective Date, the Assignor
shall have no rights or obligations with respect to the Assigned Loan or the
Assigned Commitment.
7. METHOD OF PAYMENT. All payments to be made by the Assignor or the
Assignee hereunder shall be in funds available at the place of payment on the
same day and shall be made by wire transfer to the account designated by the
party to receive payment.
8. INTEGRATION. This Agreement shall supersede any prior agreement or
understanding between the parties (other than the Loan Agreement) as to the
subject matter hereof.
9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
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<PAGE>
original and shall be binding upon both parties, their successors and assigns.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF, THE STATE OF NEW YORK.
ASSIGNOR: [BANK]
By: ____________________________
Title: _____________________
ASSIGNEE: _________________________
By: ____________________________
Title: _____________________
Agreed and Accepted:
RAINBOW PROGRAMMING HOLDINGS, INC.,
a New York corporation
By: _____________________________
Title: ______________________
Acknowledged:
TORONTO DOMINION (TEXAS), INC.
By: _________________________
Title: __________________
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<PAGE>
SCHEDULE 1
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
Loan Agreement Among
Rainbow Programming Holdings, Inc., the Guarantors,
Toronto Dominion (Texas), Inc., as Agent,
and the Banks dated as of __________ __, 1994
Item 1. Assignor's Commitment $___________
Item 2. Assignor's Loan Under
the Commitment $___________
consisting of:
Base Rate Advances $__________
Eurodollar Advances $__________
Item 3. Amount of Assigned Commitment
Under the Commitment $___________
Item 4. Percentage of the Commitment
Assigned ___________%
Item 5. Amount of Assigned Loan
Under the Commitment $ ___________
consisting of:
Base Rate Advances $_____________
Eurodollar Advances $_____________
Item 6. Lending Office of Assignee ______________________
and Address for Notices ______________________
under Loan Agreement ______________________
______________________
Attn: _______________
Telecopy No.: ____________
<PAGE>
NOTES TO SCHEDULE 1
Item 1. Insert the dollar amount of Assignor's Commitment under each of
the Commitment prior to assignment.
Item 2. Insert the total amount of outstanding Loan of Assignor, showing
a breakdown by type. Description of the type of loan should conform to the
description in the Loan Agreement.
Item 3. Insert the dollar amounts of the Assignor's Commitment under the
Commitment, including outstanding Loan, being assigned.
Item 4. Insert the Assigned Commitment as a percentage of total
commitments of all Banks under each of the Commitment.
Item 5. Insert the total amount of outstanding Loan of Assignor being
assigned to Assignee. Description of the type of Loan should be consistent with
Item 2.
Item 6. Insert the name and address of the lending office of the
Assignee.
<PAGE>
EXHIBIT B
BORROWER PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement"), entered into as of this 30th
day of June, 1994, by and between RAINBOW PROGRAMMING HOLDINGS, INC., a New York
corporation (the "Pledgor"), and TORONTO DOMINION (TEXAS), INC., as agent (the
"Agent") for the Banks (as defined in the Loan Agreement defined below),
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated as of June 30, 1994
(together with any and all extensions, renewals, amendments, modifications or
supplements thereto, the "Loan Agreement") by and among the Pledgor, the Agent,
and the Banks, the Banks have agreed, severally in accordance with their
respective Commitment Ratios and not jointly, to extend a credit facility to the
Pledgor in an aggregate principal amount not to exceed U.S. $105,000,000 (the
"Loan"), evidenced by the Pledgor's term notes in favor of each Bank (as
executed on the date hereof and as they may be amended, modified, renewed or
extended from time to time, collectively, the "Notes"); and
WHEREAS, to secure the due and punctual payment and performance of all
obligations of the Pledgor under the Loan Agreement, the Notes and the Loan
Documents (as defined in the Loan Agreement), the Pledgor wishes to pledge and
assign to the Agent and the Banks all of its right, title and interest in and to
all of the shares of capital stock (the "Stock") set forth on Schedule I hereto
issued by the Subsidiaries of the Pledgor named therein and all shares of
capital stock (the "Additional Stock") issued by future Subsidiaries of the
Pledgor which shares are required pursuant to the Loan Agreement to be pledged
to the Agent for the benefit of the Banks; and
WHEREAS, the Pledgor has delivered certificates for the Stock to the Agent,
on behalf of the Banks;
NOW, THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the meanings ascribed thereto in the Loan Agreement.
<PAGE>
2. SECURITY INTEREST. As security for (a) the timely fulfillment and
performance of each and every covenant and obligation of the Pledgor under the
Loan Agreement, the Notes and the other Loan Documents, and (b) the payment of
the Obligations, the Pledgor hereby pledges, mortgages, transfers, sets over and
delivers to and assigns to the Agent, on behalf of the Banks, and grants the
Agent, on behalf of the Banks, a continuing Lien on and security interest in and
security title to, and has delivered to and deposited with the Agent, on behalf
of the Banks herewith, the following collateral, whether now owned or hereafter
acquired (the "Collateral"):
(i) the Stock and the Additional Stock and all substitutions therefor
and replacements thereof, all proceeds and products thereof and all rights
related thereto, including, without limitation, certificates representing the
Stock and the Additional Stock, the right to request that the Stock, the
Additional Stock and other certificated securities be registered in the name of
the Agent, on behalf of the Banks, or any of its or their nominees, the right to
receive the Stock and the Additional Stock and the right to require that same be
delivered to the Agent, on behalf of the Banks, together with stock powers or
assignments of investment securities with respect thereto, duly executed in
blank by each of the applicable Subsidiaries of the Pledgor, all warrants,
options, share appreciation rights and other rights, contractual or otherwise,
in respect thereof and of all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in addition to, in substitution of, on account of or in exchange for any or all
of the Stock and Additional Stock;
(ii) all other securities of existing and future Subsidiaries of the
Pledgor at any time and from time to time acquired by the Pledgor, the
certificates or other instruments representing such securities, all options,
warrants, share appreciation rights and other rights, contractual or otherwise,
in respect thereof and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of, in
addition to, in substitution of, on account of, or in exchange for any and all
of such securities; and
(iii) all proceeds of any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor, howsoever
its interest therein may arise or appear (whether beneficially or of record and
whether by ownership, security interest, claim or otherwise).
- 2 -
<PAGE>
All certificates and instruments currently representing the Stock and any
other securities constituting Collateral hereunder are being delivered to the
Agent, on behalf of the Banks, contemporaneously herewith. All other
certificates and instruments constituting capital stock or other securities
constituting Collateral hereunder from time to time shall be delivered to the
Agent, on behalf of the Banks, promptly upon the receipt thereof by or on behalf
of the Pledgor. All such certificates and instruments shall be held by the
Agent, on behalf of the Banks, pursuant hereto and shall be delivered in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignments in blank, all in form and substance
satisfactory to the Agent and the Banks.
It is the intention of the parties hereto that beneficial ownership of the
capital stock and securities constituting Collateral hereunder, including,
without limitation, all voting, consensual and dividend rights, shall remain in
the Pledgor until the occurrence and during the continuance of an Event of
Default and until the Agent shall notify the Pledgor of the Agent's exercise, on
behalf of the Banks, of voting, consensual and dividend rights to such capital
stock and other securities pursuant to the terms of this Agreement.
3. REPRESENTATION AND WARRANTY. The Pledgor hereby represents and
warrants to the Agent and the Banks as follows: (a) except for the security
interest created hereby, the Pledgor is and will at all times be the legal and
beneficial owner of the Stock and, when acquired by Pledgor, the Additional
Stock, free and clear of all Liens; (b) all Collateral and all shares of capital
stock from time to time constituting Collateral either have been or will be duly
authorized, validly issued, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof, and the Collateral constitutes or
will constitute 100% of the issued and outstanding shares of capital stock of
the Subsidiaries of the Pledgor with respect thereto; (c) the Pledgor has the
unencumbered right and power to pledge the Collateral as provided herein;
(d) all actions necessary or desirable to perfect, establish the first priority
of, or otherwise protect, the security interest of the Agent, and the Banks in
the Collateral have been duly taken, except for the taking possession by the
Agent, on behalf of the Banks, of certificates, instruments and cash
constituting capital stock and other securities pledged as Collateral hereunder
and which is acquired by Pledgor after the date hereof; (e) subject to obtaining
certain consents and approvals and giving certain notices prior to the transfer
of the Collateral, the exercise by the Agent, on behalf of the Banks, of its or
their rights and remedies hereunder will not contravene any law or governmental
regulation or any contractual restriction binding on or affecting
- 3 -
<PAGE>
the Pledgor or any of its properties and will not result in or require the
creation of any Lien upon or with respect to any of its properties; (f) no
authorization or approval or other action by, and no notice to or filing with,
any court, agency, department, commission, board, bureau or instrumentality of
the United States or any State or other political subdivision thereof (a
"Governmental Authority") or regulatory body, or any other third party, except
as has previously been obtained, is required either (i) for the pledge and
assignment hereunder by the Pledgor of, or the grant by the Pledgor of the Lien
and security interest created hereby in, the Collateral, or (ii) for the
exercise by the Agent, on behalf of the Banks, of its or their rights and
remedies hereunder, except as may be required in respect of any such exercise by
laws affecting the offering and sale of securities generally; and (g) this
Agreement creates a valid Lien and security interest in favor of the Agent, on
behalf of the Banks, in the Collateral, as security for the Obligations. The
taking possession by the Agent, on behalf of the Banks, of the certificates and
instruments and cash constituting any capital stock or other securities pledged
as Collateral hereunder from time to time will perfect and establish the first
priority of the Lien and security interest hereunder in favor of the Agent and
the Banks in the Collateral securing the Obligations.
4. NO LIENS. The Pledgor covenants and agrees that it will not:
(a) sell or otherwise dispose of any interest in the Collateral or any funds or
property held therein or constituting a part thereof; or (b) create or permit to
exist any mortgage, pledge, lien, charge or other encumbrance upon or with
respect to the Collateral or any funds or property constituting a part thereof,
other than the lien and security interest created hereunder in favor of the
Agent and the Banks.
5. COVENANTS REGARDING STOCK. So long as any of the Obligations shall
remain outstanding, the Pledgor shall: (a) at its own expense, promptly deliver
to the Agent a copy of each notice or other communication received by it in
respect of any of the capital stock or other securities constituting Collateral
hereunder; (b) not make or consent to any amendment or other modification or
waiver with respect to any such capital stock or securities, or enter into any
agreement or permit to exist any restriction with respect to any such capital
stock or securities other than pursuant hereto; (c) not permit the issuance of
(i) any additional shares of any class of stock of any Subsidiary of the Pledgor
the shares of which have been pledged hereunder, (ii) any securities convertible
voluntarily by the holder thereof or automatically upon the occurrence or
non-occurrence of any event or condition into, or exchangeable for, any shares
of capital stock of any Subsidiary of the Pledgor the shares of which have been
pledged hereunder, or (iii) any warrants, options, contracts or other
commitments entitling any Person to
- 4 -
<PAGE>
purchase or otherwise acquire any such shares of capital stock; or (d) not take
any action which would (or fail to take any action, the result of which failure
would) in any manner impair the value of the Collateral or the priority or
enforceability of the security interest of the Agent, for the benefit of the
Banks, therein.
6. COVENANTS REGARDING SUBSIDIARIES AND OPERATING ENTITIES PARTNERSHIP
AGREEMENTS.
The Pledgor shall, to the extent requested by the Agent, cause each of its
direct and indirect Subsidiaries holding partnership interests in Operating
Entities to comply with all applicable obligations and agreements under the
related partnership agreement in connection with the applicable Operating
Entity. After the occurrence and during the continuance of an Event of Default,
and upon the request of the Agent, the Pledgor shall cause each of such
Subsidiaries to take all such actions under the related partnership agreement
which the Agent may so request.
7. POWER OF ATTORNEY; STANDARD OF CARE.
(a) After the occurrence and during the continuance of an Event of
Default, the Pledgor hereby irrevocably appoints the Agent as its
attorney-in-fact, with full power and authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion, to take any action and execute any documents which the Agent
may deem necessary or desirable in connection with the terms and provisions of
this Agreement, including, without limitation, (i) to receive, endorse and
collect all instruments made payable to the Pledgor representing any payment on
or any dividend or other distribution in respect of the capital stock or other
securities constituting Collateral hereunder or any part thereof and to give
full discharge for the same and (ii) to instruct any direct Subsidiary of the
Pledgor which holds partnership interests in any Operating Entity to comply with
any obligation under the related partnership agreement or to take any action
thereunder, and which obligation and action shall include, without limitation
and if applicable, notice to any other partner of such Operating Entity offering
to such partner a right of first refusal with respect to such Subsidiary's
partnership interest in such Operating Entity in accordance with the terms and
conditions under the applicable partnership agreement. If the Pledgor fails to
perform any agreement or obligation contained herein, the Agent itself may
perform, or cause performance of, such agreement or obligation, and the expenses
that the Agent incurs in connection therewith shall be payable by the Pledgor
and deemed a part of the Obligations.
- 5 -
<PAGE>
(b) Other than the exercise of reasonable care to assure the safe custody
of the Collateral while held hereunder, the Agent shall not have any duty or
liability to preserve rights pertaining thereto and shall be relieved of all
responsibility for the Collateral upon surrendering same or tendering surrender
of same to the Pledgor. The Agent, on behalf of each Bank, shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in the Agent's possession if the Collateral is accorded treatment similar to
that which the Agent accords its own property, it being understood that the
Agent, on behalf of the Banks, shall not have any responsibility for
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any of the Collateral, whether
or not the Agent or any Bank has or is deemed to have knowledge of such matters,
or (ii) taking any necessary steps to preserve rights against any parties with
respect to any of the Collateral, unless the failure to do so constitutes the
gross negligence or willful misconduct of the Agent.
8. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify the Agent and the Banks, or any of
them from and against any and all claims, losses and liabilities growing out of
or resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting solely and
directly from the gross negligence or willful misconduct of the Agent.
(b) The Pledgor will, upon demand, pay to the Agent the amount of any and
all reasonable expenses, including the disbursements and reasonable fees of the
Agent's counsel and of any experts, consultants and agents, which the Agent may
incur in connection with (i) the administration of this Agreement; (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral; (iii) the exercise or enforcement of any
of the rights of the Agent and the Banks hereunder; or (iv) the failure by the
Pledgor to perform or observe any of the provisions hereof.
9. ADDITIONAL COLLATERAL SECURITIES. In the event that, during the term
of this Agreement:
(a) any stock dividend, stock split, reclassification, readjustment, or
other change is declared or made with respect to any of the capital stock or
other securities constituting Collateral hereunder or any stock certificate
(including, without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets,
- 6 -
<PAGE>
combination of shares, stock split, spinoff, split-off or otherwise), or any
promissory note or other instrument is received by the Pledgor or its
successors, by virtue of its being or having been an owner of any Collateral,
all new, substituted and additional shares, promissory notes, instruments or
other securities issued by reason of any such change and received by the Pledgor
or to which the Pledgor shall be entitled shall be immediately transferred and
delivered to the Agent, on behalf of the Banks, together with any necessary
indorsement or stock powers or assignments endorsed in blank by the Pledgor, and
shall thereupon be held by the Agent, on behalf of the Banks, as Collateral
under the terms of this Agreement;
(b) any subscriptions, warrants, share appreciation rights or any other
rights or options or any other security, whether as an addition to, substitution
for, or in exchange for any capital stock or other securities constituting
Collateral hereunder, or otherwise, shall be issued in connection with any of
such capital stock or other securities, all new stock or other securities
acquired through such subscriptions, warrants, share appreciation rights, rights
or options by the Pledgor shall be immediately transferred and delivered to the
Agent, on behalf of the Banks, and shall thereupon constitute Collateral, as the
case may be, to be held by the Agent, on behalf of the Banks, as Collateral
under the terms of this Agreement; and
(c) any dividend payable in securities or property other than cash, or
dividend or other distribution in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus is received by the Pledgor, by virtue of its being or having
been an owner of any Stock or Additional Stock, the Pledgor shall receive such
payment or distribution in trust, for the benefit of the Agent and the Banks,
shall segregate same from the Pledgor's other property and shall deliver it
forthwith to the Agent in the exact form received, with any necessary
indorsement or appropriate stock powers or assignments duly executed in blank,
to be held by the Agent as Stock or Additional Stock, as the case may be.
10. DEFAULT. In the event of the occurrence and during the continuance of
an Event of Default, the Agent, for and on behalf of the Banks, may, pursuant to
Section 9.2 of the Loan Agreement without the necessity of foreclosure and as a
means of substituting collateral, sell, transfer or otherwise dispose of the
Collateral or any interest or right therein or any part thereof after ten (10)
Business Days prior written notice to the Pledgor, in one or more parcels, at
the same or different times, at a public or private sale, or may make any other
commercially reasonable disposition of the Collateral or any portion thereof.
The Agent or any Bank may purchase the Collateral or any portion
- 7 -
<PAGE>
thereof. The proceeds of the sale or other disposition shall be applied to the
Obligations in such order as set forth in the Loan Agreement. Any remaining
proceeds shall be paid over to the Pledgor or others as provided by law.
11. ADDITIONAL RIGHTS OF SECURED PARTIES. In addition to its rights and
privileges under this Agreement, the Agent, on behalf of the Banks, shall have
all the rights, powers and privileges of a secured party under the Uniform
Commercial Code as in effect in the relevant jurisdiction, and such other rights
or remedies which it may have at law or in equity.
12. TERMINATION AND RELEASE. Upon payment in full of the Obligations and
the performance and satisfaction in full of all covenants and undertakings of
the Pledgor under the Loan Agreement and the other Loan Documents, the Agent
shall take any actions reasonably necessary to terminate and release the
security interest in and security title to the Collateral granted to the Agent
and the Banks hereunder, and to cause the Collateral to be delivered to the
Pledgor, all at the cost and expense of the Pledgor.
13. DISPOSITION OF STOCK BY THE AGENT. To the extent that any of the
capital stock or other securities constituting Collateral hereunder is not
registered under the various federal or State securities acts, the disposition
thereof after the occurrence and during the continuance of an Event of Default
may be restricted to one or more private (instead of public) sales in view of
the lack of such registration; the Pledgor understands that, upon such
disposition, the Agent may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for such capital stock or other securities than if the same
were registered pursuant to federal and state securities legislation and sold on
the open market. The Stock and all other capital stock and securities
constituting Collateral hereunder is not, as of the date of this Agreement, and
the Additional Stock and all other capital stock and securities hereafter
acquired will not be, on the date of acquisition thereof, registered under the
various federal and state securities laws. The Pledgor, therefore, agrees that:
(a) if the Agent, on behalf of the Banks, shall, pursuant to the terms of
this Agreement, sell or cause the Collateral or any portion thereof to be sold
at a private sale, the Agent shall have the right to rely upon the advice and
opinion of any national brokerage or investment firm having recognized expertise
and experience in connection with shares or obligations of companies or entities
in the same or similar business as the issuing company or entity which brokerage
or investment firm shall have reviewed financial data and other information
- 8 -
<PAGE>
available to the Agent pertaining to the Pledgor and its Subsidiaries (but shall
not be obligated to seek such advice and the failure to do so shall not be
considered in determining the commercial reasonableness of the Agent's action)
as to the best manner in which to expose such Collateral for sale and as to the
best price reasonably obtainable at the private sale thereof; and
(b) such reliance shall be conclusive evidence that the Agent has handled
such disposition in a commercially reasonable manner.
14. PLEDGOR'S OBLIGATION ABSOLUTE.
(a) The obligations of the Pledgor under this Agreement shall be direct
and immediate and not be conditional or contingent upon the pursuit of any other
remedies against the Pledgor, or any other Person, nor against other security or
liens available to the Agent or any Bank, or its or their respective successors,
assigns or agents. The Pledgor waives any right to require that an action be
brought against any other Person or to require that the Agent or any Bank resort
to any security or to any balance of any deposit account or credit on the books
of any Bank in favor of any other Person or to require resort to rights or
remedies hereunder prior to the exercise of any other rights or remedies of the
Agent and the Banks in connection with the Loans.
(b) The obligations of the Pledgor hereunder shall remain in full force
and effect without regard to, and shall not be impaired by: (i) any bankruptcy,
insolvency, reorganization, arrangements, readjustment, composition, liquidation
or the like of the Pledgor or any Affiliate; (ii) any exercise or nonexercise,
or any waiver, by the Agent and the Banks of any rights, remedy, power or
privilege under or in respect of the Obligations, this Agreement, the Loan
Agreement or any other Loan Document, or any security for any of the Obligations
(other than this Agreement); or (iii) any amendment to or modification of the
Obligations, this Agreement, the Loan Agreement or any other Loan Document or
any security for any of the Obligations (other than this Agreement), whether or
not the Pledgor shall have notice or knowledge of any of the foregoing.
15. VOTING RIGHTS.
(a) Upon the occurrence and during the continuance of an Event of Default,
(i) the Agent may, upon ten (10) Business Days prior written notice to the
Pledgor of its intention to do so, exercise all voting rights and all other
ownership or consensual rights of or with respect to any capital stock or other
securities constituting Collateral hereunder, but under no circumstances is the
Agent obligated to exercise such rights, and
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<PAGE>
(ii) the Pledgor hereby appoints the Agent, which appointment shall be effective
on the tenth (10th) Business Day following the giving of notice by the Agent as
provided in Section 17 hereof, as the Pledgor's true and lawful attorney-in-fact
and IRREVOCABLE PROXY to vote such capital stock or other securities in any
manner the Agent deems advisable, consistent with the provisions of the Loan
Agreement, for or against all matters submitted or which may be submitted to a
vote of shareholders; PROVIDED that, until such occurrence and during the
continuance of an Event of Default and the giving of the aforesaid notice by the
Agent, the Pledgor shall retain all voting rights to such capital stock or other
securities; and
(b) For so long as the Pledgor shall have the right to vote any capital
stock or other securities constituting Collateral hereunder, the Pledgor
covenants and agrees that it will not, without the prior written consent of the
Agent and the Banks, (i) vote or take any consensual action with respect to the
Stock or the Additional Stock which would constitute an Event of Default,
(ii) cause, permit or allow any assets of any Subsidiary of the Pledgor the
shares of which are pledged hereunder to be leased, sold, conveyed, pledged,
hypothecated, transferred or otherwise encumbered or disposed of, except as
permitted under the terms of the Loan Agreement, or (iii) cause, permit or allow
any Subsidiary of the Pledgor the shares of which are pledged hereunder to be
dissolved or liquidated or to acquire, be acquired by, merged or consolidated
into or with any other Person, except as permitted under the terms of the Loan
Agreement.
16. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be given in the manner prescribed in the
Loan Agreement. Notice of change of address for notice shall also be governed
by the Loan Agreement. Notices given to any Subsidiary of the Pledgor shall be
delivered to the Pledgor at its address in the Loan Agreement. Notices given to
the Pledgor, the Agent or any Bank shall be addressed as provided in the Loan
Agreement.
17. SECURITY INTEREST ABSOLUTE. All rights of the Agent and the Banks,
and all security interests and all obligations of the Pledgor hereunder shall be
absolute and unconditional irrespective of: (1) any lack of validity or
enforceability of the Loan Agreement, the Notes or any other Loan Documents
executed and delivered in connection therewith; (2) any change in the time,
manner or place of payment of, or any other term in respect of, all or any of
the Obligations, or any other amendment or waiver of or consent to any departure
from the Loan Agreement, the Notes or any other Loan Document; (3) any increase
in, addition to, exchange or release of, or non-perfection of any lien on or
security interest in any other collateral or any
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<PAGE>
release or amendment or waiver of or consent to departure from any security
document or guaranty, for all or any of the Obligations; (4) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, any loan party in respect of the Obligations, or the Pledgor in
respect of this Agreement; or (5) the absence of any action on the part of the
Agent or the Banks to obtain payment or performance of the Obligations from any
other loan party.
18. BINDING AGREEMENT. THE PROVISIONS OF THIS AGREEMENT SHALL BE
CONSTRUED AND INTERPRETED, AND ALL RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. This
Agreement, together with all documents referred to herein, constitutes the
entire Agreement between the Pledgor, the Agent and the Banks with respect to
the subject matter hereof, and may not be modified except by a writing executed
by the Agent and the Majority Banks and delivered by the Agent to the Pledgor,
and no waiver of any provision of this Agreement, and no consent to any
departure by the Pledgor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Agent and the Majority Banks, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. This Agreement shall be binding upon
the Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
19. SEVERABILITY. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited or
invalid under such law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision of this Agreement.
20. MISCELLANEOUS. No failure to exercise, and no delay in exercising,
any right hereunder or under any of the other Loan Documents held by the Agent
and the Banks shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or future exercise thereof or the
exercise of any other right. The rights and remedies of the Agent and the Banks
provided herein and in the other Loan Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights and remedies of the Agent and the Banks hereunder or under any other Loan
Documents against any party thereto are not conditional or contingent on any
attempt by the Agent or either Bank to exercise any of its or their rights under
any other Loan Document against such party or against any other Person.
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<PAGE>
21. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall constitute one and the same instrument, and each of
the parties hereto may execute this Agreement by signing any such counterpart.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
affixed their seals by and through their duly authorized signatories, as of the
day and year first above written.
PLEDGOR: RAINBOW PROGRAMMING HOLDINGS, INC., a New York
corporation
By:________________________________
Title:________________________
[CORPORATE SEAL]
Attest:____________________________
Title:________________________
AGENT: TORONTO DOMINION (TEXAS), INC.
By:_____________________________________
Title:_____________________________
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<PAGE>
SCHEDULE I
Description of Stock
Type/Class Certificate No. of Shares
Name of Company of Stock Number Pledged
- - --------------- ---------- ----------- -------------
RASCO
The Singles
Network, Inc.
<PAGE>
EXHIBIT C
FORM OF INTEREST RATE CONFIRMATION
I, _______________, the ____________________________________ and an
Authorized Signatory of Rainbow Programming Holdings, Inc., a New York
corporation (the "Borrower"), do hereby certify pursuant to the provisions of
the Loan Agreement (the "Loan Agreement"), dated as of June 30, 1994, by and
among the Borrower, the Guarantors, the Banks signatories thereto and Toronto
Dominion (Texas), Inc. (the "Agent"), as Agent for the Banks, that The Borrower
hereby requests a Base Rate Eurodollar Advance under the Term Loan in the amount
of $___________________ to be made on _____________, 1994. The foregoing
instructions shall be irrevocable.
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
Dated as of this _______ day of _____________, 1994.
RAINBOW PROGRAMMING HOLDINGS, INC.,
a New York corporation
By:___________________________
Title:___________________
<PAGE>
EXHIBIT D
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement"), entered into as of this 30th
day of June, 1994, by and between CABLEVISION SYSTEMS CORPORATION a Delaware
corporation (the "Pledgor"), and TORONTO DOMINION (TEXAS), INC., as agent (the
"Agent") for the Banks (as defined in the Loan Agreement defined below),
W I T N E S S E T H:
WHEREAS, pursuant to that certain Loan Agreement dated the date hereof
(together with any and all extensions, renewals, amendments, modifications or
supplements thereto, the "Loan Agreement") by and among Rainbow Programming
Holdings, Inc., a New York corporation (the "Borrower"), the Agent, and the
Banks, the Banks have agreed, severally in accordance with their respective
Commitment Ratios and not jointly, to extend a credit facility to the Borrower
in an aggregate principal amount not to exceed U.S. $105,000,000 (the "Loan"),
evidenced by the Borrower's term notes in favor of each Bank (as executed on the
date hereof and as they may be amended, modified, renewed or extended from time
to time, collectively, the "Notes"); and
WHEREAS, to secure the due and punctual payment and performance of all
obligations of the Borrower under the Loan Agreement, the Notes and the Loan
Documents (as defined in the Loan Agreement), the Pledgor wishes to pledge and
assign to the Agent and the Banks all of its right, title and interest in and to
all of the shares of capital stock of the Borrower which stock is more fully
described as of the Agreement Date on Exhibit "A" (the "Stock"); and
WHEREAS, the Pledgor has delivered certificates for the Stock to the Agent,
on behalf of the Banks;
NOW, THEREFORE, for and in consideration of the above premises and the
mutual covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definition
shall have the meanings ascribed thereto in the Loan Agreement.
2. SECURITY INTEREST. As security for (a) the timely fulfillment and
performance of each and every covenant and
<PAGE>
obligation of the Borrower under the Loan Agreement, the Notes and the other
Loan Documents, and (b) the payment of the Obligations, the Pledgor hereby
pledges, mortgages, transfers, sets over and delivers to and assigns to the
Agent, on behalf of the Banks, and grants the Agent, on behalf of the Banks, a
continuing Lien on and security interest in and security title to, and has
delivered to and deposited with the Agent, on behalf of the Banks herewith, the
following collateral, whether now owned or hereafter acquired (the
"Collateral"):
(i) the Stock and all substitutions therefor and replacements
thereof, all proceeds and products thereof and all rights related thereto,
including, without limitation, the certificates representing the Stock, the
right to request that the Stock and other certificated securities be registered
in the name of the Agent, on behalf of the Banks, or any of its or their
nominees, the right to receive the Stock and the right to require that same be
delivered to the Agent, on behalf of the Banks, together with stock powers or
assignments of investment securities with respect thereto, duly executed in
blank by the Borrower, all warrants, options, share appreciation rights and
other rights, contractual or otherwise, in respect thereof and all dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in addition to, in substitution of, on
account of or in exchange for any or all of the Stock;
(ii) (A) all other capital stock of the Borrower and (B) securities
received as proceeds of capital stock of the Borrower at any time and from time
to time acquired by the Pledgor, the certificates or other instruments
representing such capital stock or securities, all options, warrants, share
appreciation rights and other rights, contractual or otherwise, in respect
thereof and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of, in addition
to, in substitution of, on account of, or in exchange for any and all of such
Stock; and
(iii) all proceeds of any and all of the foregoing;
in each case, whether now owned or hereafter acquired by the Pledgor, howsoever
its interest therein may arise or appear (whether beneficially or of record and
whether by ownership, security interest, claim or otherwise).
All certificates and instruments currently representing the Stock and any
other capital stock or securities constituting Collateral hereunder are being
delivered to the Agent, on behalf of the Banks, contemporaneously herewith. All
other certificates
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<PAGE>
and instruments constituting capital stock and other securities constituting
Collateral hereunder from time to time shall be delivered to the Agent, on
behalf of the Banks, promptly upon the receipt thereof by or on behalf of the
Pledgor. All such certificates and instruments shall be held by the Agent, on
behalf of the Banks, pursuant hereto and shall be delivered in suitable form for
transfer by delivery or shall be accompanied by duly executed instruments of
transfer or assignments in blank, all in form and substance satisfactory to the
Agent and the Banks.
It is the intention of the parties hereto that beneficial ownership of any
capital stock or other securities constituting Collateral hereunder, including,
without limitation, all voting, consensual and dividend rights, shall remain in
the Pledgor until the Agent's exercise, on behalf of the Banks, of voting,
consensual and dividend rights to such capital stock or other securities
pursuant to the terms of this Agreement following the occurrence and during the
continuance of an Event of Default.
3. REPRESENTATION AND WARRANTY. The Pledgor hereby represents and
warrants to the Agent and the Banks as follows: (a) except for the security
interest created hereby, the Pledgor is and will at all times be the legal and
beneficial owner of the Collateral, free and clear of all Liens; (b) all
Collateral and all shares of capital stock from time to time constituting
Collateral either have been or will be duly authorized, validly issued, fully
paid and non-assessable, with no personal liability attaching to the ownership
thereof, and the Collateral constitutes 100% of the issued and outstanding
shares of capital stock of the Borrower; (c) the Pledgor has the unencumbered
right and power to pledge the Collateral as provided herein; (d) all actions
necessary or desirable to perfect, establish the first priority of, or otherwise
protect, the security interest of the Agent, and the Banks in the Collateral
have been duly taken, except for the taking possession by the Agent, on behalf
of the Banks, of certificates, instruments and cash constituting capital stock
or other securities pledged as Collateral hereunder and which is acquired by
Pledgor after the date hereof; (e) subject to obtaining certain consents and
approvals and giving certain notices prior to the transfer of the Collateral,
the exercise by the Agent, on behalf of the Banks, of its or their rights and
remedies hereunder will not contravene any law or governmental regulation or any
contractual restriction binding on or affecting the Pledgor or any of its
properties and will not result in or require the creation of any Lien upon or
with respect to any of its properties; (f) no authorization or approval or other
action by, and no notice to or filing with, any court, agency, department,
commission, board, bureau or instrumentality of the
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<PAGE>
United States or any State or other political subdivision thereof (a
"Governmental Authority") or regulatory body, or any other third party, except
as has previously been obtained, is required either (i) for the pledge and
assignment hereunder by the Pledgor of, or the grant by the Pledgor of the Lien
and security interest created hereby in, the Collateral, or (ii) for the
exercise by the Agent, on behalf of the Banks, of its or their rights and
remedies hereunder, except as may be required in respect of any such exercise by
laws affecting the offering and sale of securities generally; and (g) this
Agreement creates a valid Lien and security interest in favor of the Agent, on
behalf of the Banks, in the Collateral, as security for the Obligations. The
taking possession by the Agent, on behalf of the Banks, of the certificates
accompanied by stock powers endorsed in blank and instruments and cash
constituting any capital stock or other securities pledged as Collateral
hereunder from time to time will perfect and establish the first priority of the
Lien and security interest hereunder in favor of the Agent and the Banks in the
Collateral securing the Obligations.
4. NO LIENS. The Pledgor covenants and agrees that it will not:
(a) sell or otherwise dispose of any interest in the Collateral or any funds or
property held therein or constituting a part thereof; or (b) create or permit to
exist any mortgage, pledge, lien, charge or other encumbrance upon or with
respect to the Collateral or any funds or property constituting a part thereof,
other than the lien and security interest created hereunder in favor of the
Agent and the Banks.
5. COVENANTS REGARDING COLLATERAL. So long as any of the Obligations
shall remain outstanding, the Pledgor shall: (a) at its own expense, promptly
deliver to the Agent a copy of each notice or other communication received by it
specifically in respect of any of the capital stock or other securities
constituting Collateral hereunder; (b) not make or consent to any amendment or
other modification or waiver with respect to any such capital stock or
securities, or enter into any agreement or permit to exist any restriction with
respect to any such capital stock or securities other than pursuant hereto;
(c) not permit the issuance of (i) any additional shares of any class of stock
of the Borrower, (ii) any securities convertible voluntarily by the holder
thereof or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any shares of capital stock of the
Borrower, or (iii) any warrants, options, contracts or other commitments
entitling any Person to purchase or otherwise acquire any such shares of capital
stock; or (d) not take any action which would (or fail to take any action, the
result of which failure would) in any manner impair the value of the Collateral
or the priority or
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<PAGE>
enforceability of the security interest of the Agent, for the benefit of the
Banks, therein.
6. COVENANTS REGARDING THE BORROWER'S SUBSIDIARIES AND OPERATING
ENTITIES.
(a) INDEBTEDNESS FOR MONEY BORROWED. The Pledgor shall not permit any of
the Borrower's Subsidiaries or the Operating Entities to create, assume, incur
or otherwise become or remain obligated in respect of, or permit to be
outstanding, any Indebtedness for Money Borrowed except:
(i) Indebtedness under the Loan Documents, or otherwise permitted by the
Loan Documents;
(ii) Indebtedness of the Borrower's Subsidiaries permitted under the Loan
Agreement;
(iii) With respect to AMC so long as the AMC Loan Agreement is in effect,
Indebtedness permitted under the AMC Loan Agreement as in effect on the
Agreement Date;
(iv) With respect to Operating Entities other than AMC, and to AMC if
clause (iii) immediately above does not apply, intercompany Indebtedness among
any of the Borrower, the Borrower's Subsidiaries and the Operating Entities,
PROVIDED that the repayment of any such Indebtedness owed by the Borrower or any
of its Subsidiaries to any of the Operating Entities shall be subordinated to
the prior payment in full of the Obligations.
(v) With respect to SportsChannel Cincinnati Associates ("SCA"),
indebtedness under that certain Convertible Subordinated Loan and Security
Agreement, dated as of January 10, 1990 (including as the same may be amended
from time to time, with the prior written consent of the Agent if any such
amendment effects an increase in the Obligations (as defined therein) or an
expansion of the Lien created thereunder, the "SCA/NBC Agreement") in favor of
NBC/National AD Holding, Inc. (the "NBC Partner") evidencing, in part, the NBC
Partner's investment in SCA.
(b) LIMITATION ON LIENS.
The Pledgor shall not permit any of the Borrower's Subsidiaries or the
Operating Entities to create, assume, incur, or permit to exist or to be
created, assumed, incurred or permitted to exist, directly or indirectly, any
Lien on any of its properties or assets, whether now owned or hereafter
acquired, except for (i) Permitted Liens, (ii) with respect to
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<PAGE>
AMC, Liens permitted under the AMC Loan Agreement so long as it remains in
effect and (iii) with respect to SCA, Liens in favor of the NBC Partner to
secure SCA's Obligations (as defined in the SCA/NBC Agreement).
(c) LIMITATION ON GUARANTIES.
The Pledgor shall not permit any of the Borrower's Subsidiaries or the
Operating Entities, to at any time, Guarantee, or assume, be obligated with
respect to, or permit to be outstanding any Guarantee of, any obligation of any
other Person other than (i) under the Loan Documents, (ii) as permitted under
the Loan Agreement, (iii) with respect to AMC so long as the AMC Loan Agreement
is in effect, as permitted under the AMC Loan Agreement and (iv) with respect to
the Operating Entities other than AMC, (x) obligations under agreements to
indemnify Persons who have issued bid or performance bonds or letters of credit
issued in lieu of such bonds in the ordinary course of business of such
Operating Entity securing performance by the Operating Entity of activities
otherwise permissible under the Loan Documents, and (y) a guarantee by
endorsement of negotiable instruments for collection in the ordinary course of
business.
(d) DISPOSITION OF AMC.
The Pledgor shall not cease to own, directly or indirectly through its
Subsidiaries, at least 50% of the then outstanding partnership interests of AMC
and Pledgor agrees that any reduction in the Pledgor's direct or indirect
partnership interests in AMC shall be conducted strictly in accordance with the
terms and conditions in the Loan Agreement.
(e) CAPITAL INFUSIONS RELATING TO CONSULTING FEES.
Following the occurrence and during the continuance of an Event of Default,
the Pledgor shall make a capital infusion, in immediately available funds, to
the Borrower concurrently with each payment by AMC of the consulting fee set
forth in the Consulting Agreement and the amount of which capital infusion shall
not be less than the aggregate amount of such consulting fee payment actually
received.
7. COVENANTS REGARDING DELIVERY OF PLEDGOR AVAILABILITY CERTIFICATE.
The Pledgor shall deliver to the Agent, concurrently with the delivery of
financial statements pursuant to Sections 7.1 and 7.2 under the Loan Agreement,
a certificate of an Authorized Signatory of the Pledgor substantially in the
form of EXHIBIT L
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<PAGE>
attached hereto (i) stating that (x) the Pledgor has sufficient borrowing
availability under the revolving credit facility provided for under the Parent
Company Loan Agreement, and sufficient borrowing availability under the covenant
set forth in Section 9.16 of the Parent Company Loan Agreement to make the
interest payments on the Term Loans due under this Agreement or the Term Notes
for the next succeeding twelve (12) months following the date of such
certificate or (y) at the sole option of the Pledgor, that an escrow account has
been established with The Toronto-Dominion Bank on such terms as shall be
reasonably satisfactory to the Majority Banks and in an amount sufficient to
make the interest payments on the Term Loans due under this Agreement or the
Term Notes for the next succeeding twelve (12) months following the date of such
certificate; (ii) stating that payment by the Pledgor of interest on the Term
Loans due under this Agreement or the Term Notes for the next succeeding three
(3) months following the date of such certificate will not cause the Pledgor to
be in default of Section 9.26 (or any comparable covenant of the Parent Company
Loan Agreement, if the same is amended) of the Parent Company Loan Agreement;
and (iii) stating that no event of default, or event which with the giving of
notice or the passage of time will constitute an event of default, has occurred
under the Parent Company Loan Agreement as at the end of such quarter or year,
as the case may be, which will prevent the Pledgor from making any borrowing
thereunder.
8. POWER OF ATTORNEY; STANDARD OF CARE.
(a) After the occurrence and during the continuance of an Event of
Default, the Pledgor hereby irrevocably appoints the Agent as its
attorney-in-fact, with full power and authority in the place and stead of the
Pledgor and in the name of the Pledgor or otherwise, from time to time in the
Agent's discretion, to take any action and execute any documents which the Agent
may deem necessary or desirable in connection with the terms and provisions of
this Agreement, including, without limitation, to receive, endorse and collect
all instruments made payable to the Pledgor representing any payment on or any
dividend or other distribution in respect of the capital stock or other
securities constituting Collateral hereunder or any part thereof and to give
full discharge for the same. If the Pledgor fails to perform any agreement or
obligation contained herein, the Agent itself may perform, or cause performance
of, such agreement or obligation, and the expenses that the Agent incurs in
connection therewith shall be payable by the Pledgor and deemed a part of the
Obligations.
(b) Other than the exercise of reasonable care to assure the safe custody
of the Collateral while held hereunder, the
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<PAGE>
Agent shall not have any duty or liability to preserve rights pertaining thereto
and shall be relieved of all responsibility for the Collateral upon surrendering
same or tendering surrender of same to the Pledgor. The Agent, on behalf of
each Bank, shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in the Agent's possession if the Collateral is
accorded treatment similar to that which the Agent accords its own property, it
being understood that the Agent, on behalf of the Banks, shall not have any
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any of
the Collateral, whether or not the Agent or any Bank has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any of the Collateral, unless the failure to
do so constitutes the gross negligence or willful misconduct of the Agent.
9. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify the Agent and the Banks, or any of
them from and against any and all claims, losses and liabilities growing out of
or resulting from this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting solely and
directly from the gross negligence or willful misconduct of the Agent.
(b) The Pledgor will, upon demand, pay to the Agent the amount of any and
all reasonable expenses, including the disbursements and reasonable fees of the
Agent's counsel and of any experts, consultants and agents, which the Agent may
incur in connection with (i) the administration of this Agreement; (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any Collateral; (iii) the exercise or enforcement of any
of the rights of the Agent and the Banks hereunder; or (iv) the failure by the
Pledgor to perform or observe any of the provisions hereof.
10. ADDITIONAL COLLATERAL SECURITIES. In the event that, during the term
of this Agreement:
(a) any stock dividend, stock split, reclassification, readjustment, or
other change is declared or made with respect to any of the capital stock or
other securities constituting Collateral hereunder or any stock certificate
(including, without limitation, any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets,
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<PAGE>
combination of shares, stock split, spinoff, split-off or otherwise), or any
promissory note or other instrument is received by the Pledgor or its
successors, by virtue of its being or having been an owner of any Collateral,
all new, substituted and additional shares, promissory notes, instruments or
other securities issued by reason of any such change and received by the Pledgor
or to which the Pledgor shall be entitled shall be immediately transferred and
delivered to the Agent, on behalf of the Banks, together with any necessary
indorsement or stock powers or assignments endorsed in blank by the Pledgor, and
shall thereupon be held by the Agent, on behalf of the Banks, as Collateral
under the terms of this Agreement;
(b) any subscriptions, warrants, share appreciation rights or any other
rights or options or any other security, whether as an addition to, substitution
for, or in exchange for any capital stock or other securities constituting
Collateral hereunder, or otherwise, shall be issued in connection with any of
such capital stock or other securities, all new stock or other securities
acquired through such subscriptions, warrants, share appreciation rights, rights
or options by the Pledgor shall be immediately transferred and delivered to the
Agent, on behalf of the Banks, and shall thereupon constitute Collateral, to be
held by the Agent, on behalf of the Banks, as Collateral under the terms of this
Agreement; and
(c) any dividend payable in securities or property other than cash, or
dividend or other distribution in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus is received by the Pledgor, by virtue of its being or having
been an owner of any Stock, the Pledgor shall receive such payment or
distribution in trust, for the benefit of the Agent and the Banks, shall
segregate same from the Pledgor's other property and shall deliver it forthwith
to the Agent in the exact form received, with any necessary indorsement or
appropriate stock powers or assignments duly executed in blank, to be held by
the Agent as Stock.
11. DEFAULT. In the event of the occurrence and during the continuance of
an Event of Default, the Agent, for and on behalf of the Banks, may, pursuant to
Section 9.2 of the Loan Agreement without the necessity of foreclosure and as a
means of substituting collateral, sell, transfer or otherwise dispose of the
Collateral or any interest or right therein or any part thereof after ten (10)
Business Days prior written notice to the Pledgor, in one or more parcels, at
the same or different times, at a public or private sale, or may make any other
commercially reasonable disposition of the Collateral or any portion thereof.
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<PAGE>
The Agent or any Bank may purchase the Collateral or any portion thereof. The
proceeds of the sale or other disposition shall be applied to the Obligations in
such order as set forth in the Loan Agreement. Any remaining proceeds shall be
paid over to the Pledgor or others as provided by law.
12. ADDITIONAL RIGHTS OF SECURED PARTIES. In addition to its rights and
privileges under this Agreement, the Agent, on behalf of the Banks, shall have
all the rights, powers and privileges of a secured party under the Uniform
Commercial Code as in effect in the relevant jurisdiction, and such other rights
or remedies which it may have at law or in equity.
13. TERMINATION AND RELEASE. Upon payment in full of the Obligations and
the performance and satisfaction in full of all covenants and undertakings of
the Pledgor under the Loan Agreement and the other Loan Documents, the Agent
shall take any actions reasonably necessary to terminate and release the
security interest in and security title to the Collateral granted to the Agent
and the Banks hereunder, and to cause the Collateral to be delivered to the
Pledgor, all at the cost and expense of the Pledgor.
14. DISPOSITION OF COLLATERAL BY THE AGENT. To the extent that any of the
capital stock or other securities constituting Collateral hereunder is not
registered under the various federal or State securities acts, the disposition
thereof after the occurrence and during the continuance of an Event of Default
may be restricted to one or more private (instead of public) sales in view of
the lack of such registration; the Pledgor understands that, upon such
disposition, the Agent may approach only a restricted number of potential
purchasers and further understands that a sale under such circumstances may
yield a lower price for such capital stock or other securities than if the same
were registered pursuant to federal and state securities legislation and sold on
the open market. The Stock and all other capital stock and securities
constituting Collateral hereunder is not, as of the date of this Agreement,
registered under the various federal and state securities laws. The Pledgor,
therefore, agrees that:
(a) if the Agent, on behalf of the Banks, shall, pursuant to the terms of
this Agreement, sell or cause the Collateral or any portion thereof to be sold
at a private sale, the Agent shall have the right to rely upon the advice and
opinion of any national brokerage or investment firm having recognized expertise
and experience in connection with shares or obligations of companies or entities
in the same or similar business as the issuing company or entity which brokerage
or investment firm
- 10 -
<PAGE>
shall have reviewed financial data and other information available to the Agent
pertaining to the Pledgor and its Subsidiaries (but shall not be obligated to
seek such advice and the failure to do so shall not be considered in determining
the commercial reasonableness of the Agent's action) as to the best manner in
which to expose the Collateral for sale and as to the best price reasonably
obtainable at the private sale thereof; and
(b) such reliance shall be conclusive evidence that the Agent has handled
such disposition in a commercially reasonable manner.
15. PLEDGOR'S OBLIGATION ABSOLUTE.
(a) The obligations of the Pledgor under this Agreement shall be direct
and immediate and not be conditional or contingent upon the pursuit of any other
remedies against the Pledgor, or any other Person, nor against other security or
liens available to the Agent or any Bank, or its or their respective successors,
assigns or agents. The Pledgor waives any right to require that an action be
brought against any other Person or to require that the Agent or any Bank resort
to any security or to any balance of any deposit account or credit on the books
of any Bank in favor of any other Person or to require resort to rights or
remedies hereunder prior to the exercise of any other rights or remedies of the
Agent and the Banks in connection with the Loans.
(b) The obligations of the Pledgor hereunder shall remain in full force
and effect without regard to, and shall not be impaired by: (i) any bankruptcy,
insolvency, reorganization, arrangements, readjustment, composition, liquidation
or the like of the Pledgor or any Affiliate; (ii) any exercise or nonexercise,
or any waiver, by the Agent and the Banks of any rights, remedy, power or
privilege under or in respect of the Obligations, this Agreement, the Loan
Agreement or any other Loan Document, or any security for any of the Obligations
(other than this Agreement); or (iii) any amendment to or modification of the
Obligations, this Agreement, the Loan Agreement or any other Loan Document or
any security for any of the Obligations (other than this Agreement), whether or
not the Pledgor shall have notice or knowledge of any of the foregoing.
16. VOTING RIGHTS.
(a) Upon the occurrence and during the continuance of an Event of Default,
(i) the Agent may, upon ten (10) Business Days prior written notice to the
Pledgor of its intention to do so, exercise all voting rights and all other
ownership or consensual
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<PAGE>
rights of or with respect to any capital stock or other securities constituting
Collateral hereunder, but under no circumstances is the Agent obligated to
exercise such rights, and (ii) the Pledgor hereby appoints the Agent, which
appointment shall be effective on the tenth (10th) Business Day following the
giving of notice by the Agent as provided in Section 17 hereof, as the Pledgor's
true and lawful attorney-in-fact and IRREVOCABLE PROXY to vote such capital
stock or other securities in any manner the Agent deems advisable, consistent
with the provisions of the Loan Agreement, for or against all matters submitted
or which may be submitted to a vote of shareholders; PROVIDED that, until such
occurrence and during the continuance of an Event of Default and the giving of
the aforesaid notice by the Agent, the Pledgor shall retain all voting rights to
such capital stock or other securities; and
(b) For so long as the Borrower shall have the right to vote any capital
stock or other securities constituting Collateral hereunder, the Pledgor
covenants and agrees that it will not, without the prior written consent of the
Agent and the Banks, (i) vote or take any consensual action with respect to the
Stock which would constitute an Event of Default, (ii) cause, permit or allow
any assets of the Borrower to be leased, sold, conveyed, pledged, hypothecated,
transferred or otherwise encumbered or disposed of, except as permitted under
the terms of the Loan Agreement, or (iii) cause, permit or allow the Borrower to
be dissolved or liquidated or to acquire, be acquired by, merged or consolidated
into or with any other Person, except as permitted under the terms of the Loan
Agreement.
17. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be given in the manner prescribed in the
Loan Agreement. Notice of change of address for notice shall also be governed
by the Loan Agreement. Notices given to the Borrower shall be addressed to the
Borrower at its address in the Loan Agreement. Notices given to the Pledgor,
the Agent or any Bank shall be addressed as provided in the Loan Agreement.
18. SECURITY INTEREST ABSOLUTE. All rights of the Agent and the Banks,
and all security interests and all obligations of the Pledgor hereunder shall be
absolute and unconditional irrespective of: (1) any lack of validity or
enforceability of the Loan Agreement, the Notes or any other Loan Documents
executed and delivered in connection therewith; (2) any change in the time,
manner or place of payment of, or any other term in respect of, all or any of
the Obligations, or any other amendment or waiver of or consent to any departure
from the Loan Agreement, the Notes or any other Loan Document; (3) any increase
in,
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<PAGE>
addition to, exchange or release of, or non-perfection of any lien on or
security interest in any other collateral or any release or amendment or waiver
of or consent to departure from any security document or guaranty, for all or
any of the Obligations; (4) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any loan party in respect
of the Obligations, or the Pledgor in respect of this Agreement; or (5) the
absence of any action on the part of the Agent or the Banks to obtain payment or
performance of the Obligations from any other loan party.
19. LIMITATIONS ON PLEDGE.
(a) Agent hereby acknowledges that certain actions which may be taken
pursuant to the provisions of this Agreement may be subject to the receipt of
the consent of one or more partners of the Operating Entities (other than
Subsidiaries of the Borrower). Anything in this agreement (including any
representation and warranty of the Pledgor) to the contrary notwithstanding, the
pledge and security interest granted hereunder shall not be deemed to be an
assignment, transfer or change in beneficial or record ownership of the
Borrower, any Subsidiary of Borrower, or any Operating Entity, or control of any
of the foregoing.
(b) Following the occurrence and during the continuance of any Event of
Default, Pledgor shall, to the extent requested by the Agent, cause each of its
direct and indirect Subsidiaries holding a partnership interest in any Operating
Entity to take such actions as may be necessary in accordance with the terms of
its related partnership agreement to sell its interest in, or consent to a
change of control relating to, an Operating Entity, including giving of any
notice that may be required to any other partner of such Operating Entity
offering such partner a right of first refusal. In the event that Pledgor shall
not comply with its obligations described in the preceding sentence, the Agent
is authorized as the Pledgor's attorney-in-fact under Section 8 hereof to
instruct any of Pledgor's direct or indirect Subsidiaries in the name of the
Pledgor to take such action.
20. BINDING AGREEMENT. THE PROVISIONS OF THIS AGREEMENT SHALL BE
CONSTRUED AND INTERPRETED, AND ALL RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. This
Agreement, together with all documents referred to herein, constitutes the
entire Agreement between the Pledgor, the Agent and the Banks with respect to
the subject matter hereof, and may not be modified except by a writing executed
by the Agent and the Majority Banks and delivered by the Agent to the Pledgor,
and no waiver of any provision of this Agreement, and no consent to any
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<PAGE>
departure by the Pledgor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Agent and the Majority Banks, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. This Agreement shall be binding upon
the Pledgor and its respective successors and assigns, and shall inure to the
benefit of the Agent and the Banks and their respective successors and assigns.
21. SEVERABILITY. Whenever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited or
invalid under such law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision of this Agreement.
22. MISCELLANEOUS. No failure to exercise, and no delay in exercising,
any right hereunder or under any of the other Loan Documents held by the Agent
and the Banks shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or future exercise thereof or the
exercise of any other right. The rights and remedies of the Agent and the Banks
provided herein and in the other Loan Documents are cumulative and are in
addition to, and not exclusive of, any rights or remedies provided by law. The
rights and remedies of the Agent and the Banks hereunder or under any other Loan
Documents against any party thereto are not conditional or contingent on any
attempt by the Agent or either Bank to exercise any of its or their rights under
any other Loan Document against such party or against any other Person.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall constitute one and the same instrument, and each of
the parties hereto may execute this Agreement by signing any such counterpart.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
affixed their seals by and through their duly authorized signatories, as of the
day and year first above written.
PLEDGOR: CABLEVISION SYSTEMS CORPORATION, a Delaware corporation
By:________________________________
Title:________________________
[CORPORATE SEAL]
Attest:____________________________
Title:________________________
AGENT: TORONTO DOMINION (TEXAS), INC.
By:
-------------------------------------
Title:
-----------------------------
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<PAGE>
EXHIBIT A
Description of Collateral
Type/Class Certificate No. of Shares
Name of Company of Collateral Number Pledged
- - --------------- --------------- ----------- -------------
RAINBOW PROGRAMMING Common stock One 1000
HOLDING, INC. (no par value)
<PAGE>
EXHIBIT E
BORROWER'S REQUEST FOR INITIAL ADVANCE
I, _______________, the ____________________________________ and an
Authorized Signatory of Rainbow Programming Holdings, Inc., a New York
corporation (the "Borrower"), do hereby certify pursuant to the provisions of
the Loan Agreement (the "Loan Agreement"), dated as of June 3, 1994, by and
among the Borrower, the Guarantors, the Banks signatories thereto and Toronto
Dominion (Texas), Inc. (the "Agent"), as Agent for the Banks, that:
1. The Borrower hereby requests a Base Rate Eurodollar Advance under
the Commitment in the amount of $105,000,000.00 to be made on June 30,
1994. The proceeds of the Advances should be wired as set forth on
Schedule 1 attached hereto. The foregoing instructions shall be
irrevocable.
2. All representations and warranties of the Borrower made in
Article 4 of the Loan Agreement are true and correct in all material
respects as of the date hereof, both before and after giving effect to the
application of the proceeds of the Advance in connection with which this
request is given.
3. There does not exist on this date, and will not exist after
giving effect to the requested Advance, a Default or an Event of Default.
4. No material litigation has been commenced against the Borrower
since March 31, 1994.
5. There has been no material adverse change in the Borrower's
business, assets, or financial condition from that reflected in the
Borrower's December 31, 1993 audited financial statements or March 31, 1994
unaudited financial statements, copies of which have been provided to the
Agent.
<PAGE>
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
Dated as of this 30th day of June, 1994.
RAINBOW PROGRAMMING HOLDINGS, INC.,
a New York corporation
By:___________________________
Title:___________________
Schedule 1 - Wiring Instructions
-2-
<PAGE>
Schedule 1
Wiring Instructions
-3-
<PAGE>
EXHIBIT F
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (the "Agreement"), made as of this 30th day of
June, 1994, by and among RAINBOW PROGRAMMING HOLDINGS, INC., a New York
corporation (the "Borrower"), CABLEVISION SYSTEMS CORPORATION, a Delaware
corporation (the "Subordinated Lender"), and TORONTO DOMINION (TEXAS), INC., as
agent (the "Agent") for the banks (the "Senior Lenders") party to the Loan
Agreement.
W I T N E S S E T H:
WHEREAS, the Subordinated Lender has made advances in an aggregate amount
of $202,500,000, and may in the future make, advances, investments and other
extensions of funds to the Borrower and its Subsidiaries (collectively, the
"Subsidiary Indebtedness");
WHEREAS, the execution and delivery of this Subordination Agreement is a
condition, among others, to the Borrower's ability to borrow funds from the
Senior Lenders pursuant to the provisions of that certain Loan Agreement dated
as of the date hereof among the Borrower, the Senior Lenders and the Agent; and
WHEREAS, the Subordinated Lender deems it to be in its best interest to
enter into this Subordination Agreement;
NOW, THEREFORE, to induce the Senior Lenders to permit the Borrower to
borrow funds from the Senior Lenders pursuant to the Loan Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the Borrower and
the Subordinated Lender hereby agree with the Agent and the Senior Lenders as
follows:
1. As used herein, the following terms shall have the following meanings:
<PAGE>
"Senior Indebtedness" shall mean, collectively, all outstanding
indebtedness and Obligations of the Borrower to the Senior Lenders under
the Loan Agreement, the Term Notes and the other Loan Documents (as defined
in the Loan Agreement) and all amendments, modifications, supplements,
renewals, extensions, deferrals, restatements, restructurings,
replacements, refinancings or refundings of any such indebtedness or
Obligations.
"Subordinated Debt" shall mean, collectively, all principal, premium
(if any), interest and all other amounts of every kind, nature and
description payable by the Borrower or any of its Subsidiaries to the
Subordinated Lender with respect to the Subsidiary Indebtedness, whether
now outstanding or hereafter arising, and all amendments, modifications,
supplements, renewals, extensions, deferrals, restatements, restructurings,
replacements, refinancings or refundings of any such amounts; PROVIDED that
"Subordinated Debt" shall not include Operating Advances.
"Proceeding" shall mean (i) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding relative to the Borrower or any of its
Subsidiaries or to any of their respective assets, (ii) any total or
partial liquidation, dissolution, reorganization or winding-up of the
Borrower or any of its Subsidiaries, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy, or (iii) any arrangement
or general assignment for the benefit of creditors or any other marshalling
of assets and liabilities of the Borrower or any of its Subsidiaries.
Except as defined above, capitalized terms used herein and not otherwise
defined are used as defined in the Loan Agreement.
2. The Subordinated Lender hereby agrees that the Subordinated Debt is
and shall be subordinate in right of payment to the prior payment and
satisfaction of the Senior Indebtedness and until the Senior Indebtedness has
been paid or performed indefeasibly in full, neither the Borrower nor any of its
Subsidiaries shall make any payment or
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<PAGE>
distribution, direct or indirect, to the Subordinated Lender on account of the
Subordinated Debt and the Subordinated Lender shall not ask, demand, sue for,
commence any action seeking, or take or receive, directly or indirectly, from
the Borrower or any of its Subsidiaries in cash, securities, or other property,
by set-off, by realizing on collateral or in any other manner any payment or
distribution in respect of, or security for, any and all of the Subordinated
Debt, or accelerate or seek any other remedy against the Borrower or any of its
Subsidiaries with respect to the Subordinated Debt, whether pursuant to any
applicable agreement or instrument at law or in equity.
3. (a) Upon any payment or distribution to creditors of the Borrower or
any of its Subsidiaries in a Proceeding: (i) the Agent, on behalf of the Senior
Lenders, shall be entitled to receive payment in full of all Senior Indebtedness
(including accrued and unpaid interest after the commencement of any such
Proceeding at the rate specified in the Loan Agreement) before the Subordinated
Lender shall be entitled to receive any payment or distribution by or on behalf
of the Borrower or any of its Subsidiaries; and (ii) until all of the Senior
Indebtedness (as provided in clause (i) above) is paid in full, any payment or
distribution to which the Subordinated Lender would be entitled but for this
Agreement shall be made to the Agent, on behalf of the Senior Lenders (as their
interests may appear) for application (in the case of cash) to, or as collateral
(in the case of non-cash property or securities) for the payment or prepayment
of, the Senior Indebtedness to the extent necessary to pay all of the Senior
Indebtedness in full after giving effect to any concurrent payment or
distribution to or for the Senior Lenders.
(b) This Agreement shall be applicable both before and after the
commencement, whether voluntary or involuntary, of any Proceeding and all
references herein shall be deemed, to the extent appropriate, to apply to each
of the Borrower and each of its Subsidiary as a debtor-in-possession and to any
trustee in bankruptcy for the estate of the Borrower or any of its Subsidiaries.
(c) In any Proceeding commenced by or against the Borrower or any of
its Subsidiaries, the Subordinated Lender will not take any action, or fail to
take any action, which is inconsistent with, or in opposition, to the action or
position requested by notice from the Agent to be taken by the Subordinated
Lender so long as such request is made in
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<PAGE>
good faith by the Agent to obtain payment of the Senior Indebtedness as
contemplated hereby.
4. No right of the Agent and the Senior Lenders or any present or future
holder of any Senior Indebtedness to enforce subordination as provided herein
shall at any time in any way be prejudiced or impaired by any act or failure to
act on the part of the Borrower or any of its Subsidiaries, or the Subordinated
Lender, or by any act or failure to act by the Senior Lenders or the Agent, or
by any noncompliance by the Borrower or any of its Subsidiaries, or the
Subordinated Lender, with the terms of the Loan Agreement, the Term Notes or any
other Loan Document regardless of any knowledge thereof which such holder may
have or be otherwise charged with. No right of the Subordinated Lender or any
present or future holder of any Subordinated Debt to enforce its rights as
provided herein shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Borrower or any of its Subsidiaries, or
the Subordinated Lender, or by any act or failure to act by any such future
holder of the Subordinated Debt, or by any noncompliance by the Borrower or any
of its Subsidiaries, or the Agent or the Senior Lenders, with the terms of the
Loan Agreement, the Term Notes or any other Loan Document regardless of any
knowledge thereof which such holder may have or be otherwise charged with.
5. Each of the parties hereto shall, at all times do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, deeds, transfers, assignments, agreements and
assurances as the other party hereto may reasonably require in order to give
effect to the provisions of this Agreement.
6. The Agent and the Senior Lenders may extend, renew, modify or amend
the terms of Senior Indebtedness or any security therefor and release, transfer,
assign, sell or exchange such security and otherwise deal freely with the
Borrower and its Subsidiaries, or any of them, to the same extent as could any
Person, all without notice to or consent of any Subordinated Lender and without
affecting the liabilities and obligations of the Subordinated Lender. The
Subordinated Lender may extend, renew, modify or amend the terms of the
Subordinated Debt or any security therefor and release, transfer, assign, sell
or exchange any such security and otherwise deal freely with the Borrower and
its Subsidiaries, or any of them, to the same extent as could any Person, all
without notice to or consent of any Senior Lender, so long as such actions do
not impair the rights of
-4-
<PAGE>
the Agent and the Senior Lenders set forth herein; PROVIDED, HOWEVER, that the
Subordinated Lender acknowledges and agrees that any such extension, renewal,
modification or amendment of the terms of the Subordinated Debt, or release of
security, if any, shall, at all times during the effectiveness of this
Agreement, be "Subordinated Debt" for purposes hereof; and PROVIDED, FURTHER,
that any assignee of the Subordinated Lender shall agree to be bound by the
terms and conditions of this Agreement as a "Subordinated Lender" hereunder.
7. The Senior Lenders may assign or transfer any or all of the Senior
Indebtedness or any interest herein; and notwithstanding any such assignment or
transfer or any subsequent assignment or transfer thereof, such Senior
Indebtedness shall be and remain Senior Indebtedness for the purposes of this
Agreement, and every immediate and successive assignee or transferee of any of
the Senior Indebtedness or of any interest therein shall, to the extent of the
interest of such assignee or transferee in the Senior Indebtedness, be entitled
to the benefits of this Agreement to the same extent as if any such assignee or
transferee were a Senior Lender; PROVIDED, HOWEVER, that, each Senior Lender
shall have an unimpaired right, prior and superior to that of any such assignee
or transferee, to enforce this Agreement, as to that portion of the Senior
Indebtedness which such Senior Lender has not assigned or transferred; PROVIDED,
FURTHER, that such assignee or transferee agrees to be bound by the terms of
this agreement as a "Senior Lender" hereunder.
8. No delay on the part of the Agent or the Senior Lenders in the
exercise of any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Agent or the Senior Lenders of any right or remedy
shall preclude other or further exercise thereof or the exercise of any other
right or remedy; nor shall any modification or waiver of any of the provisions
of this Agreement be binding upon the Agent and the Senior Lenders except as
expressly set forth in a writing duly signed and delivered by or on behalf of
the Agent and the Senior Lenders.
9. The Borrower and the Subordinated Lender hereby waive (a) notice of
acceptance of this Agreement by the Agent and the Senior Lenders, (b) notice of
the existence or creation or nonpayment of all or any of the Obligations, and
(c) all diligence in any collection upon the Obligations.
10. The subordination herein specified is applicable irrespective of the
time of creation of the Senior Indebtedness or the Subordinated Debt.
-5-
<PAGE>
11. The Borrower and the Subordinated Lender hereby expressly agree and
represent that this Agreement is to induce the Agent and the Senior Lenders to
enter into the Loan Documents and make the Term Loan. The provisions hereof
shall be binding upon the successors and assigns of the Borrower and the
Subordinated Lender and shall inure to the benefit of the Agent and the Senior
Lenders and any participant of the Senior Lenders and all subsequent holders of
the Senior Indebtedness. It is hereby further agreed that the Agent and the
Senior Lenders may enforce any and all rights derived from this Agreement by
suit, either in equity or law, for specific performance of any agreement herein
contained or for judgment at law and any other relief whatsoever appropriate to
such action or procedure. In the event this Agreement shall be enforced by the
Agent and the Senior Lenders or by their selected counsel(s), the Borrower
agrees to pay all reasonable costs and expenses of such enforcement.
12. This Agreement shall be interpreted, and the rights and liabilities of
the parties hereto shall for all purposes be governed by and construed and
enforced without giving effect to the principles of conflicts of laws, in
accordance with the laws of the State of New York. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under Applicable Law, but if any provision of this Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
13. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all such separate counterparts
shall together constitute one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective duly
authorized officers or representatives to execute and deliver this Agreement as
of the date first above written.
CABLEVISION SYSTEMS CORPORATION
By:
-----------------------------------------------
Its:
------------------------------------------
RAINBOW PROGRAMMING HOLDINGS, INC.,
By:
----------------------------------------------
Its:
------------------------------------------
TORONTO DOMINION (TEXAS), INC., as Agent for the Banks
under the Loan Agreement
By:
----------------------------------------------
Its:
------------------------------------------
<PAGE>
EXHIBIT G
SUBORDINATION OF MANAGEMENT FEES AGREEMENT
THIS SUBORDINATION OF MANAGEMENT FEES AGREEMENT (the "Agreement"), made as
of this 30th day of June, 1994, by and among CABLEVISION SYSTEMS CORPORATION, a
Delaware corporation (the "Manager"), RAINBOW PROGRAMMING HOLDINGS, INC., a New
York corporation (the "Borrower"), RAINBOW PROGRAM ENTERPRISES, a New York
limited partnership ("RPE"), and TORONTO DOMINION (TEXAS), INC., as agent (the
"Agent") for the Banks (as defined in the Loan Agreement defined below):
W I T N E S S E T H:
WHEREAS, the Borrower, RPE, the Agent and the Banks are parties to that
certain Loan Agreement of even date (as amended from time to time, the "Loan
Agreement") pursuant to which the Banks have agreed, severally in accordance
with their respective Commitment Ratios and not jointly, to extend a credit
facility to the Borrower in an aggregate principal amount not to exceed
$105,000,000 (the "Loan");
WHEREAS, the Manager is engaged, among other things, in the business of
providing management services to the Borrower and to RPE in return for
management fees which may be agreed upon between the Borrower, RPE and the
Manager, subject to the limitations set forth herein;
WHEREAS, the Manager, is the owner, directly or indirectly of all of the
outstanding capital stock of the Borrower and at least 75% of the partnership
interests in RPE;
WHEREAS, the execution and delivery of this Agreement is a condition, among
others, to the making of the Loans; and
NOW, THEREFORE, to induce the Banks to enter into the Loan Agreement, to
make the Loans, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Manager, the Borrower, RPE and
the Agent, on behalf of the Banks agree as follows:
1. For purposes hereof, all capitalized terms used herein shall have the
meanings ascribed to them in the Loan Agreement
- 1 -
<PAGE>
unless otherwise defined or limited herein. The term "Senior Indebtedness"
means, collectively, the "Obligations," as that term is defined in the Loan
Agreement. The term "Subordinated Fees" means any management fees payable to
the Manager by the Borrower or any of its Subsidiaries whether due or to become
due, including, but not limited to, such fees as may be or become payable under
the Management Agreement.
2. (a) Except as permitted by Section 2(d) hereof, all the Senior
Indebtedness, including all fees and any other payments due or to become due
pursuant to the terms of the Loan Agreement, the Loan Documents, and any other
instruments or agreements evidencing such Senior Indebtedness, shall be paid in
full before any payment is made on account of any Subordinated Fees.
(b) In the event that the Borrower or RPE shall make any unauthorized
payment on account of the Subordinated Fees to the Manager, upon notice from the
Agent on behalf of the Banks that such payment is unauthorized, such payment
shall be held by the Manager in trust for the benefit of and shall be paid
forthwith over and delivered to the Agent on behalf of the Banks.
(c) Upon the occurrence of an Event of Default, the Agent on behalf
of the Banks shall have the right to instruct the Borrower and RPE to thereafter
make all payments otherwise due in respect of the Subordinated Fees payable
directly to the Agent on behalf of the Banks, and the Agent shall have the right
to apply all such payments received in reduction of the Senior Indebtedness in
such order of application as provided in the Loan Agreement. The Manager
further agrees that immediately upon notice to it of the occurrence of an Event
of Default, the Manager shall direct the Borrower and RPE to make all payments
under the Management Agreement or otherwise in respect of the Subordinated Fees
directly to the Agent on behalf of the Banks. In no event shall the Borrower or
RPE pay or the Manager receive interest or delinquency charges of any type
whatsoever in respect of the Subordinated Fees.
(d) Notwithstanding anything to the contrary contained herein, each
party hereto agrees that so long as no Event of Default has occurred and is then
continuing, the Borrower or RPE may pay Subordinated Fees to the Manager in the
amounts and at such times as are provided in the Management Agreement, it being
understood that to the extent such Subordinated Fees are not paid by reason of
the foregoing provisions such Subordinated Fees may be accrued and paid when
permitted.
3. The Manager agrees that the Subordinated Fees shall be unsecured.
Until such time as the Senior Indebtedness has been paid in full, the Manager
agrees not to exercise any of its rights under any document, instrument or
agreement relating to the Subordinated Fees or to accelerate or collect any
portion of the
- 2 -
<PAGE>
Subordinated Fees or to realize upon any assets of the Borrower or RPE or to
attach, levy upon or execute against any assets of the Borrower or RPE.
4. Upon any distribution of the assets or properties of the Borrower or
upon any dissolution, winding up, liquidation or reorganization involving the
Borrower or RPE (whether in bankruptcy, insolvency or receivership proceedings
or upon an assignment for the benefit of creditors or otherwise) the Manager
agrees that:
(a) the Agent and the Banks shall first be entitled to receive
payment in full of all of the Senior Indebtedness and all fees and any other
payments (including reasonable costs and expenses) due pursuant to the terms of
the instruments and documents evidencing such Senior Indebtedness before the
Manager is entitled to receive any payment on account of the Subordinated Fees;
(b) any payment or distribution of the assets or properties of the
Borrower of any kind or character, whether in cash, property or securities, to
which the Manager would be entitled except for the provisions of this Agreement,
shall be paid by the liquidating trustee or agent or other Person making such
payment or distribution directly to the Agent on behalf of the Banks; and
(c) in the event that except as provided in Section 2(d),
notwithstanding the foregoing, any payment or distribution of the assets or
properties of the Borrower or RPE of any kind or character, whether in cash,
property or securities, shall be received by the Manager on account of the
Subordinated Fees before all Senior Indebtedness is paid in full, such payment
or distribution shall be received and held in trust for and shall be paid over
to the Agent on behalf of the Banks for application to the payment of such
Senior Indebtedness as provided in the Loan Agreement until all such Senior
Indebtedness shall have been paid in full.
5. No right of the Agent, the Banks or any present or future holder of
any Senior Indebtedness to enforce subordination as provided herein shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Borrower or RPE, or by any act or failure to act, in good faith, by
any holder of the Senior Indebtedness, or by any noncompliance by the Borrower
or RPE with any of the terms of the Loan Documents.
6. The Banks may extend, renew, modify or amend the terms of Senior
Indebtedness or any security therefor and release, transfer, assign, sell or
exchange such security and otherwise deal freely with the Borrower and RPE to
the same extent as could any Person,
- 3 -
<PAGE>
all without notice to or consent of the Manager and without affecting the
liabilities and obligations of the Manager pursuant to the provisions hereof.
7. The Banks may assign or transfer any or all of the Senior Indebtedness
or any interest therein, as provided in the Loan Agreement; and notwithstanding
any such assignment or transfer or any subsequent assignment or transfer
thereof, such Senior Indebtedness shall be and remain Senior Indebtedness for
purposes of this Agreement, and every immediate and successive assignee or
transferee of any of the Senior Indebtedness or of any interest therein shall,
to the extent of the interest of such assignee or transferee in the Senior
Indebtedness, be entitled to the benefits of this Agreement to the same extent
as if such assignee or transferee were the a Bank hereunder; provided, however,
that, unless the appropriate assignor shall otherwise consent in writing, such
assignor shall have an unimpaired right, prior and superior to that of any such
assignee or transferee, to enforce this Agreement as to such Senior Indebtedness
which has not been assigned or transferred.
8. No delay on the part of the Banks in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise by
the Banks of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy; nor shall any modification
or waiver of any of the provisions of this Agreement be binding upon the Banks,
except as expressly set forth in a written instrument duly signed and delivered
by or on behalf of the Banks.
9. The Manager hereby waives, except as expressly provided elsewhere
herein, (a) notice of acceptance of this Agreement by the Agent and the Banks,
(b) notice of the existence or creation or nonpayment of all or any part of the
Senior Indebtedness, and (c) all diligence in the collection or protection of or
realization upon the Senior Indebtedness or any collateral therefor.
10. The priorities herein specified are applicable irrespective of the
time of creation of the Senior Indebtedness or the time of the creation or
perfection of the Agent's and the Bank's security interest in any of collateral
securing such Senior Indebtedness.
11. The Manager hereby expressly acknowledges and agrees that the purpose
of this Agreement is to induce the Agent and the Banks to enter into the Loan
Agreement, to make the Loan. The provisions hereof shall be binding upon the
successors and assigns of the Borrower, RPE and the Manager and shall inure to
the benefit of the Agent and the Banks and all subsequent holders of the Senior
Indebtedness. It is hereby further agreed that the Agent on behalf of the Banks
may enforce any and all rights derived from this
- 4 -
<PAGE>
Agreement by suit, either in equity or law, for specific performance of any
agreement herein contained or for judgment at law and any other relief
whatsoever appropriate to such action or procedure. The remedies of the Agent
on behalf of the Banks hereunder are cumulative, not exclusive, and the exercise
of any one or more of the remedies provided for herein shall not be construed as
a waiver of any of the other remedies of the Agent on behalf of the Banks so
long as any part of the Senior Indebtedness remains unsatisfied. The Manager
expressly agrees that the Agent and the Banks shall not be under any obligation
to resort to any right or remedy hereunder prior to exercising any other rights
it may have against the Manager, the Borrower, or any other Person to secure
repayment of the Loan, nor shall the Agent and the Banks be required to resort
to any such other rights prior to the exercise of its rights and remedies
hereunder. In the event this Agreement shall be enforced by the Agent on behalf
of the Banks or by its counsel, the Manager agrees to pay all costs and expenses
of such enforcement including reasonable attorney fees, and such costs and
expenses shall be deemed Senior Indebtedness hereunder.
12. The Manager represents and warrants to the Agent and the Banks that:
(i) the Manager is a corporation duly organized and validly existing under the
laws of the State of Delaware, having the corporate power and authority to own
its properties and to carry on its business as now being and hereafter proposed
to be conducted; (ii) this Agreement has been duly executed and delivered by the
Manager and is the legal, valid and binding obligation of the Manager
enforceable in accordance with its terms except that enforcement may be limited
by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other
similar laws affecting enforcement of creditors' rights generally (insofar as
any such law relates to the bankruptcy, insolvency or similar event of the
Manager); (iii) the execution, delivery and performance by the Manager of this
Agreement in accordance with its terms do not and will not (A) require any
consent or approval not already obtained, (B) violate any Applicable Law
respecting the Manager, or (C) conflict with, result in a material breach of, or
constitute a default under the certificate of incorporation or bylaws of the
Manager or under any indenture, agreement or instrument to which the Manager is
bound.
13. This Agreement shall be construed in accordance with, and the rights
of the parties shall be governed by, the laws of the State of New York.
14. This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
but one and the same instrument.
- 5 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals as of the day and year first written above.
MANAGER: CABLEVISION SYSTEMS CORPORATION
By:______________________________
Title:________________________
[CORPORATE SEAL]
Attest:__________________________
Title:____________________
BORROWER: RAINBOW PROGRAMMING HOLDINGS, INC.
By:______________________________
Title: ______________________
[CORPORATE SEAL]
Attest:__________________________
Title:____________________
RPE: RAINBOW PROGRAM ENTERPRISES
By:______________________________
Title:____________________
AGENT: TORONTO DOMINION (TEXAS), INC.
By:______________________________
Title:________________________
- 6 -
<PAGE>
EXHIBIT H
TERM NOTE
$__,000,000.00 ________________, 1994
FOR VALUE RECEIVED, the undersigned, RAINBOW PROGRAMMING HOLDINGS, INC., a
New York corporation (the "Borrower"), promises to pay to the order of
_______________________________ (hereinafter, together with its successors and
assigns, called the "Bank"), at the office of Toronto Dominion (Texas), Inc. in
Houston, Texas or such other place as the Bank may designate in writing to the
Borrower, the principal sum of __________ MILLION AND NO/100 UNITED STATES
DOLLARS ($__,000,000.00), or, if less, the principal amount of the term loans
outstanding from time to time, plus interest as hereinafter provided. Such
Advances may be endorsed from time to time on the grid attached hereto, but the
failure to make such notations shall not affect the validity of the Borrower's
obligation to repay unpaid principal and interest hereunder. Except as
expressly provided herein and in the Loan Agreement, referred to below, amounts
repaid hereunder may not be reborrowed.
All capitalized terms used herein shall have the meanings ascribed to them
in that certain Loan Agreement dated as of June 30, 1994 (as extended, renewed,
amended, modified or supplemented from time to time, the "Loan Agreement") by
and among the Borrower, the Banks party thereto from time to time, and Toronto
Dominion (Texas), Inc. (the "Agent") as agent for the Banks, except to the
extent such capitalized terms are otherwise defined or limited herein.
All principal amounts and other Obligations then outstanding hereunder
shall be due and payable on ___________, 1995; or such earlier date as payments
of the Term Loan shall be due, whether by acceleration or otherwise.
The Borrower shall be entitled to borrow, re-pay and re-borrow funds
hereunder pursuant to the terms and conditions of Section 2.2 of the Loan
Agreement only so as to change the Interest Rate Bases or Interest Periods for
outstanding Advances under the Loan Agreement; PROVIDED, HOWEVER, that there
shall be no net increase in the principal amount outstanding hereunder.
Prepayment of the principal amount of any Term Loan may be made only as provided
in the Loan Agreement.
The Borrower hereby promises to pay interest on the unpaid principal amount
hereof as provided in Article 2 of the Loan
<PAGE>
Agreement. Interest under this Note shall also be due and payable when this
Note shall become due (whether at maturity, by reason of acceleration or
otherwise). Overdue principal and, to the extent permitted by law, overdue
interest, shall bear interest payable on DEMAND at the Default Rate to the
extent provided in the Loan Agreement.
In no event shall the amount of interest due or payable hereunder exceed
the maximum rate of interest allowed by Applicable Law, and in the event any
such payment is inadvertently made by the Borrower or any Guarantor or
inadvertently received by the Bank, then such excess sum shall be credited as a
payment of principal, unless the Borrower or such Guarantor shall notify the
Bank in writing that it elects to have such excess sum returned forthwith. It
is the express intent hereof that the Borrower and the Guarantors not pay and
the Bank not receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may legally be paid by the Borrower and the Guarantors
under Applicable Law.
All parties now or hereafter liable with respect to this Note, whether the
Borrower, any guarantor, endorser, or any other Person or entity, hereby waive
presentment for payment, demand, notice of non-payment or dishonor, protest and
notice of protest.
No delay or omission on the part of the Bank or any holder hereof in
exercising its rights under this Note, or delay or omission on the part of the
Bank, the Agent, the Majority Banks or the Banks collectively, or any of them,
in exercising its or their rights under the Loan Agreement or under any other
Loan Document, or course of conduct relating thereto, shall operate as a waiver
of such rights or any other right of the Bank or any holder hereof, nor shall
any waiver by the Bank, the Agent, the Majority Banks or the Banks collectively,
or any of them, or any holder hereof, of any such right or rights on any one
occasion be deemed a bar to, or waiver of, the same right or rights on any
future occasion.
The Borrower promises to pay all reasonable out-of-pocket costs of
collection, including reasonable attorneys' fees as provided in the Loan
Agreement, should this Note be collected by or through an attorney-at-law or
under advice therefrom.
Time is of the essence of this Note.
This Note evidences the Bank's portion of the Term Loan under, and is
entitled to the benefits and subject to the terms of, the Loan Agreement, which
contains provisions with respect to the acceleration of the maturity of this
Note upon the happening of certain stated events, and provisions for prepayment.
-2-
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the duly authorized signatories of the Borrower as
Authorized Signatories, have executed this Note under seal as of the day and
year first above written.
RAINBOW PROGRAMMING HOLDINGS, INC.
By:
----------------------------------------------
Title:
--------------------------------------
[CORPORATE SEAL]
Attest:
------------------------------------------
Title:
--------------------------------------
-3-
<PAGE>
ADVANCES
_______________________________________________________________________________
Amount of Type of Amount of Principal Notation
Date Advance Advance Paid or Prepaid Made By
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
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<PAGE>
EXHIBIT I
FORM OF BORROWER LOAN CERTIFICATE
The undersigned, ___________________, an Authorized Signatory of
Rainbow Programming Holdings, Inc., a New York corporation (the "Borrower"),
does hereby certify on behalf of the Borrower, and in connection with the making
of certain loans in an aggregate principal amount not to exceed $105,000,000
(the "Loans") pursuant to that certain Loan Agreement (the "Loan Agreement"),
dated as of June 30, 1994, by and among the Borrower, the Guarantors, the Banks,
and Toronto Dominion (Texas), Inc., as agent for the Banks (the "Agent"):
1. Attached hereto as EXHIBIT A is a true, complete and correct copy
of the Certificate of Incorporation certified by the Secretary of State of the
State of New York and the By-laws of the Borrower and all amendments thereto (if
any) certified by an Authorized Signatory of the Borrower, as in full force and
effect on the date hereof.
2. Attached hereto as EXHIBIT B is a true, complete and correct copy
of the good standing certificate dated as of a recent date with respect to the
Borrower issued by the Secretary of State of the State of New York.
3. Attached hereto as EXHIBIT C is a true, complete and correct copy
of the resolutions of the Borrower, authorizing the execution, delivery and
performance by the Borrower of each of the Loan Documents to which the Borrower
is a party (the "Resolutions") in accordance with their respective terms and of
any other documents contemplated thereunder and the consummation of the
transactions contemplated thereby. The Resolutions remain in full force and
effect and without modification in any respect.
4. Attached hereto as EXHIBIT D is a true, complete and correct copy
of the Management Agreements.
5. The following persons are the Authorized Signatories of the
Borrower as of the date hereof, each of such persons having been duly elected,
and set forth opposite their respective names below are their respective genuine
signatures:
NAME TITLE SIGNATURE
---- ----- ---------
______________________ ______________ _______________________
______________________ ______________ _______________________
______________________ ______________ _______________________
<PAGE>
______________________ ______________ _______________________
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate this ____ day of
_______________, 1994.
__________________________________,
a __________________________
By: ______________________________
Authorized Signatory
Exhibit A - Certificate of Incorporation and By-Laws
Exhibit B - Good Standing Certificate
Exhibit C - Resolutions
Exhibit D - Management Agreements
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<PAGE>
EXHIBIT J
FORM OF PARENT COMPANY LOAN CERTIFICATE
The undersigned, ___________________, an Authorized Signatory of
Cablevision Systems Corporation, a Delaware corporation (the "Parent Company"),
does hereby certify on behalf of the Borrower, and in connection with the making
of certain loans in an aggregate principal amount not to exceed $105,000,000
(the "Loans") pursuant to that certain Loan Agreement (the "Loan Agreement"),
dated as of __________, 1994, by and among Rainbow Programming Holdings, Inc.,
the Guarantors, the Banks, and Toronto Dominion (Texas), Inc., as agent for the
Banks (the "Agent"):
1. Attached hereto as EXHIBIT A is a true, complete and correct copy
of the Certificate of Incorporation certified by the Secretary of State of the
State of Delaware and the By-laws of the Parent Company and all amendments
thereto (if any) certified by an Authorized Signatory of the Parent Company, as
in full force and effect on the date hereof.
2. Attached hereto as EXHIBIT B is a true, complete and correct copy
of the good standing certificate dated as of a recent date with respect to the
Parent Company issued by the Secretary of State of the State of Delaware.
3. Attached hereto as EXHIBIT C is a true, complete and correct copy
of the resolutions of the Parent Company, authorizing the execution, delivery
and performance by the Parent Company of each of the Loan Documents to which the
Parent Company is a party (the "Resolutions") in accordance with their
respective terms and of any other documents contemplated thereunder and the
consummation of the transactions contemplated thereby. The Resolutions remain
in full force and effect and without modification in any respect.
4. The following persons are the Authorized Signatories of the
Parent Company as of the date hereof, each of such persons having been duly
elected, and set forth opposite their respective names below are their
respective genuine signatures:
NAME TITLE SIGNATURE
---- ----- ---------
______________________ ______________ _______________________
______________________ ______________ _______________________
<PAGE>
______________________ ______________ _______________________
______________________ ______________ _______________________
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate this ____ day of
_______________, 1994.
__________________________________,
a __________________________
By: ______________________________
Authorized Signatory
Exhibit A - Certificate of Incorporation and By-Laws
Exhibit B - Good Standing Certificate
Exhibit C - Resolutions
-2-
<PAGE>
EXHIBIT K
FORM OF GUARANTOR LOAN CERTIFICATE
The undersigned, ___________________, an Authorized Signatory of
__________________________________, a ___________ ___________ (the "Guarantor"),
does hereby certify on behalf of the Guarantor, and in connection with the
making of certain loans in an aggregate principal amount not to exceed
$105,000,000 (the "Loans"), pursuant to that certain Loan Agreement (the "Loan
Agreement"), dated as of __________, 1994, by and among the Rainbow Programming
Holdings, Inc., the Guarantors, the Banks, and Toronto Dominion (Texas), Inc.,
as agent for the Banks (the "Agent"):
1. Attached hereto as EXHIBIT A is a true, complete and correct copy
of [the Certificate of Incorporation] [the Partnership Agreement] [certified by
the Secretary of State of the jurisdiction of its organization] [and the By-
laws] of the Guarantor and all amendments thereto (if any) certified by an
Authorized Signatory of the Guarantor, as in full force and effect on the date
hereof.
2. Attached hereto as EXHIBIT B is a true, complete and correct copy
of the good standing certificate dated as of a recent date with respect to the
Guarantor issued by the Secretary of State of the State of its organization.
3. Attached hereto as EXHIBIT C is a true, complete and correct copy
of the resolutions of the Guarantor (or a general partner thereof), authorizing
the execution, delivery and performance by the Guarantor of each of the Loan
Documents to which the Guarantor is party (the "Resolutions") in accordance with
their respective terms and of any other documents contemplated thereunder and
the consummation of the transactions contemplated thereby. The Resolutions
remain in full force and effect and without modification in any respect.
4. The following persons are the Authorized Signatories of the
Guarantor as of the date hereof, each of such persons having been duly elected,
and set forth opposite their respective names below are their respective genuine
signatures:
NAME TITLE SIGNATURE
______________________ ______________ _______________________
______________________ ______________ _______________________
______________________ ______________ _______________________
<PAGE>
______________________ ______________ _______________________
Capitalized terms used herein and not otherwise defined are used as
defined in the Loan Agreement.
IN WITNESS WHEREOF, I have signed this Certificate this ____ day of
_______________, 1994.
__________________________________,
a __________________________
By: ______________________________
Authorized Signatory
Exhibit A - Certificate of Incorporation or Partnership
Agreement and By-Laws
Exhibit B - Good Standing Certificate
Exhibit C - Resolutions
-2-
<PAGE>
[Conformed Copy]
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
ACQUISITION AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
Relating To
CABLEVISION OF BOSTON LIMITED PARTNERSHIP
Dated as of June 14, 1994
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
RECITALS .................................................... 1
ARTICLE I
THE TRANSACTIONS; CLOSING; EFFECTIVE TIME
1.1. The Incorporation..................................... 2
1.2. The Merger............................................ 3
1.3. The Stock Sale........................................ 3
1.4. The Preferred Equity Sale............................. 4
1.5. Closing ............................................. 4
1.6. Effective Time........................................ 4
1.7. Dissolution and Liquidation
of the Partnership.................................. 5
1.8. Appraisal Rights....................................... 5
ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. Certificate of Incorporation.......................... 6
2.2. The By-Laws........................................... 6
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1. Officers and Directors................................ 6
ARTICLE IV
CONVERSION OF SHARES AT EFFECTIVE TIME
4.1. Conversion of Shares of Boston Sub Common
Stock .............................................. 6
4.2. Anti-Dilution Provisions.............................. 8
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<PAGE>
PAGE
----
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties
of Dolan............................................ 8
5.1.1. Title to Shares, etc......................... 8
5.1.2. Authority for Agreements..................... 9
5.1.3. No Conflicts, etc............................ 9
5.1.4. Corporate Status............................. 9
5.1.5. Capitalization............................... 10
5.1.6. Litigation................................... 10
5.1.7. Financial Advisor; Brokers, Finders.......... 10
5.1.8. CSBrC........................................ 10
5.1.9. No Material Adverse Change, etc.............. 11
5.2. Representations and Warranties
of the Partnership ................................. 11
5.2.1. Authority for Agreements..................... 11
5.2.2. No Conflicts, etc............................ 11
5.2.3. Corporate and Partnership Power.............. 12
5.2.4. Status of Partnership........................ 12
5.2.5. Subsidiaries................................. 12
5.2.6. Partnership Reports, etc..................... 12
5.2.7. Litigation; No Default....................... 14
5.2.8. Title to Assets; Liens....................... 15
5.2.9. Landlords' Consents, etc..................... 15
5.2.10. No Default................................... 15
5.2.11. Franchise Agreements......................... 15
5.2.12. Franchises................................... 15
5.2.13. ERISA........................................ 16
5.2.14. Taxes........................................ 16
5.2.15. Fairness Opinion............................. 16
5.3. Representations and Warranties
of Cablevision...................................... 16
5.3.1. Corporate Status............................. 16
5.3.2. Limited Partnership Status................... 16
5.3.3. Authority for Agreements..................... 17
5.3.4. No Conflicts, etc............................ 17
5.3.5. Authorized Capital of Cablevision
and Merger Sub............................. 17
5.3.6. Cablevision Reports; Financial
Statements................................. 18
5.3.7. Litigation................................... 20
5.3.8. Purchase for Investment...................... 20
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<PAGE>
PAGE
----
5.3.9. Financial Advisor; Brokers, Finders.......... 21
5.3.10. Fairness Opinion............................. 21
ARTICLE VI
COVENANTS
6.1. Covenants of the General Partners
and the Partnership................................. 21
6.1.1. Filings and Authorizations................... 21
6.1.2. Partnership Credit Agreement................. 22
6.1.3. Limited Partners' Approval................... 22
6.1.4. Stockholder Approval......................... 22
6.1.5. SEC Filings.................................. 23
6.1.6. Boston Sub Shares............................ 23
6.1.7. Affiliates Agreements........................ 23
6.1.8. Incorporation................................ 24
6.1.9. Other Actions................................ 24
6.2. Covenants of the Buyer................................ 24
6.2.1. Filings and Authorizations................... 24
6.2.2. Amendment to CSC Credit Agreement............ 24
6.2.3. SEC Filings.................................. 24
6.2.4. Other Filings................................ 25
6.2.5. Stock Exchange Listing....................... 25
6.2.6. Other Actions................................ 25
ARTICLE VII
CONDITIONS PRECEDENT
7.1. Conditions Precedent to Each Party's
Obligations......................................... 25
7.1.1. Consummation of Incorporation................ 25
7.1.2. Limited Partner Approval..................... 26
7.1.3. Cable Approvals.............................. 26
7.1.4. Amendment to Partnership
Credit Agreement........................... 26
7.1.5. Amendment to CSC Credit Agreement............ 26
7.1.6. No Injunction, etc........................... 26
7.1.7. Brookline Amendments......................... 26
7.1.8. Consents..................................... 26
7.1.9. Proxy Statement/Prospectus................... 27
7.1.10. Blue Sky Approvals........................... 27
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<PAGE>
PAGE
----
7.1.11. Stock Exchange Listing........................ 27
7.1.12. Purchase of CSBrC Shares...................... 27
7.1.13. The Preferred Equity Sale..................... 27
7.1.14. The Merger Restructuring Agreement............ 27
7.2. Conditions to Obligations of Cablevision.............. 27
7.2.1. Representations, Performance, etc............ 27
7.2.2. Appraisal Rights............................. 28
7.2.3. No Material Adverse Change................... 28
7.2.4. Opinion of Counsel........................... 28
7.3. Conditions to Obligations of the
General Partners and the Partnership................ 28
7.3.1. Representations, Performance, etc............ 29
7.3.2. No Material Adverse Change................... 29
7.3.3. Opinion of Counsel........................... 29
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent......................... 30
8.2. Termination after the First Anniversary
of this Agreement................................... 30
8.3. Termination by Cablevision, the Partnership
or the General Partners if not Approved
by Unaffiliated Limited Partners.................... 30
8.4. Special Termination Rights............................ 30
8.5. Termination Upon Breach by Dolan Entity
or Cablevision Company.............................. 31
8.6. Effect of Termination................................. 31
ARTICLE IX
DEFINITIONS, MISCELLANEOUS
9.1. Definition of Certain Terms........................... 31
9.2. Survival of Representations and
Warranties.......................................... 37
9.3. Indemnification....................................... 37
9.4. Expenses.............................................. 39
9.5. Further Assurances.................................... 42
9.6. Severability.......................................... 42
9.7. Notices ............................................. 42
9.8. Miscellaneous......................................... 44
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<PAGE>
PAGE
----
9.8.1. Headings..................................... 44
9.8.2. Entire Agreement............................. 44
9.8.3. Counterparts................................. 44
9.8.4. Governing Law................................ 44
9.8.5. Assignment................................... 44
9.8.6. No Third Party Beneficiaries................. 45
9.8.7. Amendment; Waivers........................... 45
9.8.8. No Effect on Preferred Equity................ 45
ANNEXES
ANNEX I Incorporation Restructuring Agreement
ANNEX II Calculation of Reductions
ANNEX III Merger Restructuring Agreement
ANNEX IV Brookline Sale Agreement
ANNEX V Brookline Partnership Agreement Amendment
ANNEX VI Appraisal Rights
SCHEDULES
Schedule 5.3.4 Cablevision Conflicts
Schedule 7.2.4 Form of Opinion of Debevoise & Plimpton
Schedule 7.3.3 Form of Opinion of Cablevision General
Counsel
DISCLOSURE LETTERS
Dolan Disclosure Letter
Partnership Disclosure Letter
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ACQUISITION AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
ACQUISITION AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(hereinafter called the "Agreement"), dated as of June 14, 1994, among
CABLEVISION OF BOSTON LIMITED PARTNERSHIP, a Massachusetts limited partnership
(the "Partnership"), CABLEVISION OF BOSTON, INC., a Delaware corporation wholly
owned by the Partnership ("Boston Sub"), CHARLES F. DOLAN, a general partner of
the Partnership ("Dolan"), CABLEVISION SYSTEMS BOSTON CORPORATION, a
Massachusetts corporation wholly owned by Dolan ("CSBC" and, together with
Dolan, the "General Partners"), CABLEVISION SYSTEMS CORPORATION, a Delaware
corporation ("Cablevision"), COB, Inc., a Delaware corporation and a wholly
owned subsidiary of Cablevision ("Merger Sub"), CABLEVISION SYSTEMS SERVICES
CORPORATION, a Delaware corporation and an affiliate of Dolan ("CSSC"), and
CABLEVISION FINANCE LIMITED PARTNERSHIP, a New York limited partnership wholly
owned by Cablevision ("Finance LP").
RECITALS
WHEREAS, the Partnership owns and operates a cable television system
in the City of Boston, Massachusetts (the "Boston System");
WHEREAS, Dolan and CSBC are the general partners of the Partnership
and each owns 1/2% of the partnership interests in the Partnership;
WHEREAS, the Partnership owns 99% of the partnership interests in
Cablevision of Brookline Limited Partnership, a Massachusetts limited
partnership ("Brookline"), which owns and operates a cable television system in
Brookline, Massachusetts (the "Brookline System" and, together with the Boston
System, the "Systems"), and Dolan and Cablevision Systems Brookline Corporation,
a Delaware corporation wholly-owned by Dolan ("CSBrC") are the general partners
of, and each owns 1/2% of the partnership interests in, Brookline;
WHEREAS, the Partnership owns all of the outstanding capital stock
of Boston Sub;
WHEREAS, Cablevision and the Partnership wish to enter into an
agreement providing for the merger of Merger Sub with and into Boston Sub so
that, following such merger, Cablevision will own all of the outstanding stock
of Boston Sub;
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WHEREAS, the parties intend the Merger to be a reorganization
pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended;
WHEREAS, immediately prior to the Merger, CSSC wishes to sell to
Finance LP, and Finance LP wishes to acquire from CSSC, all of CSSC's Preferred
Equity in the Partnership as set forth more fully herein;
WHEREAS, immediately prior to the Merger, Dolan wishes to sell to
Cablevision, and Cablevision wishes to acquire from Dolan, all of the
outstanding capital stock of CSBrC as set forth more fully herein; and
WHEREAS, Cablevision, Finance LP, CSSC and Dolan hold certain claims
and interests in the Partnership relating to subordinated debt, advances,
management fees, Preferred Equity and accrued and unpaid dividends and
distributions thereon, and such parties wish to settle such interests in
connection with the Merger.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
ARTICLE I
THE TRANSACTIONS; CLOSING; EFFECTIVE TIME
1.1. THE INCORPORATION. Prior to the Closing Date (as defined in
Section 1.5), the Partnership shall have transferred to Boston Sub all of the
assets and liabilities of the Boston System and of the Partnership (other than
cash and cash equivalents in an amount reasonably necessary to pay the expenses
of the Partnership in connection with the transactions contemplated by this
Agreement and not exceeding $100,000, which cash and cash equivalents will be
segregated and held apart for such purpose and are hereinafter referred to as
the "Expense Reserve Fund") in exchange for all of the issued and outstanding
capital stock of Boston Sub. All such transferred assets are hereinafter
referred to as the "Boston Assets" and all such transferred liabilities are
hereinafter referred to as the "Boston Liabilities." The incorporation of
Boston Sub and the exchange referred to in this Section 1.1 are hereinafter
referred to as the "Incorporation." Contemporaneous with the consummation of
the Incorporation, the Partnership, Finance LP, Cablevision, CSSC and Dolan
shall enter into the Incorporation Restructuring Agreement in substantially the
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form of Annex I hereto (the "Incorporation Restructuring Agreement") providing
for (a) the reduction, effective from and after the date of the Incorporation,
in the rate of cumulative distributions on the Preferred Equity of the
Partnership from 15% per annum to 10% per annum, (b) a 10% reduction in the
aggregate amount of cumulative distributions on the Preferred Equity owed by the
Partnership to CSSC and Finance LP as of the date that the Incorporation
Restructuring Agreement is executed, (c) the assignment by CSSC to Finance LP of
a portion of the outstanding accrued and unpaid cumulative distributions with
respect to its Preferred Equity in the amount determined as provided in the
Incorporation Restructuring Agreement and (d) the release of the Partnership
from all obligations with respect to all Boston Liabilities owed to such parties
upon the assumption thereof by Boston Sub in the Incorporation.
1.2. THE MERGER. Subject to the terms and conditions of this
Agreement and in accordance with the Delaware General Corporation Law (the
"DGCL"), at the Effective Time (as defined in Section 1.6) Merger Sub shall be
merged with and into Boston Sub and the separate corporate existence of Merger
Sub shall thereupon cease (the "Merger"). Boston Sub shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be incorporated under and governed by the
laws of the State of Delaware. The Merger shall have the effects specified in
the DGCL. Contemporaneous with the Closing (as defined in Section 1.5), the
Partnership, Brookline, Cablevision, Finance LP, Boston Sub and CSSC shall enter
into the Merger Restructuring Agreement substantially in the form of Annex III
(the "Merger Restructuring Agreement") hereto providing for (i) a reduction in
the outstanding amount of the cumulative distributions on the Preferred Equity
held by Finance LP in the amount determined pursuant to the formula described in
Annex II, (ii) the assignment by CSSC to Cablevision of a portion of the
outstanding management fees, interest on management fees and interest on
subordinated debt in the amount determined pursuant to Annex II, (iii) the
payment of the outstanding subordinated debt and advances, management fees and
accrued and unpaid interest thereon held by CSSC, Dolan and Finance LP and (iv)
termination of the Management Agreements between the Partnership and CSSC and
Brookline and CSSC.
1.3. THE STOCK SALE. Subject to the terms and conditions of this
Agreement, (i) at the Closing Dolan shall sell to Cablevision or its designee,
and Cablevision or its designee shall acquire from Dolan, all of the outstanding
capital stock of CSBrC (the "CSBrC Stock") for an aggregate
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consideration of $100.00, and (ii) contemporaneous with the Closing, Dolan and
Cablevision shall enter into the Brookline Sale Agreement substantially in the
form of Annex IV hereto (the "Brookline Sale Agreement") (x) granting
Cablevision a right of first refusal in Dolan's 0.5% general partnership
interest in Brookline and a right to acquire such interest on the earlier to
occur of Dolan's death and January 1, 2002 at the greater of $10,000 and the
book value of such interest (the "Call Price"), (y) granting Dolan's estate a
right to put such interest to Cablevision at the Call Price, and (z) granting
Dolan the right to put such interest to Cablevision at the greater of the prices
ranging from $4.8 million in 1994 to $10,000 in 2002 and the Call Price in the
event of a Change of Control (as defined in the Brookline Sale Agreement) of
Cablevision or Brookline. The sale of stock provided for in this Section 1.3 is
hereinafter referred to as the "Stock Sale." In connection with and as a
condition to the Stock Sale, Dolan shall cause Brookline to execute an amendment
to the Brookline Partnership Agreement substantially in the form of Annex V
hereto.
1.4. THE PREFERRED EQUITY SALE. Subject to the terms and
conditions of this Agreement, immediately prior to the Closing CSSC shall sell
to Finance LP, and Finance LP shall acquire from CSSC, all of CSSC's Preferred
Equity (including cumulative distributions thereon after giving effect to the
reductions and the assignment pursuant to the Incorporation Restructuring
Agreement) in the Partnership (the "Transferred Preferred Equity") for an
aggregate cash consideration of $4.6 million. The sale of Preferred Equity
provided for in this Section 1.4 is hereinafter referred to as the "Preferred
Equity Sale."
1.5. CLOSING. The closing of the Merger and the Stock Sale (the
"Closing") shall take place (i) at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York 10004, at 10:00 A.M. on the first business day on
which the last to be fulfilled or waived of the conditions set forth in Article
VII hereof shall be fulfilled or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date as the parties
hereto may agree. The date upon which the Closing occurs is herein called the
"Closing Date."
1.6. EFFECTIVE TIME. As soon as practicable following the
Closing, the Company and Merger Sub will cause a Certificate of Merger to be
executed, acknowledged and filed with the Secretary of State of the State of
Delaware as provided in Section 251 of the DGCL (the "Certificate of Merger").
The Merger shall become effective at the time at
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which the Certificate of Merger has been duly filed with the Secretary of State
of the State of Delaware and such time is hereinafter referred to as the
"Effective Time."
1.7. DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP. As soon as
practicable following the Effective Time, the General Partners will cause the
dissolution and liquidation of the Partnership (the "Dissolution and
Liquidation") pursuant to Article XI of the Partnership Agreement. The priority
of distributions in the Dissolution and Liquidation shall be as set forth in the
Partnership Agreement and the Merger Restructuring Agreement. In the
Dissolution and Liquidation, Limited Partners (other than Cablevision and its
subsidiaries) will not receive fractional shares. Instead, fractional shares
will be aggregated for each Limited Partner and, if there is a fractional share
after such aggregation, such fractional share will be rounded up to the next
whole number. Cablevision and Finance LP hereby agree that in the Liquidation
and Dissolution, they and their subsidiaries will be distributed such lesser
number of shares of Cablevision Class A Stock in respect of their limited
partnership interests as is necessary to effect the rounding of shares of
Cablevision Class A Stock distributed to Limited Partners other than Cablevision
and its subsidiaries. Finance LP and the Partnership hereby agree that the
consideration distributed to Finance LP in the Liquidation and Dissolution in
respect of its Preferred Equity shall consist of the Preferred Equity Shares
issued in the Merger to the Partnership in respect of the Preferred Equity and
the accumulated distributions thereon as such distributions are reduced in
accordance with the Incorporation Restructuring Agreement and the Merger
Restructuring Agreement (the amount of such Preferred Equity and such
distributions as so reduced, the "Preferred Equity Amount").
1.8. APPRAISAL RIGHTS. Cablevision agrees that, in connection
with the Liquidation, Cablevision shall grant appraisal rights to the limited
partners of the Partnership, to the extent and pursuant to the procedures set
forth in Annex VI hereto.
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ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
2.1. CERTIFICATE OF INCORPORATION. At the Effective Time, the
Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Merger Sub in effect immediately prior to the
Effective Time, until duly amended, except that the name of the Surviving
Corporation in said Certificate of Incorporation shall be "Cablevision of
Boston, Inc."
2.2. THE BY-LAWS. At the Effective Time, the By-Laws of the
Surviving Corporation shall be the By-Laws of Merger Sub in effect immediately
prior to the Effective Time, until duly amended.
ARTICLE III
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
3.1. OFFICERS AND DIRECTORS. The directors and officers of
Merger Sub at the Effective Time shall, from and after the Effective Time, be
the directors and officers, respectively, of the Surviving Corporation until
their successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
ARTICLE IV
CONVERSION OF SHARES AT EFFECTIVE TIME
4.1. CONVERSION OF SHARES OF BOSTON SUB COMMON STOCK. (a) At
the Effective Time, all of the shares of the common stock, par value $.01 per
share ("Boston Sub Shares"), of Boston Sub issued and outstanding immediately
prior to the Effective Time (other than Boston Sub Shares, if any, owned by
Cablevision, Merger Sub or any other subsidiary of Cablevision (collectively,
the "Cablevision Companies") and Boston Sub Shares held in Boston Sub's treasury
immediately prior to the Effective Time) shall, by virtue of the Merger and
without any action on the part of the Partnership, as the holder thereof, be
converted in the aggregate into the right to receive the Merger Consideration.
For purposes of this Agreement the "Merger
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Consideration" shall mean the number of shares of Cablevision Class A Common
Stock, par value $.01 per share ("Cablevision Class A Stock"), obtained by
adding (x) the number obtained by dividing the sum of $40,656,566 (less $10,000
times the number of Units with respect to which the appraisal rights granted
pursuant to Section 1.8 hereof have been perfected) by the Average Cablevision
Stock Price and (y) the number obtained by dividing the Preferred Equity Amount
by the Average Cablevision Stock Price (the "Preferred Equity Shares"), rounded
up to the next whole share. The "Average Cablevision Stock Price" shall mean
the arithmetic average of the closing price per share of the Cablevision Class A
Stock for the 20 trading days ending on the second trading day prior to the
Effective Time, subject to adjustment in the event of payment in such 20 trading
day period of any dividend or other distribution of cash, assets or other
property other than regular dividend payments on Cablevision's Series C
Preferred Stock, par value $0.01 per share (the "Cablevision Series C
Preferred"). The closing price per share for each day shall be the last
reported sales price regular way or, in case no such reported sale takes place
on such day, the average of the reported closing bid and asked prices regular
way, in either case on the American Stock Exchange or, if the Cablevision Class
A Stock is not listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Cablevision Class A Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, on the National Association of Securities Dealers Automated
Quotations National Market System or, if the Cablevision Class A Stock is not
listed or admitted to trading on any national securities exchange or quoted on
such National Market System, the average of the closing bid and asked prices in
the over-the-counter market as furnished by any New York Stock Exchange member
firm selected from time to time by Cablevision for that purpose. No fractional
shares shall be issued pursuant to the Merger.
(b) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, all Boston Sub Shares issued and
outstanding immediately prior to the Effective Time (other than Boston Sub
Shares owned by the Cablevision Companies) shall cease to be outstanding, shall
be cancelled and cease to exist, and the Partnership, as the holder of a
certificate formerly representing Boston Sub Shares, shall thereafter cease to
have any rights with respect to such Boston Sub Shares, except the right to
receive, without interest, the Merger Consideration.
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(c) Each Boston Sub Share issued and outstanding at the Effective
Time and owned by any of the Cablevision Companies, and each Boston Sub Share
issued and held in Boston Sub's treasury at the Effective Time, by virtue of the
Merger and without any action on the part of the holder thereof, shall cease to
be outstanding and shall be cancelled without payment of any consideration
therefor and shall cease to exist, and each holder of a certificate representing
any such Boston Sub Shares shall cease to have any rights with respect to such
Boston Sub Shares.
(d) At the Effective Time, each share of Common Stock, par value
$.01 per share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall remain outstanding and as a result of the Merger shall
thereafter constitute all of the issued and outstanding shares of the capital
stock of the Surviving Corporation.
4.2. ANTI-DILUTION PROVISIONS. In the event that, between the
first day of the 20 day trading period referred to in Section 4.1 and the
Effective Time, Cablevision changes the number of shares of Cablevision Class A
Stock issued and outstanding as a result of a stock split, reverse stock split,
stock dividend, recapitalization, spin-off or other similar extraordinary
transaction, the number of shares of Cablevision Class A Stock to be issued in
the Merger shall be appropriately adjusted, taking into account the extent to
which such transaction or event has already been reflected in the computation of
the Average Cablevision Stock Price. The required adjustments shall be as
agreed to by the Partnership and Cablevision.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. REPRESENTATIONS AND WARRANTIES OF DOLAN. Dolan represents
and warrants to Cablevision and Merger Sub that, except as set forth in the
Dolan Disclosure Letter:
5.1.1. TITLE TO SHARES, ETC. Dolan owns, beneficially and of
record, the CSBrC Stock, free and clear of any Liens, and upon the
delivery of and payment therefor at the Closing as provided for in this
Agreement, Cablevision or its designee(s) will acquire good and marketable
title thereto, free and clear of any Liens other than any Lien created by
Cablevision or its designee(s).
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5.1.2. AUTHORITY FOR AGREEMENTS. Each of Dolan, CSBC, CSSC and
CSBrC has the legal capacity to execute and deliver the Transaction
Documents to which it is a party, to perform its obligations under the
Transaction Documents and to consummate the Transactions to which it is a
party. The execution and delivery of the Transaction Documents to which
Dolan, CSBC, CSBrC or CSSC is a party, and the consummation of the
Transactions to which any of them is a party, have been duly authorized by
all appropriate corporate or other action on the part of Dolan, CSBC,
CSBrC and CSSC, as the case may be. The Transaction Documents to which
Dolan, CSBC, CSSC and CSBrC are parties have been or will be duly executed
and delivered by Dolan, CSBC, CSSC and/or CSBrC, as the case may be, and
constitute or will, when executed, constitute valid and legally binding
obligations of such party, enforceable against such party in accordance
with the terms of such Transaction Documents.
5.1.3. NO CONFLICTS, ETC. The execution and delivery of the
Transaction Documents by Dolan, CSBC, CSSC and CSBrC and the consummation
of the Transactions by Dolan, CSBC, CSSC and CSBrC will not conflict with
or result in any violation of or default under (i) any provision of the
certificate of incorporation or by-laws of CSBC, CSSC or CSBrC or, (ii)
except as to any Franchise, as to which no representation or warranty is
made in this Section 5.1.3, any mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
Dolan except, as to this subsection (ii) only, any such conflict,
violation or default as would not adversely affect the ability of Dolan,
CSBC, CSSC or CSBrC to perform its obligations under this Agreement or any
other Transaction Document.
5.1.4. CORPORATE STATUS. Each of CSBC, CSSC and CSBrC is a
corporation duly incorporated, validly existing and in good standing under
the laws of the state of its incorporation with full corporate power and
authority to own its assets and carry on its business as now conducted.
CSBrC is qualified to do business in all jurisdictions in which the nature
of the business conducted by it makes such qualification necessary and
where failure so to qualify would have a material adverse effect on its
business, financial condition or operations. CSBrC does not have any
liabilities that are not also liabilities of Brookline,
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other than immaterial franchise tax liability and other immaterial tax
liabilities.
5.1.5. CAPITALIZATION. (a) The authorized and outstanding
capital stock of CSBrC is as set forth in the Dolan Disclosure Letter.
All outstanding shares of CSBrC as set forth in the Dolan Disclosure
Letter have been duly authorized and validly issued and are fully paid and
non-assessable.
(b) There are no preemptive or similar rights on the part of any
holders of any class of securities of CSBrC. No options, warrants,
conversion or other rights, agreements or commitments of any kind
obligating CSBrC, contingently or otherwise, to issue or sell any shares
of its capital stock or any securities convertible into or exchangeable
for any such shares, are outstanding, and no authorization therefor has
been given. There are no outstanding contractual obligations of CSBrC to
repurchase, redeem or otherwise acquire any outstanding shares of its
capital stock.
(c) CSBrC has no subsidiaries.
5.1.6. LITIGATION. There is no judicial or administrative
action, suit, proceeding or investigation pending or, to the best of
Dolan's knowledge, threatened against Dolan, CSBC, CSSC or CSBrC which
involves the validity of any Transaction Document, of any amount payable
in respect of, or which relates in any way to, any outstanding security
of, interest in or claim of Cablevision, Finance LP or any other
Cablevision Company or any Dolan Entity against the Partnership, Brookline
or Boston Sub, or of any action taken or to be taken by Dolan in
connection with the Transaction Documents or the consummation of the
Transactions.
5.1.7. FINANCIAL ADVISOR; BROKERS, FINDERS. None of the Dolan
Entities has retained any financial advisor, broker or finder or other
similar consultant other than PaineWebber Incorporated ("PaineWebber") in
connection with the transactions contemplated hereby so as to give rise to
any claim against Cablevision or Merger Sub for any financial advisory,
brokerage or finder's commission, fee or similar compensation.
5.1.8. CSBRC. The representations and warranties in Section
5.2.7, 5.2.8, 5.2.10, 5.2.13 and 5.2.14 are true and correct as to CSBrC
and shall be applied
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MUTATIS MUTANDIS to CSBrC as if such provisions were set forth in full
in this Section 5.1.8.
5.1.9. NO MATERIAL ADVERSE CHANGE, ETC. Since December 31,
1993, there has been no material adverse change in the financial condition
or operations or the business of CSBrC (it being understood that no
representation or warranty with respect to any Cable Act Effects is made
in this Section 5.1.9).
5.2. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP. Except
as set forth in the Partnership Disclosure Letter, the Partnership represents
and warrants to Cablevision and Merger Sub as follows:
5.2.1. AUTHORITY FOR AGREEMENTS. Each of the Partnership,
Brookline and Boston Sub has the legal capacity to execute and deliver the
Transaction Documents to which it is a party, to perform its obligations
under the Transaction Documents and to consummate the Transactions to
which it is a party. The execution and delivery of the Transaction
Documents to which the Partnership, Brookline or Boston Sub is a party,
and subject, in the case of the Partnership and Boston Sub, to the
approval of each of the Incorporation and the Merger by the Limited
Partners who are not affiliated with Dolan or CSSC as provided in the
Partnership Agreement, the consummation of the Transactions to which any
of them is a party, have been duly authorized by all appropriate corporate
or partnership action on the part of the Partnership, Brookline or Boston
Sub, as the case may be. The Transaction Documents have been or will be
duly executed and delivered by such entities and constitute or, when
executed will constitute, valid and legally binding obligations of such
entities, enforceable against such entities in accordance with the terms
of such Transaction Documents.
5.2.2. NO CONFLICTS, ETC. The execution and delivery of the
Transaction Documents by the Partnership, Brookline and Boston Sub and,
subject, in the case of the consummation of the Transactions by the
Partnership and Boston Sub, to the approval of each of the Incorporation
and the Merger by the Limited Partners who are not affiliated with Dolan
or CSSC as provided in the Partnership Agreement, the consummation of the
Transactions by the Partnership, Brookline and Boston Sub will not
conflict with or result in any violation of or default under any provision
of the Partnership Agreement, the Brookline Partnership
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Agreement, the Certificate of Incorporation or Bylaws of Boston Sub or any
provision of any Franchise. Except as set forth on the Partnership
Disclosure Letter, no consent, license, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Authority or other third party is required on the part of any such
entities in connection with the execution and delivery by any such
entities of any Transaction Document or the consummation by any such
entities of the Transactions.
5.2.3. CORPORATE AND PARTNERSHIP POWER. Each of the Partnership,
Brookline and Boston Sub (a) has all requisite corporate or partnership
power, as the case may be, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and
carry on its business as now being conducted; and (b) is qualified to do
business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a material adverse effect on its business, financial
condition or operations.
5.2.4. STATUS OF PARTNERSHIP. The Partnership is a limited
partnership duly organized and validly existing under the laws of the
Commonwealth of Massachusetts.
5.2.5. SUBSIDIARIES. None of the Partnership, Brookline and
Boston Sub has any subsidiaries, except that (i) Boston Sub is a wholly
owned subsidiary of the Partnership, (ii) the Partnership has a 99%
limited partnership interest in Brookline and (iii) the Partnership has a
99.8% general partnership interest in Boston Transport Company, a
Massachusetts general partnership ("Boston Transport").
5.2.6. PARTNERSHIP REPORTS, ETC. (a) The Partnership has
delivered to Cablevision copies of (i) each registration statement, Report
on Form 8-K and proxy statement prepared by it since December 31, 1993,
(ii) the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1993 and the Partnership's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994, each in the form filed with the
Securities and Exchange Commission (the "SEC"), and (iii) all other
reports filed with the SEC since December 31, 1993 (collectively, the
"Partnership Reports"). As of their respective dates, the Partnership
Reports did not contain any untrue
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statements of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
Each of the consolidated balance sheets included in or incorporated by
reference into the Partnership Reports (including the related notes and
schedules) fairly presents, in all material respects, the consolidated
financial position of the Partnership and its subsidiaries (including
Brookline) as of its date and each of the consolidated statements of
income and of changes in financial position included in or incorporated by
reference into the Partnership Reports (including any related notes and
schedules) fairly presents the results of operations, retained earnings
and changes in financial position, as the case may be, of the Partnership
and its subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments), in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein.
(b) The Partnership and Brookline did not have on December
31, 1993 any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments, except as referred to or
reflected or provided for in the balance sheet, including the notes
thereto, of the Partnership as at said date. Since December 31, 1993,
there has been no material adverse change in the financial condition or
operations or the business of the Partnership and Brookline from that set
forth in the Partnership Reports (it being understood that no
representation or warranty with respect to any Cable Act Effects is made
in this Section 5.2.6(b)). Immediately prior to the Effective Date,
Boston Sub will have no liabilities that were not liabilities of the
Partnership immediately prior to the Incorporation, except for (i)
liabilities that are immaterial organizational liabilities or immaterial
franchise tax liabilities and (ii) liabilities that are incurred in the
ordinary course of business by Boston Sub as a result of the operation of,
and are not material to, the Partnership's and Brookline's business after
the Incorporation.
(c) Insofar as relating to the General Partners, the
Partnership or any of their respective
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subsidiaries (other than Cablevision and any of its subsidiaries) is
concerned (i) the Registration Statement on Form S-4 to be filed with the
SEC by Cablevision in connection with the issuance of Cablevision Class A
Stock in the Merger (the "Consent Solicitation Statement/Prospectus") will
not, at the time the Consent Solicitation Statement/Prospectus and each
amendment and supplement thereto, if any, becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) the Consent Solicitation
Statement/Prospectus and any amendment or supplement thereto and any
supplemental soliciting materials will not, from the date of mailing of
the Consent Solicitation Statement/Prospectus to the Limited Partners
through the effective date of the consent solicitation for the Merger,
contain any statement which, at the time and in the light of the
circumstances under which such statement is made, is false or misleading
with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not false or misleading
or necessary to correct any communication with respect to the solicitation
of a consent relating to the Incorporation or the Merger which has become
false or misleading.
5.2.7. LITIGATION; NO DEFAULT. There are no legal or arbitral
proceedings or any proceedings by or before any governmental or regulatory
authority or agency, pending or (to the knowledge of the General Partners
or the Partnership) threatened in writing against the Partnership,
Brookline or Boston Sub which are reasonably likely, individually or in
the aggregate, to have a material adverse effect on the financial
condition, operations or business of the Partnership, CSBrC, Brookline and
Boston Sub, taken as a whole, or which involves the validity of any
Transaction Document, of any amount payable in respect of, or which
relates in any way to, any outstanding security of, interest in or claim
of Cablevision, Finance LP or any other Cablevision Company or any Dolan
Entity against the Partnership, Brookline or Boston Sub, or any action
taken or to be taken by the Partnership, Brookline or Boston Sub in
connection with the Transaction Documents or the consummation of the
Transactions. None of the Partnership, Brookline or Boston Sub is in
default under or in violation of or with respect to any law, rule,
regulation, order, writ,
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injunction or decree of any court, arbitrator, governmental commission,
bureau or other regulatory authority, which default or violation,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on the financial condition, operations or business of the
Partnership, Brookline and Boston Sub, taken as a whole, or the ability of
the Partnership, Brookline or Boston Sub to perform its respective
obligations under any such Transaction Document to which it is a party or
to consummate the Transactions.
5.2.8. TITLE TO ASSETS; LIENS. Each of the Partnership,
Brookline and Boston Sub have good title to its properties and assets free
and clear of all Liens, except Permitted Liens.
5.2.9. LANDLORDS' CONSENTS, ETC. None of the respective
landlords under the leases referred to in the Partnership Disclosure
Letter (the "Leases") or the owners of the premises referred to in such
Leases has any title to or ownership interest in any personal property,
equipment, office furniture or trade fixtures of the Partnership,
Brookline or Boston Sub on the premises referred to in such Leases, and no
consent of any such landlord is required in connection with the removal of
any such personal property, equipment, office furniture or trade fixture.
5.2.10. NO DEFAULT. None of the Partnership, Brookline or Boston
Sub is in default in the payment or performance or observance of any
contract, agreement or other instrument to which any of them is a party or
by which any of them or their respective properties or assets may be
bound, which individually or together with all other such defaults would
have a material adverse effect on the financial condition, operations or
business of the Partnership, CSBrC, Brookline and Boston Sub, taken as a
whole.
5.2.11. FRANCHISE AGREEMENTS. Each Franchise Agreement is in
full force and effect.
5.2.12. FRANCHISES. No approval, application, filing,
registration, consent or other action of any local, state or federal
authority is required to enable either the Partnership, Brookline or
Boston Sub to operate under the Franchises except for the approvals
identified in the Partnership Disclosure Letter.
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5.2.13. ERISA. The Dolan Entities and the ERISA Affiliates have
fulfilled their obligations under the minimum funding standards of ERISA
and the Code with respect to each Plan, all material required
contributions and material required installments under ERISA or the Code
have been made to each Plan on or before their due date, and the Dolan
Entities are in compliance in all material respects with the currently
applicable provisions of ERISA and the Code. Since December 22, 1987, no
amendment has been adopted to any Plan which pursuant to Section 307 of
ERISA or Section 401(a)(29) of the Code will result in the loss of
tax-exempt status of the trust of which such Plan is a part unless the
Partnership or an ERISA Affiliate timely provides security to the Plan in
accordance with the provisions of such Sections. None of the Dolan
Entities nor any ERISA Affiliate has incurred any material liability to
the PBGC or any Plan or Multiemployer Plan other than for payment of
accrued premiums or contributions in the ordinary course.
5.2.14. TAXES. Each of the Partnership, Brookline and Boston Sub
has filed all United States Federal income tax returns and all other
material tax returns which are required to be filed by it and has paid all
taxes shown on such returns to be due and has otherwise paid all of its
taxes currently due and payable.
5.2.15. FAIRNESS OPINION. The General Partners have obtained
from PaineWebber a fairness opinion, dated as of a date reasonably
proximate to the date of this Agreement, that the consideration to be
received by the unaffiliated Limited Partners in the Liquidation is fair,
from a financial point of view, to the unaffiliated Limited Partners.
5.3. REPRESENTATIONS AND WARRANTIES OF CABLEVISION. Cablevision
represents and warrants to the Dolan Entities as follows:
5.3.1. CORPORATE STATUS. Each of Cablevision and Merger Sub is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware.
5.3.2. LIMITED PARTNERSHIP STATUS. Finance LP is a limited
partnership duly organized and validly existing under the laws of the
State of New York.
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5.3.3. AUTHORITY FOR AGREEMENTS. Each of Cablevision, Finance LP
and Merger Sub has the corporate or partnership power to execute and
deliver the Transaction Documents to which it is a party, to perform its
obligations thereunder and to consummate the Transactions to which it is a
party. The execution and delivery of the Transaction Documents to which
any Cablevision Company is a party, and the consummation of the
Transactions to which it is a party, have been duly authorized by all
appropriate corporate or partnership action. The Transaction Documents to
which any Cablevision Company is a party have been or will be duly
executed and delivered by such Cablevision Company and constitute or will,
when executed, constitute valid and legally binding obligations of such
Cablevision Company, enforceable against such Cablevision Company in
accordance with the terms of such Transaction Document.
5.3.4. NO CONFLICTS, ETC. The execution and delivery of the
Transaction Documents and the consummation of the Transactions will not
conflict with or result in any violation of or default under (i) any
provision of the certificate of incorporation or by-laws of any
Cablevision Company or, (ii) except as set forth in Schedule 5.3.4, any
mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to any Cablevision Company,
except, in the case of this subsection (ii), for any such conflict,
violation or default as would not adversely affect any Cablevision
Company's ability to perform its obligations under this Agreement or any
other Transaction Document or consummate the Transactions or have a
material adverse effect on the financial condition, operations or business
of the Cablevision Companies taken as a whole. Except as specified in
Schedule 5.3.4., no consent, license, approval, order or authorization of,
or registration, declaration or filing with, any Governmental Authority or
other third party is required on the part of any of the Cablevision
Companies in connection with the execution and delivery of any of the
Transaction Documents, or the consummation of the Transactions to which it
is a party.
5.3.5. AUTHORIZED CAPITAL OF CABLEVISION AND MERGER SUB. As of
the date hereof and except as set forth in the Disclosure Letter, the
authorized capital stock of Cablevision consists of: (i) 50,000,000 shares
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of Cablevision Class A Common Stock of which, (A) as of April 1, 1994,
10,912,922 shares were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and not subject
to preemptive rights created by statute, Cablevision's Certificate of
Incorporation or By-Laws or any agreement to which Cablevision is a party
or by which Cablevision is bound, (B) as of April 1, 1994, 50,000 shares
were held in the treasury of Cablevision, (C) as of May 26, 1994,
2,123,695 shares were reserved for future issuance pursuant to
Cablevision's Amended and Restated Employee Stock Plan and its predecessor
plans (the "Stock Plan"), (D) as of April 1, 1994, 12,411,532 shares were
reserved for future issuance upon conversion of Cablevision Class B Common
Stock, (E) as of April 1, 1994, 112,500 shares were reserved for issuance
upon redemption of Cablevision Series C Preferred (F) 5,000,000 shares
were reserved for issuance upon conversion of Cablevision's Series E
Preferred Stock, par value $0.01 per share (the "Cablevision Series E
Preferred"); (ii) 20,000,000 shares of Cablevision Class B Common Stock,
of which, as of April 1, 1994, 12,411,532 shares were issued and
outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights created by statute,
Cablevision's Certificate of Incorporation or By-Laws or any agreement to
which Cablevision is a party or by which Cablevision is bound; and (iii)
10,000,000 shares of Preferred Stock, par value $0.01 per share, of
Cablevision, of which as of April 1, 1994, 110,622 shares of Cablevision
Series C Preferred were issued and outstanding and 100,000 shares of
Cablevision Series E Preferred were issued and outstanding, and all of
which are duly authorized, validly issued, fully paid and nonassessable
and not subject to preemptive rights created by statute, Cablevision's
Certificate of Incorporation or By-Laws or any agreement to which
Cablevision is a party or by which Cablevision is bound. As of the date
hereof, the authorized capital stock of Merger Sub consists of 1,000
shares of capital stock, of which 100 shares are issued and outstanding,
all of which are duly authorized, validly issued, fully paid and
nonassessable.
5.3.6. CABLEVISION REPORTS; FINANCIAL STATEMENTS. (a)
Cablevision has delivered to the General Partners and the Partnership
copies of (i) each registration statement, Report on Form 8-K and proxy
statement prepared by it since December 31, 1993, (ii) Cablevision's
Annual Report on Form 10-K for the year
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ended December 31, 1993, the Amendment to Cablevision's Annual Report on
Form 10-K/A for the year ended December 31, 1993 and Cablevision's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, each
in the form (including exhibits and any amendments thereto) filed with the
SEC, and (iii) all other reports filed with the SEC since December 31,
1993 (collectively, the "Cablevision Reports"). As of their respective
dates, the Cablevision Reports did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into
the Cablevision Reports (including the related notes and schedules) fairly
presents, in all material respects, the consolidated financial position of
Cablevision and its subsidiaries as of its date and each of the
consolidated statements of income and of changes in financial position
included in or incorporated by reference into the Cablevision Reports
(including any related notes and schedules) fairly presents the results of
operations, retained earnings and changes in financial position, as the
case may be, of Cablevision and its subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end
audit adjustments material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently
applied during the periods involved, except as may be noted therein.
(b) Cablevision did not have on December 31, 1993, any material
contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or provided
for in the balance sheet, including the notes thereto, of Cablevision as
at said date. Since December 31, 1993, there has been no material adverse
change in the financial condition or operations or the business of
Cablevision from that set forth in the Cablevision Reports (it being
understood that no representation or warranty with respect to any Cable
Act Effects is made in this Section 5.3.6(b)).
(c) Insofar as information relating to Cablevision or its
subsidiaries is concerned, (i) the Consent Solicitation
Statement/Prospectus will not, at the time the Consent Solicitation
Statement/Prospectus
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and each amendment and supplement thereto, if any, becomes effective under
the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) the Consent
Solicitation Statement/Prospectus and any amendment or supplement thereto
and any supplemental soliciting materials will not, from the date of
mailing the Consent Solicitation Statement/Prospectus to the Limited
Partners through the Effective Time, contain any statement which, at the
time and in the light of the circumstances under which such statement is
made, is false or misleading with respect to any material fact, or omit
to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any communication
with respect to the solicitation of a consent relating to the
Incorporation or the Merger which has become false or misleading.
5.3.7. LITIGATION. There is no judicial or administrative
action, suit, proceeding or investigation pending or, to the best of
Cablevision's knowledge, threatened which involves the validity of any of
the Transaction Documents, of any amount payable in respect of, or which
relates in any way to, any outstanding security of, interest in or claim
of Cablevision, Finance LP or any Cablevision Company or any Dolan Entity
against the Partnership, Brookline or Boston Sub, or of any action taken
or to be taken by any Cablevision Company in connection with any of the
Transaction Documents or the consummation of the transactions contemplated
thereby. Cablevision is not in default under or in violation of or with
respect to any law, rule, regulation, order, writ, injunction or decree of
any court, arbitrator, governmental commission, bureau or other regulatory
authority, which default or violation, individually or in the aggregate,
is reasonably likely to have a material adverse effect on the financial
condition, operations or business of the Cablevision Companies, taken as a
whole, or adversely affect the ability of any Cablevision Company to
perform its obligations under any Transaction Document or to consummate
the Transactions.
5.3.8. PURCHASE FOR INVESTMENT. Cablevision or its designee
(which is Finance LP, in the case of CSSC's Preferred Equity) is acquiring
Boston Sub, the CSBrC Shares and CSSC's Preferred Equity solely for
investment, with no present intention to resell any such securities and
acknowledges that such securities
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have not been registered pursuant to the Securities Act or any other
applicable securities laws, and may not be transferred in the absence of
such registration or an exemption therefrom.
5.3.9. FINANCIAL ADVISOR; BROKERS, FINDERS. Cablevision has not
retained any financial advisor, broker, finder or other similar consultant
in connection with the Transactions contemplated hereby so as to give rise
to any claim against any Dolan Entity for any financial advisory,
brokerage or finder's commission, fee or similar compensation.
5.3.10. FAIRNESS OPINION. Cablevision has obtained from
Donaldson Lufkin & Jenrette Securities Corporation an opinion, dated as of
the date of this Agreement, that the consideration to be paid by
Cablevision in the Merger pursuant to this Agreement is fair to
Cablevision from a financial point of view.
ARTICLE VI
COVENANTS
6.1. COVENANTS OF THE GENERAL PARTNERS AND THE PARTNERSHIP.
6.1.1. FILINGS AND AUTHORIZATIONS. (a) Each of the General
Partners and the Partnership will, as promptly as practicable, file or
supply, or cause to be filed or supplied, all applications, notifications
and information required to be filed or supplied by it pursuant to
Applicable Law in connection with the execution and delivery of the
Transaction Documents and the consummation of the Transactions, including
filings with the City of Boston and the City of Brookline, and will use
its reasonable efforts to obtain, or cause to be obtained, all consents,
licenses, approvals, orders or authorizations listed in the Dolan
Disclosure Letter, the Partnership Disclosure Letter or Schedule 5.3.4 or
otherwise referred to in Section 6.1.8.
(b) The General Partners and the Partnership will coordinate
and cooperate with Cablevision in exchanging such information, supplying
such assistance and information and executing such instruments, documents,
conveyances and assurances as may be reasonably requested by Cablevision
in connection with
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Cablevision's satisfaction of its obligations under Section 6.2.1.
6.1.2. PARTNERSHIP CREDIT AGREEMENT. On or prior to the
effective date of the Incorporation, each of the General Partners and the
Partnership will use all reasonable efforts to obtain an amendment to the
Partnership Credit Agreement in form and substance reasonably satisfactory
to Cablevision and the Partnership which provides for the assignment of
such agreement to Boston Sub and which contains such other provisions as
may be contemplated in the waiver and consent to the Incorporation
received in December 1993 from the Banks under the Partnership Credit
Agreement.
6.1.3. LIMITED PARTNERS' APPROVAL. Other than as provided in
Section 8.5, the General Partners and the Partnership will take,
consistent with applicable law and the Partnership Agreement, all action
necessary to commence and consummate the consent solicitations relating to
the Incorporation and the Merger as promptly as practicable after the
Consent Solicitation Statement/Prospectus is declared effective;
PROVIDED, that the General Partners and the Partnership shall have
received the written opinion of PaineWebber, dated no more than five
business days prior to the effective date of the Consent Solicitation
Statement/Prospectus, that the consideration to be received by the
unaffiliated Limited Partners in the Liquidation is fair, from a financial
point of view, to the unaffiliated Limited Partners. Other than as
provided in Section 8.5, the General Partners shall recommend approval of
the Incorporation and adoption and approval of this Agreement and the
Merger and the Partnership shall take all lawful action to solicit such
approval, provided that neither General Partner shall be required to take
or refrain from taking any actions that would violate his or its fiduciary
duties to the Limited Partners as determined by him or it on the basis of
advice received from his or its outside counsel.
6.1.4. STOCKHOLDER APPROVAL. The Partnership as the sole
stockholder of Boston Sub shall adopt and approve this Agreement and the
Merger if and when the same are adopted and approved by the Limited
Partners.
6.1.5. SEC FILINGS. The General Partners and the Partnership
shall cooperate with Cablevision to prepare and file promptly with the SEC
the Consent Solicitation Statement/Prospectus. The Partnership will file
with
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the SEC all periodic and other documents and reports required to be filed
on or prior to the Effective Time.
6.1.6. BOSTON SUB SHARES. From the date hereof until the
Effective Time, the Partnership shall at all times be the sole stockholder
of Boston Sub and there shall be no transfers of any Boston Sub Shares.
6.1.7. AFFILIATES AGREEMENTS. Prior to the Effective Time, the
Partnership shall deliver to Cablevision a list of names and addresses of
those persons who were, in its opinion, at the effective time of the
consent solicitation relating to the Merger, "affiliates" of the
Partnership within the meaning of Rule 145 (each such person, together
with each person identified below, an "Affiliate") under the Securities
Act that will acquire shares of Cablevision Class A Common Stock in
connection with the Merger and Liquidation. The General Partners and the
Partnership shall exercise their reasonable efforts to deliver or cause to
be delivered to Cablevision, prior to the Effective Time, from each of the
Affiliates of the Partnership (other than a Cablevision Company)
identified in the foregoing list an affiliate's letter dated as of the
Closing Date in customary form and reasonably acceptable to Cablevision.
6.1.8. INCORPORATION. The Partnership shall have no obligation
to consummate the Incorporation if one or more of the following conditions
has not been satisfied or waived by the Partnership: (i) Limited
Partners who are not affiliates of the General Partners entitled to 50% or
more of the Partnership's Net Profits and Net Losses (as defined in the
Partnership Agreement) shall consent to the Incorporation, (ii) all
permits, orders, approvals and consents of, notices to, and registrations
and filings with the City of Boston and the Town of Brookline required to
be obtained in order to consummate the Incorporation and the Merger shall
have been received and shall be in effect, (iii) the Partnership Credit
Agreement shall be amended to permit the transfer of the Boston System
assets to Boston Sub, the assumption by Boston Sub of the Partnership's
obligations under the Partnership Credit Agreement and the release of the
Partnership from its obligations under the Partnership Credit Agreement,
(iv) there shall not be in effect any order, injunction, decree or
judgment of any court or Governmental Authority, and there shall not be
pending or threatened any action or proceeding by any Governmental
Authority before any court or administrative body, to restrain, enjoin or
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otherwise prevent the consummation of the Incorporation or the Merger or
to recover any damages or obtain other relief as a result of such
Transaction, or (v) all material consents to the Incorporation and the
Merger required by any Governmental Authority (other than those consents
delivered pursuant to clause (ii) above) or under any agreement or
contract to which the Partnership or Brookline is a party or by which it
is bound have been received and shall be in effect.
6.1.9. OTHER ACTIONS. The Dolan Entities, subject to the
terms and conditions of this Agreement, will take all steps reasonably
necessary to consummate each of the Transactions.
6.2. COVENANTS OF THE BUYER.
6.2.1. FILINGS AND AUTHORIZATIONS. (a) Cable-vision will and
will cause Merger Sub to, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by it pursuant to Applicable
Law in connection with the execution and delivery of the Transaction
Documents by Cablevision and Merger Sub and the consummation of the
Transactions to which they are parties, including filings with the City of
Boston and the City of Brookline, and will use its reasonable efforts to
obtain, or cause to be obtained, all consents, licenses, approvals, orders
or authorizations listed in the Dolan Disclosure Letter, the Partnership
Disclosure Letter or Schedule 5.3.4.
(b) Cablevision will, and will cause Merger Sub to,
coordinate and cooperate with the General Partners and the Partnership in
exchanging such information, supplying such assistance and information and
executing such instruments, documents, conveyances and assurances as may
be reasonably requested in connection with the satisfaction by the General
Partners and the Partnership of their obligations under Section 6.1.1.
6.2.2. AMENDMENT TO CSC CREDIT AGREEMENT. Cablevision will use
its reasonable efforts to amend the CSC Credit Agreement to permit the
consummation of the Transactions.
6.2.3. SEC FILINGS. Cablevision shall cooperate with the
Partnership to prepare and file promptly with the SEC the Consent
Solicitation Statement/Prospectus.
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Cablevision will file with the SEC all periodic and other documents and
reports required to be filed on or prior to the Effective Time.
6.2.4. OTHER FILINGS. Cablevision shall use its reasonable
efforts to obtain all necessary state securities law or "Blue Sky" permits
and approvals required to carry out the Transactions and the Partnership
agrees to furnish all information concerning the Partnership as may be
reasonably requested in connection with any such action, PROVIDED,
HOWEVER, that nothing in this Section 6.2.4 or elsewhere in this
Agreement shall require Cablevision to agree to (i) amend its certificate
of incorporation or by-laws in any way, or (ii) enter into any other
agreement or arrangement (other than the Transaction Documents), or make
any undertakings, in connection with obtaining any such permits or
approvals or otherwise performing its obligations under this Agreement.
6.2.5. STOCK EXCHANGE LISTING. Cablevision shall use its
reasonable efforts to cause Cablevision Class A Stock to be issued in the
Merger to be approved for listing on the American Stock Exchange, subject
in each case to official notice of issuance, prior to the Closing Date and
shall use its reasonable efforts to obtain any consents or approvals
required in connection therewith.
6.2.6. OTHER ACTIONS. Cablevision, subject to the terms and
conditions of this Agreement, will take all other steps reasonably
necessary to consummate each of the Transactions.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS. The
respective obligations of each of the parties hereto to consummate the
Transactions are subject to the fulfillment (or written waiver by each party) of
each of the following conditions:
7.1.1. CONSUMMATION OF INCORPORATION. The Incorporation shall
have been duly consummated and the Incorporation Restructuring Agreement
shall have been duly executed and delivered by the parties thereto.
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7.1.2. LIMITED PARTNER APPROVAL. This Agreement shall have been
duly adopted and approved by the Limited Partners of the Partnership and
by the Partnership as the sole stockholder of Boston Sub, in accordance
with applicable law, the Partnership Agreement and the certificate of
incorporation and by-laws of Boston Sub.
7.1.3. CABLE APPROVALS. All permits, orders, approvals and
consents of, notices to, and registrations and filings with the City of
Boston and the Town of Brookline, which are required to transfer the
Franchise Agreements and the Franchises in connection with the
consummation of the Transactions shall have been obtained or made and all
such permits, orders, approvals and consents shall be effective and shall
not have been suspended, revoked or stayed.
7.1.4. AMENDMENT TO PARTNERSHIP CREDIT AGREEMENT. The
Partnership Credit Agreement shall have been amended as contemplated by
Section 6.1.2 in form and substance reasonably satisfactory to both
Cablevision and the Partnership.
7.1.5. AMENDMENT TO CSC CREDIT AGREEMENT. The CSC Credit
Agreement shall have been amended as contemplated by Section 6.2.2. in
form and substance reasonably satisfactory to Cablevision.
7.1.6. NO INJUNCTION, ETC. Consummation of the Transactions
shall not have been restrained, enjoined or otherwise prohibited by any
order, injunction, decree or judgment of any court or Governmental
Authority, and no such action or proceeding shall be pending or threatened
on the Closing Date before any court or administrative body to restrain,
enjoin or otherwise prevent the consummation of the Transactions or to
recover any damages or obtain other relief as a result of such
Transactions.
7.1.7. BROOKLINE AMENDMENTS. The Amendment to the Brookline
Partnership Agreement as set forth in Annex V hereto and the Brookline
Sale Agreement shall have been duly and validly executed and delivered by
each of the parties thereto.
7.1.8. CONSENTS. Any material consents to the Transactions
required by any Governmental Authority (other than those consents
delivered pursuant to Section 7.1.3) or under any agreement or contract to
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which any party hereto is a party or is bound shall have been obtained and
delivered to the parties hereto.
7.1.9. PROXY STATEMENT/PROSPECTUS. The Consent Solicitation
Statement/Prospectus shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the Consent Solicitation
Statement/Prospectus shall have been issued and no proceedings for that
purpose shall have been initiated or be threatened by the SEC.
7.1.10. BLUE SKY APPROVALS. Cablevision and the Partnership
shall have received all state securities and "Blue Sky" permits and other
authorizations necessary to consummate the Transactions.
7.1.11. STOCK EXCHANGE LISTING. The shares of Cablevision Class
A Stock issuable to the Partnership pursuant to this Agreement shall have
been authorized for listing on the American Stock Exchange upon official
notice of issuance.
7.1.12. PURCHASE OF CSBRC SHARES. At the Closing Dolan shall
have tendered all of the CSBrC Shares for purchase and Cablevision shall
have purchased such shares, as provided in Section 1.3.
7.1.13. THE PREFERRED EQUITY SALE. Finance LP shall have
purchased from CSSC, and CSSC shall have sold to Finance LP, all of CSSC's
Preferred Equity as provided in Section 1.4.
7.1.14. THE MERGER RESTRUCTURING AGREEMENT. The Merger
Restructuring Agreement shall have been duly and validly executed by each
of the parties thereto and Cablevision shall have paid to the Dolan
Entities all amounts due pursuant to such agreement.
7.2. CONDITIONS TO OBLIGATIONS OF CABLEVISION. The obligation of
Cablevision to consummate the Transactions to which it is a party shall be
subject to the fulfillment (or written waiver by Cablevision) on or prior to the
Closing Date of the following additional conditions, which the General Partners
and the Partnership agree to use their reasonable efforts to cause to be
fulfilled:
7.2.1. REPRESENTATIONS, PERFORMANCE, ETC. The representations
and warranties of Dolan contained in Section 5.1 and the Partnership
contained in Section 5.2 shall be true and correct in all material
respects at and as of the date hereof and on and as of
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the Closing Date with the same effect as though made on and as of the
Closing Date, except (a) as affected by the transactions contemplated
hereby, (b) to the extent that any representation or warranty is made as
of a specific date, in which case such representation or warranty shall be
true and correct in all material respects as of such specified date, or
(c) insofar as any representation or warranty relates to the business of
the Partnership, the Systems or the Partnership's assets or liabilities,
such representation or warranty shall, from and after the Incorporation,
relate to such business, Systems, assets or liabilities as owned by Boston
Sub (to the extent required or permitted by this Agreement to be
transferred to Boston Sub). The General Partners and the Partnership (or
Boston Sub, if appropriate) shall have duly performed and complied in all
material respects with all agreements and conditions required by this
Agreement to be performed or complied with by them prior to or on the
Closing Date. To the extent that any agreement of the Partnership can
only be effectively performed, or any condition can only be satisfied, by
Boston Sub following the Incorporation, the General Partners and the
Partnership agree to cause Boston Sub to perform such agreement or to take
all reasonable steps to perform such condition prior to the Merger. The
General Partners and the Partnership (or Boston Sub, if appropriate) shall
have delivered to Cablevision a certificate, dated the Closing Date and
signed by such entity, to the effect set forth above in this Section
7.2.1.
7.2.2. APPRAISAL RIGHTS. Holders of not more than 200 units of
Limited Partnership interest of the Partnership (other than such units
held by Cablevision and its affiliates) shall have exercised their
appraisal rights pursuant to Section 1.8 of this Agreement.
7.2.3. NO MATERIAL ADVERSE CHANGE. Between the date of this
Agreement and the Closing Date, there shall have been no material adverse
change in the business, operations or condition (financial or otherwise)
of the Partnership, Boston Sub and Brookline, taken as a whole, provided
that no Cable Act Effect singly or in the aggregate shall constitute a
material adverse effect for purposes of this Section 7.2.3.
7.2.4. OPINION OF COUNSEL. Cablevision shall have received an
opinion, dated the Closing Date, from
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Debevoise & Plimpton, counsel to the General Partners and the Partnership,
substantially to the effect set forth in Schedule 7.2.4 to Cablevision.
7.3. CONDITIONS TO OBLIGATIONS OF THE GENERAL PARTNERS AND THE
PARTNERSHIP. The obligations of the General Partners and the Partnership to
consummate the Transactions to which they are parties shall be subject to the
fulfillment (or written waiver by the General Partners and the Partnership) on
or prior to the Closing Date of the following additional conditions, which
Cablevision agrees to use its reasonable efforts to cause to be fulfilled:
7.3.1. REPRESENTATIONS, PERFORMANCE, ETC. The representations
and warranties of Cablevision contained in Section 5.3 hereof shall be
true and correct in all material respects at and as of the date hereof and
on and as of the Closing Date with the same effect as though made at and
as of such time, except (a) as affected by the Transactions or (b) to
the extent that any representation or warranty is made as of a specific
date, in which case such representation or warranty shall be true and
correct in all material respects as of such specified date. Cablevision
shall have duly performed and complied in all material respects with all
agreements and conditions required by this Agreement to be performed or
complied with by it or any other Cablevision Company prior to or on the
Closing Date. Cablevision shall have delivered to the General Partners
and the Partnership a certificate dated the Closing Date and signed by an
officer of Cablevision to the effect set forth above in this Section
7.3.1.
7.3.2. NO MATERIAL ADVERSE CHANGE. Between the date of this
Agreement and the Closing Date, there shall have been no material adverse
change in the business, operations or condition (financial or otherwise)
of Cablevision provided that no Cable Act Effect shall singly or in the
aggregate constitute a material adverse effect for purposes of this
Section 7.3.2.
7.3.3. OPINION OF COUNSEL. The General Partners and the
Partnership shall have received an opinion, dated the Closing Date, from
the General Counsel of Cablevision, substantially to the effect set forth
in Schedule 7.3.3 to the General Partners and the Partnership.
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ARTICLE VIII
TERMINATION
8.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by the Limited Partners of the Incorporation
or the Merger, by the mutual consent of Cablevision and the General Partners on
behalf of the Partnership.
8.2. TERMINATION AFTER THE FIRST ANNIVERSARY OF THIS AGREEMENT.
Cablevision, the General Partners or the Partnership may terminate this
Agreement by written notice to the other parties after the first anniversary of
the date of this Agreement if the Merger shall not have been consummated
pursuant hereto, unless such date is extended by the mutual written consent of
the parties hereto.
8.3. TERMINATION BY CABLEVISION, THE PARTNERSHIP OR THE GENERAL
PARTNERS IF NOT APPROVED BY UNAFFILIATED LIMITED PARTNERS. This Agreement may
be terminated and the Merger may be abandoned by action of Cablevision, the
Partnership or the General Partners if the approval of the Limited Partners of
the Partnership to the Incorporation or the Merger required by Section 7.1 shall
not have been obtained by the relevant consent solicitation expiration date
(including any extensions thereof).
8.4. TERMINATION UPON BREACH. This Agreement may be terminated
and the Merger may be abandoned (i) by Cablevision upon a material breach by a
Dolan Entity of this Agreement if such breach shall continue unremedied for a
period of 30 days after written notice of such breach is given to the Dolan
Entities by Cablevision, PROVIDED, that a breach of a representation or
warranty under Section 5.2 of this Agreement shall not be the basis for
termination as provided in this Section 8.4(i) if such breach was known to any
executive officer (other than Dolan) of Cablevision on the date hereof, or (ii)
by the Partnership or the General Partners upon a material breach by a
Cablevision Company of this Agreement if such breach shall continue unremedied
for a period of 30 days after written notice of such breach is given to
Cablevision by the Partnership or the General Partners, PROVIDED, that a
breach of a representation or warranty of any Cablevision Company contained in
this Agreement shall not be the basis for termination as provided in this
Section 8.4 (ii) if such breach was known to Dolan or any officer of CSBC or
CSBrC on the date hereof.
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8.5. SPECIAL TERMINATION RIGHTS. In addition to the right to
terminate this Agreement pursuant to Section 8.1, 8.2, 8.3 and 8.4, this
Agreement may be terminated at any time prior to the consummation of the
Incorporation (i) by Cablevision, if Cablevision determines that the
Incorporation or the Merger is not in the best interests of its public
stockholders, or (ii) by the General Partners, if the General Partners determine
that the Incorporation or the Merger is not in the best interests of the Limited
Partners who are not affiliates of the General Partners, and the Partnership.
8.6. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to the provisions of Section 8.1, 8.2, 8.3, 8.4 or 8.5,
this Agreement shall become void and have no effect, without any liability in
respect of this Agreement on the part of any party hereto, or any of its
directors, officers, employees, agents, consultants, representatives or
stockholders, to any other party to this Agreement, except (a) for any liability
resulting from such party's willful breach of this Agreement and (b) for the
obligations of the parties under Section 9.3 and Section 9.4.
ARTICLE IX
DEFINITIONS, MISCELLANEOUS
9.1. DEFINITION OF CERTAIN TERMS. As used in this Agreement and
the Annexes and Schedules hereto, the following terms shall have the following
meanings:
AFFILIATE: means as to any Person, any other Person that
controls, is controlled by, or is under common control with such Person.
AFFILIATE CLAIMS: as defined in the Consent Solicitation
Statement/Prospectus.
APPLICABLE LAW: means all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances or orders of any Governmental Authority, (ii)
Governmental Approvals and (iii) orders, decisions, judgments, awards and
decrees of or agreements with any Governmental Authority.
AVERAGE CABLEVISION STOCK PRICE: as defined in Section 4.1.
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BOSTON ASSETS: as defined in Section 1.1.
BOSTON LIABILITIES: as defined in Section 1.1.
BOSTON SUB: as defined in the Recitals.
BOSTON SUB SHARE: as defined in Section 4.1.
BOSTON SYSTEM: as defined in the Recitals.
BOSTON TRANSPORT: as defined in Section 5.2.5.
BROOKLINE: as defined in the Recitals.
BROOKLINE SALE AGREEMENT: as defined in Section 1.3.
BROOKLINE SYSTEMS: as defined in the Recitals.
CABLE ACT: means the Cable Television Consumer Protection Act of
1992 and the rules and regulations promulgated thereunder from time to
time.
CABLE ACT EFFECTS: (i) reductions in existing rates and charges
and projected rates and charges, or rebates, refunds or similar payments,
resulting from the regulation of rates and charges as provided for or
contemplated by the Cable Act; (ii) changes required in billing and
collection practices as provided for or contemplated by the Cable Act;
(iii) programming, compensation payments and other business changes and
charges resulting from the "must carry" and "retransmission consent"
provisions of the Cable Act; (iv) increased competition resulting from the
Cable Act, including from the program access requirements thereof; (v)
changes in franchise award and renewal practices as provided for in or
contemplated by the Cable Act; (vi) costs and technological and business
changes resulting from compliance with the equal employment opportunity,
customer service, consumer protection, customer privacy, home wiring,
equipment compatibility and technical standards provisions of the Cable
Act; (vii) costs and liabilities resulting from the provisions governing
indecent and obscene programming in or contemplated by the Cable Act; and
(viii) other effects directly resulting from the Cable Act.
CABLEVISION CLASS A STOCK: as defined in Section 4.1.
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CABLEVISION COMPANIES: as defined in Section 4.1.
CABLEVISION REPORTS: as defined in Section 5.3.6.
CABLEVISION SERIES C PREFERRED: as defined in Section 4.1.
CALIFORNIA PARTNERSHIP ROLL-UP RULES: Sections 25014.5 - 25014.7
of the California Corporations Code.
CERTIFICATE OF MERGER: as defined in Section 1.6.
CLOSING: as defined in Section 1.4.
CLOSING DATE: as defined in Section 1.4.
CODE: as defined in Section 1.01 of the Partnership Credit
Agreement.
CONSENT SOLICITATION STATEMENT/PROSPECTUS: as defined in Section
5.2.6(c).
CSBC: as defined in the Recitals.
CSBRC: as defined in the Recitals.
CSBRC STOCK: as defined in Section 1.3.
CSC CREDIT AGREEMENT: The Third Amended and Restated Credit
Agreement, dated as of June 24, 1992 and amended by Amendment No. 1, dated
as of August 4, 1992, and Amendment No. 2 and Waiver, dated as of November
8, 1993, among Cablevision, the banks parties thereto, Bank of Montreal,
Chicago Branch, The Bank of New York, The Bank of Nova Scotia and The
Canadian Imperial Bank of Commerce, as Co-Agents, and Toronto Dominion
(Texas), Inc., as Agent.
CSSC: as defined in the Recitals.
DGCL: as defined in Section 1.1.
DISSOLUTION AND LIQUIDATION: as defined in Section 1.7.
DOLAN DISCLOSURE LETTER: the disclosure letter, dated the date of
this Agreement, that is delivered by Dolan to Cablevision and Merger Sub
at the time of execution and delivery of this Agreement identifying
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exceptions to the representations and warranties made by Dolan pursuant to
Section 5.1.
DOLAN ENTITY: Dolan, CSSC, CSBC, CSBrC, Boston Sub, the
Partnership and Brookline.
EFFECTIVE TIME: as defined in Section 1.6.
ERISA: as defined in Section 10.01 of the Partnership Credit
Agreement.
ERISA AFFILIATE: as defined in Section 10.01 of the Partnership
Credit Agreement; PROVIDED, that for the purposes of this Agreement,
ERISA Affiliate shall not include any Cablevision Company.
EXPENSE RESERVE FUND: as defined in Section 1.1.
FINANCE LP: as defined in the Recitals.
FRANCHISE AGREEMENTS: the franchise agreements between the Town
of Brookline and Brookline and between the City of Boston and the
Partnership granting the Franchises.
FRANCHISES: the franchises granted by the City of Boston and the
Town of Brookline to construct, operate and maintain cable television
systems in the City of Boston and the Town of Brookline.
GOVERNMENTAL APPROVAL: an authorization, consent, approval,
permit, license or exemption of, registration or filing with, or report or
notice to, any Governmental Authority.
GOVERNMENTAL AUTHORITY: any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any government
authority, agency, department, board, commission or instrumentality of the
United States, any State of the United States or any political subdivision
thereof.
INCORPORATION: as defined in Section 1.1.
INCORPORATION RESTRUCTURING AGREEMENT: as defined in Section 1.1.
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INDEBTEDNESS: as defined in the Partnership Credit Agreement, as
such definition is in effect on the date hereof.
LEASES: as defined in Section 5.2.8.
LIEN: any lien, pledge, charge, security interest, title
retention agreement, adverse claim, option or other third party interest
or claim.
LIMITED PARTNER: as defined in the Recitals.
LOSSES: as defined in Section 9.3(a).
MERGER: as defined in Section 1.2.
MERGER CONSIDERATION: as defined in Section 4.1.
MERGER RESTRUCTURING AGREEMENT: as defined in Section 1.2.
MERGER SUB: as defined in the Recitals.
MULTIEMPLOYER PLAN: as defined in Section 10.01 of the
Partnership Credit Agreement.
PARTNERSHIP AGREEMENT: the Second Amended and Restated Articles
of Limited Partnership of Cablevision of Boston Limited Partnership, dated
as of March 30, 1984, as amended by the First Amendment dated September
28, 1984.
PARTNERSHIP CREDIT AGREEMENT: the Fourth Amended and Restated
Loan Agreement, dated as of September 30, 1991, as amended, among the
Partnership, the Lenders named therein, and The Toronto-Dominion Bank
Trust Company, as Agent.
PARTNERSHIP DISCLOSURE LETTER: The disclosure letter, dated the
date of this Agreement, that is delivered by the Partnership to
Cablevision and Merger Sub of the time of execution and delivery of this
Agreement identifying exceptions to the representations and warranties
made by the Partnership pursuant to Section 5.2.
PARTNERSHIP EXPENSES: as defined in Section 9.4(c).
PARTNERSHIP REPORTS: as defined in Section 5.2.6.
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PARTNERSHIP SOLICITATION COSTS: as defined in Section 9.4(b).
PBGC: as defined in Section 10.01 of the Partnership Credit
Agreement.
PERSON: any natural person, firm, partnership, association,
corporation, trust or Governmental Authority.
PERMITTED LIENS: as defined in Section 10.01 of the Partnership
Credit Agreement.
PLAN: as defined in Section 10.01 of the Partnership Credit
Agreement.
PREFERRED EQUITY: the interests in the Partnership represented by
the Agreement, dated September 30, 1985, between Finance LP and the
Partnership and the Agreement, dated June 29, 1989, between CSSC and the
Partnership.
PREFERRED EQUITY AMOUNT: as defined in Section 1.7.
PREFERRED EQUITY SALE: as defined in Section 1.4.
PREFERRED EQUITY SHARES: as defined in Section 4.1.
SEC: the United States Securities and Exchange Commission.
SECURITIES ACT: the Securities Act of 1933, as amended.
STOCK SALE: as defined in Section 1.3.
SURVIVING CORPORATION: as defined in Section 1.2.
SYSTEMS: as defined in the Recitals.
TERMINATION RELATED LOSSES: as defined in Section 9.3(a).
TRANSACTION DOCUMENTS: this Agreement, the Certificate of Merger,
the Incorporation Restructuring Agreement, the Merger Restructuring
Agreement, the Brookline Sale Agreement and the Brookline Partnership
Agreement Amendment, and the other documents delivered in connection with
the foregoing.
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TRANSACTIONS: shall mean the transactions contemplated by the
Transaction Documents including, without limitation, the Incorporation,
the Merger, the Stock Sale, the Preferred Equity Sale and the Dissolution
and Liquidation.
TRANSFERRED PREFERRED EQUITY: as defined in Section 1.4.
UNITS: shall mean units of limited partnership interest of the
Partnership.
9.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this Agreement shall terminate (i)
in the event of and upon the termination of this Agreement pursuant to Section
8.1 or (ii) upon the Closing.
9.3. INDEMNIFICATION. (a) Whether or not any of the
Transactions are consummated, Cablevision hereby agrees to indemnify the
General Partners and hold the General Partners harmless from and against, and
shall reimburse them on demand for, any and all losses, damages, liabilities,
claims, demands, deficiencies, judgments, settlements, whether or not arising
out of third-party claims, including without limitation the reasonable fees and
expenses of counsel and other related costs and expenses, but excluding any
fees, costs and expenses covered in Section 9.4 hereof ("Losses") resulting from
or arising out of the Transactions, including but not limited to (i) all
liabilities of the Partnership and Brookline in connection with the Transactions
and (ii) all liabilities whatsoever to Limited Partners in connection with the
Transactions; PROVIDED, that Cablevision shall not be required by this
Agreement to indemnify either of the General Partners (1) for Termination
Related Losses (as hereinafter defined) in the event that this Agreement shall
be terminated (I) by Cablevision pursuant to Section 8.4 as a result of any
breach of this Agreement by either of the General Partners, acting in their
individual or corporate capacity, as the case may be, and not in their capacity
as a general partner of the Partnership or Brookline, or (II) by the General
Partners or the Partnership for reasons other than a breach of this Agreement by
a Cablevision Company, or (2) for any Losses (A) related to any amounts payable
by the Partnership to either of the General Partners with respect to any
Affiliate Claim or Preferred Equity or (B) subject to Section 9.3(b), related in
any way to any outstanding security of or interest in the Partnership.
"Termination Related Losses" are (i) any Losses resulting from the termination
of this Agreement and (ii) in the case of a
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termination under Section 8.4, Losses related to the breach of this Agreement
which gave rise to the termination. If (i) this Agreement is terminated by the
General Partners pursuant to Section 8.5 and (ii) any of the General Partners or
the Partnership shall enter into an agreement within 12 months from the date of
such termination providing for the sale or disposition of all or substantially
all of the equity interests in, or assets of, the Partnership (or Boston Sub if
the Incorporation has occurred), then the General Partners shall promptly
reimburse Cablevision for any amounts paid to such General Partners pursuant to
Section 9.3(a) hereof and the indemnity provided under Section 9.3(a) shall
terminate.
(b) From and after the Effective Time, Cablevision shall indemnify
the General Partners and hold the General Partners harmless from and against,
and shall reimburse them for, any and all Losses resulting from or arising out
of acting as a general partner of the Partnership or Brookline (whether before
or after the Effective Time) or as an officer or director of Boston Sub,
including but not limited to (i) liabilities, obligations and commitments of the
Partnership and Brookline, (ii) Boston Liabilities and (iii) liabilities,
obligations and commitments whatsoever to the partners of the Partnership and
Brookline, provided that Cablevision shall not indemnify the General Partners
for any Losses related to (A) any indebtedness owed by Brookline to the
Partnership as of the date of this Agreement, PROVIDED, that the foregoing
limitation shall not apply from and after any time Dolan ceases to be a general
partner of Brookline for any reason and (B) any amounts payable to either of the
General Partners with respect to any Affiliate Claim or Preferred Equity (but
nothing in this clause (B) shall in any way abrogate or impair the obligations
of Cablevision under the Merger Restructuring Agreement).
(c) If a claim by a third party is made against a party indemnified
pursuant to this Section 9.3, and if such indemnified party intends to seek
indemnity with respect thereto under this Section 9.3, the indemnified party
shall promptly notify the indemnifying party of such claim; provided that the
failure of the indemnified party to notify the indemnifying party of any such
claim shall not relieve the indemnifying party of its obligations under this
Section 9.3, except to the extent the indemnifying party is actually prejudiced
by such failure. In case any action or proceeding including any such claim is
brought against the indemnified party, the indemnifying party shall be entitled
to participate therein and to assume the defense thereof with counsel reasonably
satisfactory to the indemnified
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party to the extent it may wish; PROVIDED that in the event the indemnifying
party so assumes the defense, the indemnified party shall still have the right
to employ separate counsel at its own expense in any such action and to
participate in the defense thereof. Without the prior written consent of the
indemnified party, which consent shall not unreasonably be withheld, the
indemnifying party will not consent to the entry of any judgment or enter into
any settlement of any such claim which does not include as an unconditional term
thereof the giving by the claimant or plaintiff thereof to such indemnified
party of a release from any and all liability in respect of such claim or
litigation. The indemnified party will not enter into any settlement or pay
(except pursuant to a final court order or judgment) any such claim without the
prior written consent of the indemnifying party, which consent shall not
unreasonably be withheld. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such claim, provided that in such
event it shall waive any right to indemnity therefor by the indemnifying party
or parties.
(d) Notwithstanding any other provision hereof, (i) Cablevision
shall not indemnify a General Partner under this Section 9.3 for any action
taken or any failure to act by such General Partner, acting in their individual
or corporate capacity, as the case may be, and not in their capacity as a
general partner of the Partnership or Brookline, after the date of this
Agreement if such action or failure to act is in breach of any provision hereof
or if such action or inaction constituted a willful violation of law and (ii)
Cablevision shall not indemnify the General Partners under this Section 9.3 for
any failure of the General Partners to liquidate the Partnership in a manner
consistent with the Consent Solicitation Statement/Prospectus or this Agreement,
unless such manner of liquidation is required by any applicable order,
injunction, decree or judgment of any Governmental Authority.
(e) Notwithstanding the statutory or common law liability of a
general partner for the obligations of a partnership, the General Partners shall
not be liable for any breach of the representations, warranties or covenants of
the Partnership set forth in the Agreement, it being expressly agreed that all
such liabilities shall be satisfied only from the assets of the Partnership.
9.4. EXPENSES. (a) Except as may otherwise expressly provided
in this Section 9.4, each party shall bear all of its expenses, costs and fees
(including the fees
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of attorneys, auditors and appraisers, financial advisory fees, investment
banking fees, travel expenses and all other fees related to the preparatory work
of the Transactions) in connection with the Transactions. Whether or not the
Transactions contemplated hereby are consummated and except as may otherwise
expressly provided in this Section 9.4, the parties agree that Cablevision and
the Partnership shall each be responsible for one-half of the costs of the
preparation, printing and mailing the consents to the Incorporation and Merger,
the Consent Solicitation Statement/Prospectus and other documents, and for the
costs of the preparation and execution of this Agreement.
(b) If the Incorporation or the Merger is not approved by the
Limited Partners: (i) Cablevision shall bear all costs in connection with the
solicitation of consents to the Incorporation and the Merger ("Partnership
Solicitation Costs") to the extent but only to the extent a general partner or
sponsor would be required pursuant to Section 25014.7(g) of the California
Corporations Code to pay such costs if the provisions of the California
Partnership Roll-up Rules had been applicable to the Transactions, and if not so
required, the Partnership shall bear such costs; and (ii) the Partnership shall
bear all other Partnership Expenses, subject to possible reimbursement as
provided in Section 9.4(e).
(c) If the Merger is consummated, Cablevision shall bear all of the
Partnership's and Boston Sub's expenses, costs and fees (including the fees of
attorneys, auditors and appraisers, costs of printing and mailing the consents
to the Merger, the Consent Solicitation Statement/Prospectus and other
documents, financial advisory fees, investment banking fees, travel expenses and
all other fees related to the preparatory work of the Transactions) in
connection with the Transactions, including the preparation and execution of
this Agreement and compliance herewith, and the preparation of the consents to
the Incorporation and the Merger, the Consent Solicitation Statement/Prospectus
and other documents, but not including any other costs that would have otherwise
been incurred by the Partnership or Boston Sub in the ordinary course of
business ("Partnership Expenses").
(d) If the Incorporation is rejected by the Limited Partners,
subject to the last sentence of this Section 9.4(d), then, in addition to any
reimbursement obligation Cablevision may have under Section 9.4(b), Cablevision
shall reimburse the Partnership for the percentage of Partnership Expenses equal
to (i) the total amount of such Partnership Expenses multiplied by (ii) a
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fraction the numerator of which is the number of units of limited partnership
interest in the Partnership ("Units") entitled to vote that did not vote in
favor of the Incorporation and the denominator of which is the total number of
Units entitled to vote that are outstanding on the date for the expiration of
the solicitation of consents to the Incorporation. If the Incorporation is
approved by the Limited Partners but the Merger is rejected by the Limited
Partners, then, in addition to any reimbursement obligation Cablevision may have
under Section 9.4(b), Cablevision shall reimburse the Partnership for the
percentage of Partnership Expenses equal to (i) the total amount of
Partnership Expenses multiplied by (ii) a fraction the numerator of which is
the number of Units entitled to vote that did not vote in favor of the Merger
and the denominator of which is the total number of Units entitled to vote that
are outstanding on the date of the expiration of the solicitation of consents to
the Merger promptly upon request. Cablevision shall only reimburse the
Partnership pursuant to this Section 9.4(d) to the extent but only to the extent
the rights of Limited Partners would otherwise be presumed not to be protected
under Section 25104.7(e) of the California Corporations Code by reason of the
Partnership paying such costs if the provisions of the California Partnership
Roll-up Rules had been applicable to the Transactions; otherwise, the
Partnership shall bear such costs.
(e) Notwithstanding any other provision of this Section 9.4, (i) in
the event that (A) either General Partner terminates this Agreement pursuant to
the provisions of Section 8.5 or (B) Cablevision terminates this Agreement
pursuant to Section 8.4 because of a breach of this Agreement by any Dolan
Entity, each Dolan Entity shall bear all of its own, and the Partnership and
Boston Sub shall jointly and severally be responsible for Cablevision's,
expenses, costs and fees (including the fees of attorneys, auditors and
appraisers, costs of preparing, printing and mailing the Consent Solicitation
Statement/Prospectus and other documents, financial advisory fees, investment
banking fees, independent committee expenses, travel expenses and all other fees
related to the preparatory work of the Transactions) in connection with the
Transactions, (ii) in the event that (A) Cablevision terminates this Agreement
pursuant to the provisions of Section 8.5 or (B) the General Partners or the
Partnership terminate this Agreement pursuant to Section 8.4 because of a breach
of this Agreement by a Cablevision Company, each of Cablevision, Merger Sub and
Finance LP shall bear its own expenses and shall jointly and severally be
responsible for the Partnership Solicitation Costs and Partnership Expenses, and
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(iii) if the Incorporation and the Merger occur, any expenses, costs and fees of
the Partnership and Boston Sub shall be satisfied first from the Expense Reserve
Fund before any amounts are required to be paid under this Section 9.4 by any
Cablevision Company and, if the Expense Reserve Fund exceeds all such expenses,
costs and fees, the excess shall promptly be paid over by the Partnership to
Boston Sub and shall not, in any event, be distributed in the Liquidation,
PROVIDED that, if the Merger is not consummated because of the failure of any
condition to the consummation thereof to be satisfied (other than as a result of
a breach of this Agreement), then each party shall bear its own expenses (except
as otherwise provided in Section 9.4(b) and this Section 9.4(e)).
9.5. FURTHER ASSURANCES. From time to time after the Closing,
each of the parties hereto will execute and deliver, or cause to be executed and
delivered, such documents as the other parties may reasonably request in order
to more effectively consummate the sale by the Dolan Entities of, and vest in
Cablevision (or its designee) or the Surviving Corporation good title in, any of
the property that is the subject of the Transactions and to give effect to the
transactions contemplated hereby and thereby.
9.6. SEVERABILITY. If any provision of this Agreement is
inoperative or unenforceable for any reason, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable, unless to
give effect to any such remaining provision or provisions would frustrate the
purpose and intention of the parties hereunder. The invalidity of any one or
more phrases, sentences, clauses, sections or subsections of this Agreement
shall not affect the remaining portions of this Agreement.
9.7. NOTICES. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing and
shall be (a) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or (b) transmitted by hand delivery or telecopy,
addressed as follows:
(i) if to Cablevision, Merger Sub, Finance LP or the Surviving
Corporation,
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Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telecopy: (516) 496-1780
Telephone: (516) 496-1500
Attention: William Bell
with copies to:
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telecopy: (516) 496-1780
Telephone: (516) 496-1500
Attention: General Counsel
and to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
Telephone: (212) 558-4000
Attention: John P. Mead
(ii) if to Dolan, CSBC, CSSC, the Partnership or Merger Sub,
c/o Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telecopy: (516) 496-1780
Telephone: (516) 496-1500
Attention: Charles F. Dolan
with copies to:
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telecopy: (516) 364-4592
Telephone: (516) 496-1136
Attention: William F. Frewin
-43-
<PAGE>
and to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy: (212) 909-6836
Telephone: (212) 909-6000
Attention: Richard D. Bohm
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
9.8. MISCELLANEOUS.
9.8.1. HEADINGS. The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
9.8.2. ENTIRE AGREEMENT. This Agreement, together with the
Schedules, constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof, except for any agreement which
specifically states that it is not subject to this Section 9.8.2. The
only representations and warranties made by the parties hereto with
respect to the subject matter hereof are the representations and
warranties contained in this Agreement.
9.8.3. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and both of which
shall together constitute one and the same instrument.
9.8.4. GOVERNING LAW. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the laws
of the State of New York.
9.8.5. ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns, PROVIDED, that the
parties hereto shall not assign any of their respective rights or
obligations under this Agreement except (a) as specifically provided
herein with respect to a designee of Cablevision, or (b) with the prior
written consent of the other parties hereto.
-44-
<PAGE>
9.8.6. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement
shall confer any rights upon any person or entity other than the parties
hereto and their respective heirs, executors, administrators, successors
and permitted assigns, except that the provisions of Section 1.8 shall be
enforceable by the Limited Partners.
9.8.7. AMENDMENT; WAIVERS. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or
binding unless set forth in writing and duly executed by the party against
whom enforcement of the amendment, modification, discharge or waiver is
sought.
9.8.8. NO EFFECT ON PREFERRED EQUITY. The parties hereto agree
that nothing contained in this Agreement or any other Transaction Document
or in the Consent Solicitation Statement/Prospectus shall have any effect
on the rights of any affiliate of Cablevision under the Letter Agreement,
dated as of September 30, 1985, between Finance LP and the Partnership or
on the rights of CSSC under the Letter Agreement, dated June 29, 1989,
between CSSC and the Partnership, except as expressly provided in the
Incorporation Restructuring Agreement and the Merger Restructuring
Agreement.
[Intentionally Left Blank]
-45-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
CABLEVISION OF BOSTON LIMITED
PARTNERSHIP
By: CHARLES F. DOLAN,
as General Partner
/s/ Charles F. Dolan
------------------------------------
Charles F. Dolan
By: CABLEVISION SYSTEMS BOSTON
CORPORATION, as General Partner
By: /s/ Charles F. Dolan
------------------------------
Name: Charles F. Dolan
Title: Chairman
CHARLES F. DOLAN
/s/ Charles F. Dolan
------------------------------------
CABLEVISION SYSTEMS BOSTON CORPORATION
By: /s/ Charles F. Dolan
------------------------------
Name: Charles F. Dolan
Title: Chairman
CABLEVISION SYSTEMS CORPORATION
By: /s/ William J. Bell
-----------------------------------
Name: William J. Bell
Title: Vice Chairman
-46-
<PAGE>
CABLEVISION OF BOSTON, INC.
By: /s/ William J. Bell
------------------------------------
Name: William J. Bell
Title: Vice Chairman
COB, INC.
By: /s/ William J. Bell
------------------------------------
Name: William J. Bell
Title: Vice Chairman
CABLEVISION SYSTEMS
SERVICES CORPORATION
By: /s/ Charles F. Dolan
------------------------------------
Name: Charles F. Dolan
Title: President
CABLEVISION FINANCE
LIMITED PARTNERSHIP
By: CABLEVISION SYSTEMS CORPORATION,
as General Partner
By: /s/ William J. Bell
------------------------------
Name: William J. Bell
Title: Vice Chairman
-47-
<PAGE>
ANNEX I TO MERGER AGREEMENT
INCORPORATION RESTRUCTURING AGREEMENT
INCORPORATION RESTRUCTURING AGREEMENT (hereinafter called the
"Agreement"), dated as of ________ __, 1994, among CABLEVISION OF BOSTON LIMITED
PARTNERSHIP, a Massachusetts limited partnership (the "Partnership"),
CABLEVISION SYSTEMS CORPORATION, a Delaware corporation ("Cablevision"), CHARLES
F. DOLAN ("Dolan"), CABLEVISION SYSTEMS SERVICES CORPORATION, a Delaware
corporation wholly-owned by Dolan ("CSSC"), and CABLEVISION FINANCE LIMITED
PARTNERSHIP, a New York limited partnership wholly-owned by Cablevision
("Finance LP").
RECITALS
WHEREAS, the Partnership owns and operates a cable television system
in the City of Boston, Massachusetts (the "Boston System");
WHEREAS, Cablevision, Finance LP, CSSC and Dolan hold certain claims
and interests in the Partnership relating to subordinated debt, advances,
management fees, preferred equity interests and accrued and unpaid interest and
distributions thereon, all of which claims, and the current outstanding amounts
thereof, are set forth on Exhibit A to this Agreement (all such claims are
collectively referred to herein as the "Affiliate Claims and Interests");
WHEREAS, such preferred equity interests in the Partnership
(collectively, the "Preferred Equity") are held by Finance LP and CSSC;
WHEREAS, contemporaneously with the execution of this Agreement, the
Partnership is transferring to Cablevision of Boston, Inc., a Delaware
corporation wholly-owned by the Partnership ("Boston Sub"), substantially all of
its assets and all of its liabilities (the "Boston Liabilities") and Boston Sub
is assuming all such Boston Liabilities (such incorporation of Boston Sub and
such asset and liability transfers are hereinafter referred to as the
"Incorporation");
WHEREAS, it is a condition precedent to the consummation of the
Incorporation that (x) Cablevision, Finance LP, CSSC and Dolan (i) release
the Partnership from certain specified liabilities with respect to all Boston
Liabilities owed to such parties upon the assumption thereof by Boston
<PAGE>
Sub in the Incorporation and (ii) make certain adjustments to the amount of
the accrued and unpaid distributions on their Preferred Equity in connection
with the consummation of the Incorporation and (y) CSSC assign to Finance LP
a portion of the accrued and unpaid cumulative distributions with respect to its
Preferred Equity which will remain due to CSSC from the Partnership after giving
effect to this Agreement in order to make proportionate the effect of the
reductions to CSSC's and Finance LP's Preferred Equity which are being agreed to
in connection with the Incorporation; and
WHEREAS, because Cablevision, Finance LP, CSSC and Dolan desire to
cause the occurrence of the Incorporation to facilitate a subsequent merger
involving Boston Sub and for certain other reasons, such parties are willing to
provide the releases and to make the adjustments to the Preferred Equity
provided for by this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
RESTRUCTURING AND RELEASES
1.1. REDUCTION IN RATE OF RETURN ON PREFERRED EQUITY. (a)
FINANCE LP. From and after the consummation of the Incorporation, the per
annum interest rate provided for in the first sentence of the third full
paragraph of the Letter Agreement, dated as of September 30, 1985, between
Finance LP and the Partnership (the "Finance LP Letter Agreement"), in respect
of the net amount of the Cash Infusion (as such term is defined in the Finance
LP Letter Agreement) shall be reduced from 15% to 10%. Except as so amended,
the Finance LP Letter Agreement shall remain in full force and effect.
(b) CSSC. From and after the consummation of the Incorporation,
the per annum interest rate provided for in the first sentence of the third
paragraph of the Letter Agreement, dated as of June 29, 1989, between CSSC and
the Partnership (the "CSSC Letter Agreement"), in respect of the net amount of
the Cash Infusion (as such term is defined in the CSSC Letter Agreement) shall
be reduced from 15% to 10%. Except as so amended, the CSSC Letter Agreement
shall remain in full force and effect.
-2-
<PAGE>
1.2. CERTAIN REDUCTIONS TO THE PREFERRED EQUITY. (a)FINANCE
LP. Finance LP represents and warrants to the Partnership that Exhibit B
hereto sets forth a complete and correct listing of the outstanding amount of
each of its Affiliate Claims and Interests, including the face amount of its
Preferred Equity and all accrued and unpaid distributions thereon, in each case
as of __________, 1994. Finance LP agrees that effective upon the consummation
of the Incorporation, the amount of the accrued and unpaid distributions on its
Preferred Equity shall be reduced by $_______, from $_______ to $_______, and
the amount so reduced shall be deemed forgiven. Finance LP hereby
unconditionally and irrevocably releases and forever discharges, effective upon
the Incorporation, each of the Partnership and Boston Sub from any obligation it
would otherwise have to make any payments or take any other action in respect of
such released amount.
(b) CSSC. CSSC represents and warrants that Exhibit C hereto
sets forth a complete and correct listing of the outstanding amount of each of
its Affiliate Claims and Interests, including the face amount of its Preferred
Equity and all accrued and unpaid distributions thereon, in each case as of
___________, 1994. CSSC agrees that effective upon the consummation of the
Incorporation, the amount of the accrued and unpaid distributions on its
Preferred Equity shall be reduced by $_______, from $_______ to $_______ (such
remaining amount, the "Remaining CSSC Amount"), and the amount so reduced shall
be deemed forgiven. CSSC hereby unconditionally and irrevocably releases and
forever discharges, effective upon the Incorporation, each of the Partnership
and Boston Sub from any obligation it would otherwise have to make any payments
or take any other action in respect of such released amount.
1.3. ASSIGNMENT OF ACCRUED AND UNPAID DISTRIBUTIONS ON THE
PREFERRED EQUITY. Effective upon the consummation of the Incorporation and the
reductions provided for in Section 1.2 of this Agreement, CSSC irrevocably and
unconditionally assigns to Finance LP the right to receive $_______* of the
Remaining CSSC Amount.
____________________
* This amount shall be determined by subtracting from the GP Allocation (as
defined below) the amount of the reduction in CSSC's Preferred Equity
distributions provided in Section 1.2(b) ($403,000 as of March 31, 1994).
The GP Allocation shall be determined by multiplying the GP Group
Percentage (as defined in Annex II to the Merger Agreement) (17.64% as of
March
(continued...)
-3-
<PAGE>
1.4. RELEASE OF THE PARTNERSHIP. Upon the consummation of the
Incorporation, each of Cablevision, Dolan, CSSC and Finance LP, on behalf of
itself and all persons or entities claiming by or through it, does hereby
unconditionally release and forever discharge the Partnership, its past and
present agents, attorneys and divisions, from any and all manner of actions,
causes of action, suits, claims, counterclaims, cross claims, defenses and
demands whatsoever, arising from any and all debts, demands, agreements,
contracts, judgments, accounts, claims and liabilities whatsoever which are
being assumed by Boston Sub in connection with the Incorporation; it being
understood and agreed that, in the case of CSSC and Finance LP, the foregoing
release and discharge in this Section 1.4 does not apply to any claims they may
have in respect of their Preferred Equity, and in the case of Dolan and any
person claiming by, through or under him, the foregoing release and discharge in
this Section 1.4 does not apply to any rights he or such person has to receive
any indemnification from the Partnership.
ARTICLE II
MISCELLANEOUS
2.1. FURTHER ASSURANCES. From time to time after the date
hereof, each of the parties hereto will execute and deliver, or cause to be
executed and delivered, such documents as the other parties may reasonably
request in order to more effectively give effect to the agreements contemplated
hereby.
2.2. ENTIRE AGREEMENT. This Agreement, together with the
Exhibits hereto, constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
____________________
*(...continued)
31, 1994) as of the end of the month immediately preceding the date of the
Incorporation by the aggregate amount of the reduction in Preferred Equity
distributions provided in Section 1.2 ($8,995,000 as of March 31, 1994).
As of March 31, 1994, the GP Allocation was $1,587,000 and the amount to be
provided in Section 1.3 was $1,183,000. Dollar amounts used in this
footnote have been rounded to the nearest thousand.
-4-
<PAGE>
2.3. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
2.4. GOVERNING LAW. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the laws of
the State of New York.
2.5. AMENDMENT; WAIVERS. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
CABLEVISION OF BOSTON LIMITED
PARTNERSHIP
By
-------------------------------------
CABLEVISION SYSTEMS
CORPORATION
By
-------------------------------------
-------------------------------------
Charles F. Dolan
CABLEVISION SYSTEMS
SERVICES CORPORATION
By
-------------------------------------
Title:
CABLEVISION FINANCE
LIMITED PARTNERSHIP
By CABLEVISION SYSTEMS CORPORATION,
as General Partner
By
-------------------------------------
Title:
-6-
<PAGE>
ANNEX II TO MERGER AGREEMENT
Formula for Allocating Reductions in Cumulative
Distributions on Preferred Equity held by Finance LP
(Dollar amounts at March 31, 1994
have been rounded to the nearest thousand)
Step 1 Add, as of the close of business on the date prior to the Closing
Date, for the Dolan Entities:
- Unpaid subordinated debt of the Partnership
("Subordinated Debt") held by the Dolan Entities ("GP
Group Subordinated Debt") ($109,000 at March 31, 1994)
- Unpaid interest on Subordinated Debt at the
contractually provided rate owed to the Dolan Entities
($3,853,000 at March 31, 1994)
- Unpaid management fees ("Management Fees") owed to the
Dolan Entities by the Partnership ($14,519,000 at March
31, 1994)
- Unpaid interest on Management Fees at the contractually
provided rate owed to the Dolan Entities ("GP Group
Management Fees") $5,969,000 at March 31, 1994)
- Preferred Equity held by the Dolan Entities (prior to
its transfer to Cablevision Finance in connection with
the Transactions) ("GP Group Preferred Equity")
($4,600,000 at March 31, 1994)
- Cumulative unpaid distributions on the GP Group
Preferred Equity at the contractually provided rate
($4,034,000 at March 31, 1994)
The total amount so obtained is the "GP Group Base Claims"
($33,084,000 as of March 31, 1994)
Step 2 Add, as of the close of business on the date prior to the Closing
Date, for Cablevision Companies:
- Unpaid advances to the Partnership by any Cablevision
Company and unpaid subordinated debt of the Partnership
held by a Cablevision Company plus interest thereon at
the contractually provided rate ($22,823,000 at March
31, 1994)
<PAGE>
- Preferred Equity held by Cablevision Companies (prior to
the transfer of the GP Group Preferred Equity by CSSC to
Cablevision Finance in connection with the Transactions)
("Cablevision Preferred Equity") ($45,700,000 at March
31, 1994)
- Cumulative unpaid distributions on the Cablevision
Preferred Equity at the contractually provided rate
($85,912,000 at March 31, 1994)
The total amount so obtained is the "Cablevision Base Claims"
($154,435,000 at March 31, 1994)
Step 3 Add the GP Group Base Claims and the Cablevision Base Claims -- the
amount so obtained is the "Total Base Claims" ($187,519,000 at March
31, 1994)
Step 4 Divide the GP Group Base Claims by the Total Base Claims -- the
amount so obtained is the "GP Group Percentage" (17.64% at March 31,
1994)
Step 5 Divide the Cablevision Base Claims by the Total Base Claims -- the
amount so obtained is the "Cablevision Percentage" (82.36% at March
31, 1994)
Step 6 Subtract from $169,343,434 the total amount required to be paid to
repay in full all amounts of any nature owing under, and required
for full repayment, under the Partnership Credit Agreement as of the
Closing Date -- the amount so obtained is the "Balance Available".
Step 7 Multiply the GP Group Percentage by the Balance Available -- the
amount so obtained is the "GP Group Amount".
Step 8 Multiply the Cablevision Percentage by the Balance Available -- the
amount so obtained is the "Cablevision Amount".
Step 9 From the GP Group Amount shall be subtracted (i) GP Group
Subordinated Debt (ii) GP Group Preferred Equity (calculated without
regard to the Preferred Equity Sale) and (iii) GP Group Management
Fees and the negative amount obtained is the "Management Fee Deficit
-2-
<PAGE>
Allocation". There shall be transferred to Cablevision by the Dolan
Entities, all accumulated interest on GP Group Subordinated Debt,
all accrued interest on GP Group Management Fees and Management Fees
in an amount equal to the Management Fee Deficit Allocation (the
total amount so transferred is the "Transferred Amount").
Step 10 From the Cablevision Amount shall be subtracted unpaid advances and
unpaid subordinated debt owing to Cablevision Companies, the
Transferred Amount, and the Cablevision Preferred Equity (computed
without regard to the Preferred Equity Sale). The amount so
obtained shall be the amount of Cumulative Preferred Equity
Distributions which, together with the Cablevision Preferred Equity
(computed after giving effect to the Preferred Equity Sale), will be
paid in the Liquidation by the issuance of Cablevision Class A
Stock. All other cumulative Preferred Equity distributions will be
reduced to zero and deemed forgiven pursuant to the Merger
Restructuring Agreement.
__________
The actual computation of the foregoing as of March 31, 1994 is set
forth in the Consent Solicitation Statement/Prospectus under the heading
"Calculation of Allocation of Consideration" and such illustrative table may be
referred to in interpreting this Annex II.
-3-
<PAGE>
ANNEX III TO MERGER AGREEMENT
MERGER RESTRUCTURING AGREEMENT
MERGER RESTRUCTURING AGREEMENT (hereinafter called the "Agreement"),
dated as of ________ __, 1994, among CABLEVISION OF BOSTON LIMITED PARTNERSHIP,
a Massachusetts limited partnership (the "Partnership"), CABLEVISION SYSTEMS
CORPORATION, a Delaware corporation ("Cablevision"), CABLEVISION OF BOSTON,
INC., a Delaware corporation wholly-owned by the Partnership ("Boston Sub"),
CABLEVISION OF BROOKLINE LIMITED PARTNERSHIP, a Massachusetts limited
partnership ("Brookline"), CABLEVISION SYSTEMS SERVICES CORPORATION, a Delaware
corporation ("CSSC"), and CABLEVISION FINANCE LIMITED PARTNERSHIP ("Finance
LP"), a New York limited partnership.
RECITALS
WHEREAS, the Partnership owns and operates a cable television system
in the City of Boston, Massachusetts (the "Boston System");
WHEREAS, prior to the execution of this Agreement, the Partnership
has transferred substantially all of its assets and all of its liabilities (the
"Boston Liabilities") to Boston Sub, and Boston Sub has assumed all such Boston
Liabilities;
WHEREAS, Finance LP and CSSC hold certain claims against Boston Sub
relating to subordinated debt, advances, management fees and accrued and unpaid
interest thereon, all of which claims, and the current outstanding amounts
thereof, are set forth on Part I of Exhibit A to this Agreement (all such claims
are collectively referred to herein as the "Affiliate Claims");
WHEREAS, prior to the execution of this Agreement, Finance LP and
CSSC held certain preferred equity interests in the Partnership (collectively,
the "Preferred Equity");
WHEREAS, contemporaneously with the execution of this Agreement,
CSSC is selling to Finance LP and Finance LP is acquiring from CSSC, all of
CSSC's Preferred Equity and COB, Inc. ("COB"), a Delaware corporation
wholly-owned by Cablevision, is merging with and into Boston Sub (such merger of
COB with and into Boston Sub is hereinafter referred to as the "Merger")
pursuant to the Acquisition Agreement and Plan of Merger and Reorganization,
dated as of June 14, 1994, among the Partnership, Boston Sub, Charles F.
<PAGE>
Dolan, Cablevision Systems Boston Corporation, Cablevision, COB, CSSC and
Finance LP (the "Merger Agreement");
WHEREAS, it is a condition to the consummation of the Merger that
(x) Finance LP accept certain reductions of the amount of the accrued
and unpaid distributions on its Preferred Equity, (y) (i) Boston Sub and
CSSC and (ii) Brookline and CSSC terminate certain management agreements
between such parties, and (z) CSSC assign to Finance LP a portion of the
consideration CSSC would otherwise receive in the Merger in order to make
proportionate the effect of the reductions to CSSC's and Finance LP's Preferred
Equity which are being agreed to in connection with the Merger; and
WHEREAS, because the Partnership, Boston Sub, Brookline, Finance LP
and CSSC desire to effect the consummation of the Merger, such parties are
willing to make the adjustments and enter into the other agreements provided for
hereby.
NOW, THEREFORE, for good and valuable consideration, the receipt of
and sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
ARTICLE I
RESTRUCTURING
1.1. CERTAIN REDUCTIONS TO THE PREFERRED EQUITY OF FINANCE LP.
Finance LP represents and warrants to the Partnership that (i) the face amount
of its Preferred Equity, including all of the Preferred Equity it is acquiring
from CSSC on the date hereof, is $__________ and (ii) the amount of all of the
accrued and unpaid distributions on all such Preferred Equity on the date hereof
is $__________. Finance LP agrees that effective upon the consummation of the
Merger, the amount of the accrued and unpaid distributions on all such Preferred
Equity (including all of the Preferred Equity it is acquiring from CSSC on the
date hereof) shall be reduced by $_______, from $_______ to $_______, the amount
so reduced shall be deemed forgiven and no additional distributions shall
hereafter accrue. Effective upon the Merger and Finance LP's receipt from the
Partnership of the consideration in respect of the Preferred Equity Amount (as
such term is defined in the Merger Agreement), Finance LP hereby unconditionally
and irrevocably releases and forever discharges each of the Partnership, Boston
Sub and COB from any obligation it would otherwise have to make any payments or
take any other action
-2-
<PAGE>
in respect of all such eliminated accrued and unpaid contributions on the
Preferred Equity.
1.2. ASSIGNMENT OF INTEREST ON MANAGEMENT FEES. CSSC hereby
irrevocably and unconditionally assigns to Finance LP the right to receive (x)
$_______ in accrued and unpaid interest on management fees and subordinated debt
which CSSC is entitled to receive from Boston Sub in connection with the
consummation of the Merger and (y) $______ of the management fees which CSSC
is entitled to receive from Boston Sub in connection with the consummation of
the Merger (collectively, the "Assigned Amounts"), and Boston Sub hereby agrees
that, effective upon the consummation of the Merger, the Assigned Amounts shall
be paid to Finance LP by the creation of intercompany indebtedness owing from
Boston Sub to Finance LP.
1.3. SATISFACTION OF AFFILIATE CLAIMS. Each of the parties
hereto understands and agrees that in connection with the consummation of the
Merger, each of Finance LP and CSSC shall receive from Cablevision the
applicable consideration set forth on Part II of Exhibit A to this Agreement in
respect of its respective Affiliate Claims.
ARTICLE II
TERMINATION OF MANAGEMENT AGREEMENTS
2.1. TERMINATION OF BOSTON MANAGEMENT AGREEMENT. Each of Boston
Sub and CSSC hereby agrees that, effective upon the consummation of the Merger,
all of the terms and provisions of the Amended and Restated Agreement, dated
as of the 30th day of March 1984, by and between CSSC and the Partnership
(the "Partnership Management Agreement") shall terminate and have no further
force or effect.
2.2. TERMINATION OF BROOKLINE MANAGEMENT AGREEMENT. Each of
Brookline and CSSC hereby agrees that, effective upon the consummation of the
Merger, all of the terms and provisions of the Agreement, dated as of the 28th
day of December 1983, by and between CSSC and Brookline shall terminate and be
of no further force or effect.
-3-
<PAGE>
ARTICLE III
MISCELLANEOUS
3.1. FURTHER ASSURANCES. From time to time after the date
hereof, each of the parties hereto will execute and deliver, or cause to be
executed and delivered, such documents as the other parties may reasonably
request in order to more effectively give effect to the transactions
contemplated hereby.
3.2. ENTIRE AGREEMENT. This Agreement, together with the
Exhibits hereto, constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
3.3. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
3.4. GOVERNING LAW. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the laws of
the State of New York.
3.5. AMENDMENT; WAIVERS. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
CABLEVISION OF BOSTON LIMITED
PARTNERSHIP
By
-------------------------------------
CABLEVISION OF BROOKLINE
LIMITED PARTNERSHIP
By
-------------------------------------
CABLEVISION SYSTEMS
CORPORATION
By
-------------------------------------
CABLEVISION OF BOSTON, INC.
By
-------------------------------------
---------------------------------------
Charles F. Dolan
CABLEVISION SYSTEMS
SERVICES CORPORATION
By
-------------------------------------
Title:
-5-
<PAGE>
CABLEVISION FINANCE
LIMITED PARTNERSHIP
By CABLEVISION SYSTEMS CORPORATION,
as General Partner
By
-------------------------------------
Title:
-6-
<PAGE>
ANNEX IV TO MERGER AGREEMENT
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
BROOKLINE SALE AGREEMENT
Relating To
0.5% General Partnership Interest in
CABLEVISION OF BROOKLINE LIMITED PARTNERSHIP
Dated as of _______ __, 1994
- - -------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
RECITALS ............................................................. 1
ARTICLE I
THE TRANSACTIONS
1.1. Cablevision's Right to Purchase
Dolan's Brookline General
Partnership Interest................................ 2
1.2. Dolan's Put........................................... 4
1.3. Closing with Respect to the Right of
First Refusal, the Acquisition Right
or Dolan's Put........................................ 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of
the Dolan........................................... 6
2.1.1. Title to Dolan's Brookline
General Partnership Interest............... 6
2.1.2. Authority for Agreement...................... 6
2.1.3. No Conflicts, etc............................ 6
2.1.4. Litigation................................... 7
2.2. Representations and Warranties
of Cablevision...................................... 7
2.2.1. Corporate Status............................. 7
2.2.2. Authority for Agreement...................... 7
2.2.3. No Conflicts, etc............................ 7
2.2.4. Litigation................................... 8
ARTICLE III
DEFINITIONS, MISCELLANEOUS
3.1. Definition of Certain Terms........................... 8
3.2. Miscellaneous......................................... 8
3.2.1. Headings..................................... 8
3.2.2. Entire Agreement............................. 8
3.2.3. Counterparts................................. 9
3.2.4. Governing Law................................ 9
3.2.5. Assignment................................... 9
3.2.6. No Third Party Beneficiaries................. 9
3.2.7. Amendment; Waivers........................... 9
-i-
<PAGE>
BROOKLINE SALE AGREEMENT
BROOKLINE SALE AGREEMENT (hereinafter called this "Agreement"), dated
as of _______ __, 1994, among CHARLES F. DOLAN ("Dolan") and CABLEVISION SYSTEMS
CORPORATION, a Delaware corporation ("Cablevision").
RECITALS
WHEREAS, each of Cablevision and Dolan entered into an Acquisition
Agreement and Plan of Merger and Reorganization, dated as of June __, 1994 (the
"Merger Agreement"), among Cablevision of Boston Limited Partnership, a
Massachusetts limited partnership (the "Partnership"), and the other parties
named therein;
WHEREAS, the Partnership owns 99% of the partnership interests in
Cablevision of Brookline Limited Partnership, a Massachusetts limited
partnership ("Brookline"), which owns and operates a cable television system in
Brookline, Massachusetts;
WHEREAS, Dolan and Cablevision Systems Brookline Corporation, a
Delaware corporation wholly-owned by Dolan ("CSBrC"), are the general partners
of, and each owns 0.5% of the partnership interests in, Brookline; and
WHEREAS, upon consummation of the transactions contemplated by the
Merger Agreement, Cablevision shall own, either directly or through a
wholly-owned subsidiary, the 99% partnership interest and all of the capital
stock of CSBrC and Dolan shall continue to own his 0.5% partnership interest in
Brookline ("Dolan's Brookline General Partnership Interest");
WHEREAS, in connection with the transactions contemplated by the Merger
Agreement, Dolan and Cablevision wish to enter into this Agreement granting
Cablevision and Dolan or his estate, as the case may be, certain rights to
acquire (in the case of Cablevision) or to sell (in the case of Dolan or his
estate) Dolan's 0.5% partnership interest in Brookline, on the terms and
conditions set forth more fully herein.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
<PAGE>
ARTICLE I
THE TRANSACTIONS
1.1. CABLEVISION'S RIGHT TO PURCHASE DOLAN'S BROOKLINE GENERAL
PARTNERSHIP INTEREST. (a) Dolan hereby grants to Cablevision a right of first
refusal (the "Right of First Refusal") to purchase Dolan's Brookline General
Partnership Interest upon the terms and conditions set forth in this Section
1.1(a). Dolan shall only be permitted to transfer Dolan's Brookline General
Partnership Interest in whole, but not in part. Dolan shall not have the right
to sell or otherwise alienate Dolan's Brookline General Partnership Interest
without first offering to Cablevision a right to purchase Dolan's Brookline
General Partnership Interest, all on the terms hereinafter set forth.
(i) Dolan must offer Dolan's Brookline General Partnership Interest to
Cablevision by means of a written notice (an "Offer Notice") delivered to
Cablevision. The Offered Interest shall be offered to Cablevision at a price
and upon terms no less favorable to Cablevision than those which Dolan is
willing to accept from a BONA FIDE third party purchaser pursuant to a
BONA FIDE offer from such third party purchaser (a "Bona Fide Offer");
PROVIDED, HOWEVER, that regardless of the terms of the Bona Fide Offer,
Dolan's Brookline General Partnership Interest shall be offered to
Cablevision on terms that permit Cablevision one hundred and twenty (120)
days within which to complete the purchase. The Offer Notice shall include a
statement setting forth the identity of, and the price and terms offered by,
such third party for the purchase of Dolan's Brookline General Partnership
Interest. In any case where a Bona Fide Offer has been made in respect of
Dolan's Brookline General Partnership Interest in conjunction with other
property, the price in respect of Dolan's Brookline General Partnership
Interest shall be the Allocated Interest Offer Price, as defined below. The
"Allocated Interest Offer Price" shall mean (A) if the proposal or agreement
contemplating such sale specifically allocates a portion of the purchase
price for all property covered thereby to Dolan's Brookline General
Partnership Interest, unless such allocation is unreasonable, such allocated
purchase price, as certified to Cablevision by Dolan or (B) if the proposal
or agreement contemplating such sale does not contain a specific allocation
to Dolan's Brookline General Partnership Interest, or if the provisions of
clause (A) above shall be inapplicable, an amount equal to the product of the
purchase price for all such property and a fraction, the numerator of which
is equal to the Fair Market Value (as defined below) of Dolan's General
Partnership Interest and the denominator of which is equal to the Fair Market
Value of all such property to be sold, as certified to Cablevision by Dolan.
As used herein, "Fair Market Value" shall mean the price at which a willing
seller would sell and a willing
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<PAGE>
buyer would buy such property having full knowledge of the facts, and
assuming each party acts on an arm's-length basis with the expectation of
concluding the purchase or sale within a reasonable time. In any case where
there is a dispute as to the Fair Market Value of any property, such dispute
shall be determined by an appraiser selected jointly by Cablevision and Dolan
or, if Cablevision and Dolan are not able to agree on the selection of an
appraiser, each of Dolan and Cablevision shall select an appraiser and the
appraisers so selected shall select another appraiser, which shall determine
the Fair Market Value of the property in question.
(ii) Dolan's General Partnership Interest shall be offered to
Cablevision for a period of ninety (90) days. Within ninety (90) days after
receipt of the Offer Notice, Cablevision shall accept, in whole and not in
part, or reject such offer for Dolan's General Partnership Interest by
delivering a notice in writing to Dolan.
(iii) If Dolan's General Partnership Interest has not been accepted and
Cablevision has not delivered a writing in which it has refused to exercise
its Right of First Refusal, then Dolan may, within one hundred and fifty
(150) days of the date of the Offer Notice, transfer Dolan's General
Partnership Interest to such third party at a price not less than the price,
and on terms no more favorable to the third party than those, contained in
the Bona Fide Offer and the Offer Notice. If Dolan's General Partnership
Interest is not so disposed of within such 150-day period on the terms and
conditions set forth in the Offer Notice, then Dolan shall, before disposing
of Dolan's Brookline General Partnership Interest, again be obligated to
provide the Right of First Refusal set forth in this Section 1.1(a).
(b) In addition to the rights set forth in paragraph (a) of this
Section 1.1, Dolan hereby grants to Cablevision a right to acquire (the
"Acquisition Right") Dolan's Brookline General Partnership Interest upon the
earlier to occur of Dolan's death and January 1, 2002 at the greater of $10,000
and the book value of Dolan's Brookline General Partnership Interest on the date
of such transfer (the "Call Price").
1.2. DOLAN'S PUT. Cablevision hereby agrees that, (i) upon Dolan's
death, Dolan's estate shall have a right to sell to Cablevision and Cablevision
shall have the obligation to purchase from Dolan ("Dolan's Put") Dolan's
Brookline General Partnership Interest at the Call Price or (ii) in the event of
a Cablevision Change in Control or a Brookline Change in Control (in each case,
as defined below), Dolan shall have the right to sell to Cablevision and
Cablevision shall have the obligation to purchase from Dolan Dolan's Brookline
General Partnership Interest at the
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<PAGE>
greater of the Call Price or the applicable price (the "Put Price") set forth
below:
Date of Cablevision
or Brookline
Change in Control Put Price
----------------- ---------
Year ending [ ]*, 1994 $4,800,000
Year ending [ ]*, 1995 4,400,000
Year ending [ ]*, 1996 3,900,000
Year ending [ ]*, 1997 3,400,000
Year ending [ ]*, 1998 2,900.000
Year ending [ ]*, 1999 2,300,000
Year ending [ ]*, 2000 1,600,000
Year ending [ ]*, 2001 800,000
Year ending [ ]*, 2002 10,000
For purposes hereof, a "Cablevision Change in Control" shall occur if
(a) the following shall have occurred: (i) a transaction is consummated, (x)
which is approved by the holders of at least a majority of the outstanding
shares of Class A Common Stock, par value $0.01 per share, of Cablevision
("Class A Common Stock") or (y) in which a majority of the holders of Class A
Common Stock (other than Dolan and any member of the Dolan Group (as defined
below)) transfer their shares of Class A Common Stock to any Person other than
Dolan or any member of the Dolan Group and (ii) (A) any Person other than Dolan
or any member of the Dolan Group acquires beneficial ownership (as such term is
defined in Section 13(d) of the Securities Exchange Act of 1934) of 50% or more
of the outstanding shares of Class A Common Stock, (B) such Person acquires
securities representing more than 50% of the voting power of Cablevision and (C)
Dolan and the Dolan Group collectively cease to own beneficially and of record,
a number of shares of Cablevision capital stock sufficient to enable Dolan and
the Dolan Group to elect a majority of the members of the Board of Directors of
Cablevision or (b) a transaction or series of related transactions is
consummated (i) in which any Person (other than Cablevision, Dolan or any member
of the Dolan Group, any trustee or other fiduciary holding securities under an
employee benefit plan of Cablevision, or any corporation owned, directly or
indirectly, by the Cablevision stockholders in substantially the same
proportions as their ownership of stock of Cablevision) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended), directly or indirectly, of securities of Cablevision
representing 50% or more of the combined voting power of Cablevision's then
outstanding securities eligible to vote and (ii) to which the requirements of
____________________
* Insert date on which the Merger is consummated.
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<PAGE>
Section VII of Paragraph (A) of Article Fourth of the Certificate of
Incorporation of Cablevision are applicable and have been satisfied. For
purposes hereof, "Dolan Group" means (i) Charles F. Dolan, any spouse, child,
child of a spouse or parent (in each of the foregoing instances, whether natural
or adopted), and any other intestate distributee, heir or legatee of Charles F.
Dolan; (ii) any legal representative, guardian or conservator of any of the
persons described in clause (i) above; (iii) the intestate estate of any of the
persons described in clause (i) above; (iv) The Dolan Family Foundation, a New
York not-for-profit corporation; and (v) any trust of which there are no
principal beneficiaries other than any of the persons or entities described in
clauses (i) - (iv) above or any partnership or corporation of which there are no
partners or stockholders other than the persons described in clauses (i) - (iv)
above.
For purposes hereof, a "Brookline Change in Control" shall occur if a
transaction is consummated pursuant to which substantially all of the assets, or
substantially all of the limited partnership interests of Brookline or the
general partnership interests of Brookline held directly or indirectly by
Cablevision are acquired by any Person other than Dolan or any member of the
Dolan Group or Cablevision or of its subsidiaries (collectively, the "Dolan
Affiliates").
1.3. CLOSING WITH RESPECT TO THE RIGHT OF FIRST REFUSAL, THE
ACQUISITION RIGHT OR DOLAN'S PUT. Any exercise of the Right of First Refusal,
the Acquisition Right or Dolan's Put pursuant to this Article I shall be
effected by written notice (the "Notice") to the other party hereto, which
notice shall contain the Allocated Interest Offer Price, the Call Price or the
Put Price, as applicable, and the date and time of the closing of the
transaction, which closing shall occur at the offices of Cablevision or such
other location as the parties may agree in writing within 30 days of the date of
such Notice, or as soon thereafter as is reasonably practicable after obtaining
any required approvals. Each of Cablevision and Dolan agree to use each of its
and his reasonable efforts to obtain any such required approvals as promptly as
practicable. On such date, Dolan or his estate, as the case may be, shall
deliver to Cablevision an assignment of Dolan's Brookline General Partnership
Interest and Cablevision shall deliver to Dolan or his estate, as the case may
be, the Allocated Interest Offer Price, the Call Price or the Put Price, as
applicable, in immediate by available funds.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
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<PAGE>
2.1. REPRESENTATIONS AND WARRANTIES OF DOLAN. Dolan represents and
warrants to Cablevision as follows:
2.1.1. TITLE TO DOLAN'S BROOKLINE GENERAL PARTNERSHIP INTEREST.
Dolan owns and at the closing of the transaction provided for in Section 1.1
and 1.2, as the case may be, will own, beneficially and of record, Dolan's
Brookline General Partnership Interest, free and clear of any Liens.
2.1.2. AUTHORITY FOR AGREEMENT. Dolan has the legal capacity to
execute and deliver this Agreement, to perform his obligations hereunder, and
to consummate the transactions contemplated hereby. This Agreement has been
executed and delivered by Dolan, and constitutes a valid and legally binding
obligation of Dolan, enforceable against Dolan in accordance with its terms.
2.1.3. NO CONFLICTS, ETC. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will
not conflict with or result in any violation of or default under (i) any
provision of the Agreement of Limited Partnership of Brookline or, (ii)
except as to the franchise granted by the Town of Brookline to construct,
operate and maintain the cable television system in the Town of Brookline, as
to which no representation or warranty is made in this Section 2.1.3, any
mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Dolan except, as to this
subsection (ii) only, any such conflict, violation or default as would not
adversely affect the ability of Dolan to perform its obligations under this
Agreement or consummate the Transactions contemplated hereby. No consent,
license, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority (an "Approval") or other third party
is required on the part of Dolan in connection with the execution and
delivery of this Agreement, or the consummation of the transactions
contemplated hereby (other than any necessary Approvals required from the
Federal Communications Commission and the Town of Brookline and any filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and any other necessary regulatory approvals in connection with the
transfer of Dolan's General Partnership Interests).
2.1.4. LITIGATION. There is no judicial or administrative action,
suit, proceeding or investigation pending or, to the best of Dolan's
knowledge, threatened against Dolan, which involves the validity of this
Agreement or of any action taken or to be taken by Dolan in connection
therewith or the consummation of the transactions contemplated hereby.
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<PAGE>
2.2. REPRESENTATIONS AND WARRANTIES OF CABLEVISION. Cablevision
represents and warrants to Dolan as follows:
2.2.1. CORPORATE STATUS. Cablevision is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware.
2.2.2. AUTHORITY FOR AGREEMENT. Cablevision has the corporate power
to execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by all appropriate corporate
action. This Agreement has been duly executed and delivered by Cablevision
and constitutes the valid and legally binding obligation of Cablevision,
enforceable against Cablevision in accordance with its terms.
2.2.3. NO CONFLICTS, ETC. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will
not conflict with or result in any violation of or default under (i) any
provision of the Certificate of Incorporation or By-laws of Cablevision or
(ii) any mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Cablevision, except, as to this
subsection (ii) only, for any such conflict, violation or default as would
not adversely affect Cablevision's ability to perform its obligations under
this Agreement or consummate the Transactions contemplated hereby or have a
material adverse effect on the financial condition, operations or business of
Cablevision. No consent, license, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority or other
third party is required on the part of Cablevision in connection with the
execution and delivery of this Agreement, or the consummation of the
transactions contemplated hereby (other than any necessary Approvals required
from the Federal Communications Commission and the Town of Brookline and any
filings required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and any other necessary regulatory approvals in connection
with the transfer of Dolan's General Partnership Interests).
2.2.4. LITIGATION. There is no judicial or administrative action,
suit, proceeding or investigation pending or, to the best of Cablevision's
knowledge, threatened which involves the validity of this Agreement or of any
action taken or to be taken by Cablevision in connection herewith or the
consummation of the transactions contemplated hereby.
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<PAGE>
ARTICLE III
DEFINITIONS, MISCELLANEOUS
3.1. DEFINITION OF CERTAIN TERMS. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in the
Merger Agreement.
3.2. MISCELLANEOUS.
3.2.1. HEADINGS. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
3.2.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter
hereof, except for the Merger Agreement and any agreement which specifically
states that it is not subject to this Section 3.2.2. The only
representations and warranties made by the parties hereto with respect to the
subject matter hereof are the representations and warranties contained in
this Agreement.
3.2.3. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and both of which
shall together constitute one and the same instrument.
3.2.4. GOVERNING LAW. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the laws of
the State of New York.
3.2.5. ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns, PROVIDED, HOWEVER, that the
parties hereto shall not assign any of their respective rights or obligations
under this Agreement except with the prior written consent of the other
parties hereto.
3.2.6. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement
shall confer any rights upon any person or entity other than the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
3.2.7. AMENDMENT; WAIVERS. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless
set forth in writing and duly executed by the party against whom enforcement
of the amendment, modification, discharge or waiver is sought.
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<PAGE>
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
___________________________________
Charles F. Dolan
CABLEVISION SYSTEMS CORPORATION
By________________________________
Name:
Title:
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<PAGE>
ANNEX V TO MERGER AGREEMENT
SECOND AMENDMENT TO ARTICLES OF LIMITED
PARTNERSHIP ESTABLISHING
CABLEVISION OF BROOKLINE LIMITED PARTNERSHIP
This SECOND AMENDMENT TO ARTICLES OF LIMITED PARTNERSHIP ESTABLISHING
CABLEVISION OF BROOKLINE LIMITED PARTNERSHIP, dated as of , 1994
(this "Amendment"), by and among Charles F. Dolan ("Dolan"), Cablevision Systems
Brookline Corporation, a Delaware corporation wholly-owned by Dolan ("CSBrC"),
and Cablevision of Boston, Inc., a Delaware corporation ("CBInc."), hereby
amends the Articles of Limited Partnership Establishing Cablevision of Brookline
Limited Partnership, made as of the 1st day of June 1983 by and among Dolan,
CSBrC and Cablevision of Boston Limited Partnership, as limited partner
("Boston"), as amended by the Amendment Agreement of Cablevision of Brookline
Limited Partnership, dated April 14, 1992, among Dolan, CSBrC and Boston (the
"Articles of Limited Partnership"). Any terms not defined in this Amendment
shall have the meanings ascribed to them in the Articles of Limited Partnership.
RECITALS
WHEREAS, CBInc. is a limited partner of and owns 99% of the partnership
interests in Cablevision of Brookline Limited Partnership ("Brookline");
WHEREAS, Dolan and CSBrC are the general partners of, and own
partnership interests in, Brookline;
WHEREAS, contemporaneous with the execution of this Amendment, COB,
Inc. ("Merger Sub"), a Delaware corporation wholly-owned by Cablevision Systems
Corporation, a Delaware corporation ("Cablevision"), is merging with and into
CBInc. (the "Merger");
WHEREAS, contemporaneous with the Merger, Dolan will sell to
Cablevision of Brookline, Inc., a wholly-owned subsidiary of Cablevision
("Brookline Inc."), and Brookline, Inc. will acquire from Dolan, all of the
outstanding capital stock of CSBrC; and
WHEREAS, contemporaneous with the Merger and sale of CSBrC, Dolan
wishes to resign as the Managing General Partner of Brookline and CSBrC wishes
to become the Managing General Partner of Brookline;
WHEREAS, in connection with the Merger and sale of CSBrC, Dolan and
Cablevision wish to enter into the Brookline Sale Agreement, dated as of
_____________________, 1994, among Dolan and Cablevision, a copy of which is
attached as Exhibit A hereto), which would grant Cablevision and Dolan or his
estate, as the case
<PAGE>
may be, certain rights to acquire (in the case of Cablevision) or to sell (in
the case of Dolan or his estate) Dolan's 1/2% partnership interest in Brookline;
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and of the mutual benefits to be derived herefrom, the parties
hereto hereby agree as follows:
1. AMENDMENTS TO THE ARTICLES OF LIMITED PARTNERSHIP. (a)
Section 7.1(a) of the Articles of Limited Partnership is hereby amended and
restated to read in its entirety as follows:
" (a) Except as otherwise provided pursuant to Paragraph 7.9
of this Article VII, and until such time as the provisions of paragraph 6.5
of Article VI hereof shall be applicable, the net profits, net losses,
investment tax and other credits, if any, and Cash Flow of the Partnership
(hereinafter collectively referred to as "P & L Items") of the Partnership
shall be allocated among the partners for each taxable year of the
Partnership as follows:
Dolan 0.5%
CSBrC 0.5%
CB 99%
(b) Section 8.4 of the Articles of Limited Partnership is hereby
amended and restated to read in its entirety as follows:
"CSBrC shall serve as the Managing General Partner (hereinafter
referred to as the "Managing General Partner") of the Partnership for a term
commencing on , 1994 and continuing for one year, and
thereafter from year to year unless and until the General Partners voting in
accordance with the provisions of Paragraph 8.6 of this Article VIII shall
appoint a successor or Co-Managing General Partner or determine to conduct
the Partnership operations without a Managing General Partner."
(c) Sections 8.11 and 8.12 of the Articles of Limited
Partnership are hereby amended by deleting the word "Dolan" wherever it appears
therein and substituting in its place the words "the Managing General Partner."
(d) Section 9.2 of the Articles of Limited Partnership is hereby
amended by adding the following sentence to the end thereof:
"Notwithstanding anything in Paragraph 9.1 or this Paragraph 9.2 to the
contrary, Dolan may resign as a General Partner of the Partnership and may
sell, transfer and assign all or any part of his interest as a General
Partner of the Partnership to Cablevision Systems Corporation ("Cablevision")
or its designee
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<PAGE>
as provided under the terms of the Brookline Sale Agreement, dated as of
___________________, 1994 (the "Brookline Sale Agreement"), among Dolan and
Cablevision, as the same may be amended from time to time."
(e) Section 9.3 of the Articles of Limited Partnership is hereby
amended by adding the following sentence to the end thereof:
"Notwithstanding the provisions of Paragraph 9.1 and this Paragraph 9.3,
Dolan and Dolan's heirs, successors and legal representatives may sell,
transfer and assign all or any part of his interest in the Partnership to
Cablevision or its designee as provided under the terms of the Brookline Sale
Agreement, as the same may be amended from time to time."
(f) Section 9.6 of the Articles of Limited Partnership is hereby
amended by adding the following sentence to the end thereof:
"Notwithstanding the foregoing, Dolan shall have the right to retire or
withdraw from the Partnership upon the sale, transfer or assignment of all or
any part of his interest in the Partnership to Cablevision or its designee as
provided under the terms of the Brookline Sale Agreement, as the same may be
amended from time to time."
2. ENTIRE AGREEMENT. This Amendment, together with the Exhibits
hereto, constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
3. COUNTERPARTS. This Amendment may be executed in several
counterparts, each of which shall be deemed an original and both of which shall
together constitute one and the same instrument.
4. GOVERNING LAW. This Amendment shall be governed in all
respects, including as to validity, interpretation and effect, by the laws of
the Commonwealth of Massachusetts.
5. AMENDMENT; WAIVERS. No amendment, modification or discharge
of this Amendment, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought.
6. ARTICLES OF LIMITED PARTNERSHIP. Except as expressly set forth
herein, the Articles of Limited Partnership shall remain in full force and
effect.
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<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of
the date first above written.
GENERAL PARTNERS:
----------------------------------
Charles F. Dolan
CABLEVISION SYSTEMS BROOKLINE
CORPORATION
By
-------------------------------
Title:
LIMITED PARTNER:
CABLEVISION OF BOSTON, INC.
By
-------------------------------
Title:
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<PAGE>
ANNEX VI TO MERGER AGREEMENT
APPRAISAL RIGHTS
Capitalized terms used in this Annex VI shall have the meanings set
forth in the Acquisition Agreement and Plan of Merger and Reorganization
Relating to Cablevision of Boston Limited Partnership, dated as of June 14,
1994.
Cablevision agrees that, upon consummation of the Merger and subject
to the limitations set forth below, dissenting Limited Partners will have the
right to receive compensation for their Units based upon an appraisal of the
value of the assets of the Partnership immediately prior to the Merger (and
without giving consideration to any expectancy of the Merger) performed by a
qualified appraiser unaffiliated with Cablevision or the General Partners, less
any remaining liabilities of the Partnership and less all prior claims to the
assets of the Partnership (including Preferred Equity), in each case as of the
date of and immediately prior to the Merger. The appraisal of the assets shall
be made as if the assets were sold in an orderly manner in a reasonable period
of time less the cost of sale and shall be made otherwise in a manner consistent
with industry practice.
The appraised value will not give effect to any of the reductions in
unpaid cumulative distributions on Preferred Equity agreed to by Cablevision
Finance in the Merger Restructuring Agreement and the appraiser will instead
deduct the full value of the Preferred Equity, including the full contractual
amount of unpaid cumulative distributions thereon, before determining the
appraised value of the Units. If the appraised value of the Units is less than
the value of the Cablevision Class A Stock provided for in the Liquidation for
Limited Partners who do not exercise their appraisal rights, Limited Partners
seeking appraisal will be entitled to receive only the lower appraised value of
their Units. In the event of an appraisal, no payment will be made in respect
of Units for which appraisal rights are exercised until there is a determination
of the appraised value as provided herein and no interest will be paid in
respect of such appraised value. Compensation to dissenting Limited Partners
will be in the form of Cablevision Class A Stock valued at the arithmetic
average of the closing sale price per share of such securities on the American
Stock Exchange over the 20 trading days immediately following the Merger.
THE RIGHT OF APPRAISAL WILL BE LOST IF THE FOLLOWING PROCEDURAL
REQUIREMENTS ARE NOT FOLLOWED EXACTLY. IF THE RIGHT OF APPRAISAL IS LOST, THE
LIMITED PARTNER WILL RECEIVE THE AMOUNT OF CABLEVISION CLASS A COMMON STOCK
PROVIDED FOR IN THE MERGER AND THE LIQUIDATION.
<PAGE>
BEFORE THE MERGER. If any holder of Units elects to exercise his
or her right to dissent from the Merger and demands appraisal, such holder must
satisfy each of the following conditions:
1. A Limited Partner electing to exercise appraisal rights must deliver
a written demand for appraisal of his or her Units to the Agent at
Proxy Department, Bank of Boston, P.O. Box 1628, Boston,
Massachusetts 02105-9903, which written demand must be received by
the Agent prior to the Merger Expiration Date (as defined in the
Consent Solicitation Statement/Prospectus). To be effective, such
demand must (i) identify the number of Units held by such Limited
Partner for which appraisal is being sought, (ii) set forth the
identity of the Limited Partner with reasonable specificity
(including the identity of any controlled or controlling persons or
entities) and (iii) state that it is such person's intention to
demand the appraisal of his or her Units.
2. Such Limited Partner must not vote in favor of the Merger or the
Incorporation. If a Limited Partner returns a signed Incorporation
Consent or Merger Consent but does not specify a vote against the
Incorporation or Merger, as the case may be, or a direction to
abstain, the Incorporation Consent or Merger Consent will be voted
in favor of the Incorporation or Merger, as the case may be, which
will have the effect of waiving that Limited Partner's appraisal
rights.
Only the Limited Partner of record of Units is entitled to seek
appraisal of the fair value of the Units registered in such Limited Partner's
name. To be effective, the demand for appraisal must be executed by or for the
Limited Partner of record, fully and correctly, as such Limited Partner's name
appears in the Partnership's books. Beneficial owners of Units whose Units are
held of record by another person should instruct the record holder to follow the
procedures outlined herein if such persons wish to seek an appraisal with
respect to their Units.
If the Units are owned of record in a fiduciary capacity, such as by
a trustee, guardian or custodian, the demand must be made in that capacity, and
if the Units are owned of record by more than one person, as in a joint tenancy
or tenancy in common, the demand must be made for all owners of record. An
authorized agent, including one of two or more joint owners, may execute the
demand for
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<PAGE>
appraisal for a holder of record; however, such agent must (i) identify the
record owner or owners; (ii) expressly state, in such demand, that the agent
is acting as agent for the record owner or owners of such Units; and (iii)
provide the Agent with reasonable documentation supporting such authorized
agent's authority. A record holder, such as a broker, who holds Units as a
nominee for several beneficial owners, some of whom desire to demand appraisal,
must exercise appraisal rights on behalf of each beneficial owner who desires to
demand appraisal with respect to the Units held for each such beneficial owner.
In such case, the written demand should set forth the number of Units covered
thereby. Where the number of Units is not expressly stated, the demand will be
presumed to cover all Units outstanding in the name of such record owner.
AFTER THE MERGER. A Limited Partner who has demanded appraisal
rights in accordance with the procedures set forth above will not receive any
shares of Cablevision Class A Common Stock in the Liquidation unless such holder
withdraws his or her demand during the first 30 days after the date of the
approval of the Merger by delivering written notice thereof to Cablevision,
attention: Robert S. Lemle, One Media Crossways, Woodbury, New York 11797. Any
Limited Partner who has demanded appraisal and withdraws his or her demand or
loses his or her right to appraisal as provided below within such 30-day period
will receive and accept from Cablevision, and Cablevision shall issue to such
Limited Partner, the same number of shares of Cablevision Class A Stock per Unit
as was issued in the Liquidation, and will thereafter waive any right to
appraisal.
A Limited Partner will effectively lose his or her right of
appraisal if either (i) such Limited Partner withdraws his or her demand for
appraisal or (ii) no written request for appraisal is delivered to and
received by the Agent within 30 days after the date on which the Agent mails a
notice to the Limited Partners that the Merger has been consummated (the "Merger
Notice Date"), except that any attempt to withdraw not made within 30 days after
the date of the approval of the Merger requires the approval of Cablevision.
The Merger Notice Date shall not be more than 30 days after the Effective Date.
If any Limited Partner who has properly exercised his or her
appraisal rights delivers a written request for appraisal to the Agent prior to
the Merger Expiration Date, Cablevision shall, within 120 days following the
Effective Date, engage an independent appraiser to conduct the appraisal.
-3-
<PAGE>
From and after the Effective Date, a Limited Partner who has
perfected appraisal rights hereunder shall cease to have any rights as a Limited
Partner other than the right to receive the appraised value of his or her Units
hereunder or, if such Limited Partner withdraws his or her demand for, or loses
his or her right to, appraisal, the right to receive Cablevision Class A Common
Stock as provided above, and shall waive any rights under the Partnership
Agreement.
All written requests for appraisal shall be addressed to the Agent
at Proxy Department, Bank of Boston, P.O. Box 1628, Boston, Massachusetts
02105-9903, with a copy to: Robert S. Lemle, Executive Vice President, General
Counsel and Secretary of Cablevision at Cablevision's principal executive
offices located at One Media Crossways, Woodbury, New York 11797. It is the
responsibility of the Limited Partners wishing to dissent to ensure that a
written request for appraisal is received by the Agent within such 30-day
request period.
No fractional shares shall be issued under Section 1.8 of the
Agreement or this Annex VI. Instead, fractional shares will be rounded to the
nearest whole number.
The cost of the appraisal shall be borne by Cablevision.
-4-
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
CABLEVISION OF FRAMINGHAM, INC.,
The Several Lenders
from Time to Time Parties Hereto,
THE CHASE MANHATTAN BANK, N.A.,
as Agent
and
CIBC INC.,
as Co-Agent
DATED AS OF JUNE 15, 1994
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER DEFINITIONAL PROVISIONS. . . . . . . . . . . . . . . . . . 17
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS. . . . . . . . . . . . . . . . . 18
2.1 REVOLVING CREDIT COMMITMENTS . . . . . . . . . . . . . . . . . . . 18
2.2 REVOLVING CREDIT NOTES . . . . . . . . . . . . . . . . . . . . . . 18
2.3 PROCEDURE FOR REVOLVING CREDIT BORROWING . . . . . . . . . . . . . 19
2.4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. . . . . . . . . 20
2.6 TERM LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 TERM NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.8 PROCEDURE FOR TERM LOAN BORROWING. . . . . . . . . . . . . . . . . 21
2.9 OPTIONAL AND MANDATORY PREPAYMENTS . . . . . . . . . . . . . . . . 22
2.10 CONVERSION AND CONTINUATION OPTIONS . . . . . . . . . . . . . . . 23
2.11 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. . . . . . . . . . 23
2.12 INTEREST RATES AND PAYMENT DATES. . . . . . . . . . . . . . . . . 24
2.13 COMPUTATION OF INTEREST AND FEES. . . . . . . . . . . . . . . . . 24
2.14 INABILITY TO DETERMINE INTEREST RATE. . . . . . . . . . . . . . . 25
2.15 PRO RATA TREATMENT AND PAYMENTS . . . . . . . . . . . . . . . . . 26
2.16 ILLEGALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.17 REQUIREMENTS OF LAW . . . . . . . . . . . . . . . . . . . . . . . 27
2.18 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.19 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . 30
3.1 LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . 30
3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. . . . . . . . . . . . 31
3.3 L/C PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 FUNDING OF LENDER LETTERS OF CREDIT. . . . . . . . . . . . . . . . 31
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER . . . . . . . . . . . . . 32
3.6 LETTER OF CREDIT FEE.. . . . . . . . . . . . . . . . . . . . . . . 33
3.7 CONDITIONS TO ISSUANCE . . . . . . . . . . . . . . . . . . . . . . 33
3.8 REIMBURSEMENT OF COSTS AND EXPENSES. . . . . . . . . . . . . . . . 33
3.9. OBLIGATIONS NOT AFFECTED. . . . . . . . . . . . . . . . . . . . . 34
3.10. APPLICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 34
4.1 NO CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.2 EXISTENCE; COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . 34
4.3 SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. . . . . . . . . . . 35
4.5 NO LEGAL BAR . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.6 NO MATERIAL LITIGATION . . . . . . . . . . . . . . . . . . . . . . 36
4.7 TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.8 OWNERSHIP OF PROPERTY; LIENS . . . . . . . . . . . . . . . . . . . 36
4.9 FRANCHISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.10 ABSENCE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 36
4.11 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.12 FEDERAL REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . 37
<PAGE>
PAGE
----
4.13 INVESTMENT COMPANY ACT; OTHER REGULATIONS . . . . . . . . . . . . 37
4.14 PURPOSE OF LOANS. . . . . . . . . . . . . . . . . . . . . . . . . 37
4.15 ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 37
4.16 LINES OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . 39
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. . . . . . . . . . . . . 39
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT . . . . . . . . . . . . . . 43
SECTION 6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 43
6.1 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 43
6.2 CERTIFICATES; OTHER INFORMATION. . . . . . . . . . . . . . . . . . 44
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE . . . . . . . . . 45
6.4 MAINTENANCE OF PROPERTY; INSURANCE . . . . . . . . . . . . . . . . 45
6.5 INTEREST RATE PROTECTION . . . . . . . . . . . . . . . . . . . . 45
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS . . . . . . 46
6.7 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.8 ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 47
7.1 FINANCIAL CONDITION COVENANTS. . . . . . . . . . . . . . . . . . . 47
7.2 LIMITATION ON INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . 48
7.3 LIMITATION ON GUARANTEES . . . . . . . . . . . . . . . . . . . . . 48
7.4 LIMITATION ON LIENS. . . . . . . . . . . . . . . . . . . . . . . . 49
7.5 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. . . . . . . . . . . 49
7.6 LIMITATION ON MODIFICATIONS OF CERTAIN DOCUMENTS . . . . . . . . 49
7.7 LIMITATION ON RESTRICTED PAYMENTS. . . . . . . . . . . . . . . . . 50
7.8 LIMITATION ON FUNDAMENTAL CHANGES. . . . . . . . . . . . . . . . . 50
7.9 LIMITATION ON SALE OF ASSETS . . . . . . . . . . . . . . . . . . . 50
7.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . 51
7.11 LIMITATION ON NEGATIVE PLEDGE CLAUSES . . . . . . . . . . . . . . 51
7.12 LIMITATION ON MANAGEMENT FEES AND G&A ALLOCATIONS . . . . . . . . 51
7.13 LIMITATION ON SALES AND LEASEBACKS. . . . . . . . . . . . . . . . 52
7.14 LIMITATION ON CHANGES IN FISCAL YEAR. . . . . . . . . . . . . . . 52
7.15 LIMITATION ON OPTIONAL PAYMENTS ON PARENTS' LOANS . . . . . . . . 52
7.16 LIMITATION ON LINES OF BUSINESS . . . . . . . . . . . . . . . . . 52
7.17 SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 9. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.1 APPOINTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.2 DELEGATION OF DUTIES . . . . . . . . . . . . . . . . . . . . . . . 57
9.3 EXCULPATORY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 57
9.4 RELIANCE BY AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 57
9.5 NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 58
9.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. . . . . . . . . . . . . . 58
9.7 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . 59
9.8 AGENT IN ITS INDIVIDUAL CAPACITY . . . . . . . . . . . . . . . . . 59
-ii-
<PAGE>
PAGE
----
9.9 SUCCESSOR AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.1 AMENDMENTS AND WAIVERS. . . . . . . . . . . . . . . . . . . . . . 60
10.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.3 NO WAIVER; CUMULATIVE REMEDIES. . . . . . . . . . . . . . . . . . 61
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 61
10.5 PAYMENT OF EXPENSES AND TAXES . . . . . . . . . . . . . . . . . . 61
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. . . . . . 62
10.7 ADJUSTMENTS; SET-OFF. . . . . . . . . . . . . . . . . . . . . . . 64
10.8 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.9 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.10 INTEGRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.12 SUBMISSION TO JURISDICTION; WAIVERS. . . . . . . . . . . . . . . 66
10.13 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 66
10.14 CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . 66
10.15 INTERCREDITOR MATTERS. . . . . . . . . . . . . . . . . . . . . . 67
-iii-
<PAGE>
SCHEDULES
Schedule I The Borrower, the Agent and the Issuer
Schedule II Lenders and Commitment Amounts
Schedule III Environmental Matters
Schedule IV Franchises
Schedule V Legal Bars
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Term Note
Exhibit C Form of Security Agreement
Exhibit D Form of Borrowing Request
Exhibit E Form of Continuation/Conversion Notice
Exhibit F Form of Subordination Agreement
Exhibit G Form of Subscribers Certificate
Exhibit H Form of Compliance Certificate
Exhibit I Form of Assignment and Acceptance
Exhibit J Form of Stock Pledge Agreement
Exhibit K Form of Management Agreement
-iv-
<PAGE>
CREDIT AGREEMENT, dated as of June 15, 1994, among CABLEVISION OF
FRAMINGHAM, INC., a Delaware corporation (the "BORROWER"), the several banks and
other financial institutions from time to time parties to this Agreement (the
"LENDERS"), THE CHASE MANHATTAN BANK, N.A., as agent for the Lenders hereunder
(in such capacity, the "AGENT") and CIBC INC., as co-agent for the Lenders
hereunder (in such capacity, the "CO-AGENT").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings:
"AFFILIATE": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (a) vote 10% or more of the securities having ordinary voting
power for the election of directors or other persons performing similar
functions of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise;
PROVIDED, that no individual shall be deemed an Affiliate of a corporation
or partnership solely by reason of his or her being an officer, director or
partner of such entity, except in the case of a partner if his or her
interests in such partnership shall qualify him or her as an Affiliate.
"AGENT": as defined in the preamble to this Agreement.
"AGREEMENT": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"ANNUALIZED OPERATING CASH FLOW": as at any date on or after
September 30, 1994, the product of Operating Cash Flow for the fiscal
quarter ended on or most recently prior to such date multiplied by four.
"APPLICABLE MARGIN": for each Type of Loan during any fiscal quarter,
the rate per annum set forth under the relevant column heading below
opposite the Cash Flow Ratio ("X") as at the end of the most recently
preceding fiscal quarter in respect of which a Compliance Certificate shall
have been delivered pursuant to subsection 6.2(b):
<PAGE>
2
<TABLE>
<CAPTION>
CHASE
ALTERNATE
BASE RATE EURODOLLAR
CASH FLOW RATIO LOANS LOANS
--------------- --------- ----------
<S> <C> <C>
X > 6.0 1.000% 2.000%
6.0 > X > 5.5 0.750 1.750
5.5 > X > 5.0 0.625 1.625
5.0 > X > 4.5 0.500 1.500
X < 4.5 0.250 1.250
</TABLE>
; PROVIDED that in the event no Compliance Certificate shall have been
previously delivered, then the Cash Flow Ratio shall be deemed to be
greater than 6.0.
"APPLICATION": an application, in such form as the Issuer may specify
from time to time, requesting the Issuer to open a Letter of Credit.
"ASSIGNEE": as defined in subsection 10.6(c).
"AVAILABLE REVOLVING COMMITMENT": as to any Lender at any time, an
amount equal to the excess, if any, of (a) the amount of such Lender's
Revolving Commitment over (b) the sum of (i) the aggregate principal amount
of all Revolving Credit Loans made by such Lender then outstanding PLUS
(ii) such Lender's Revolving Commitment Percentage of the L/C Obligations
then outstanding.
"BORROWER": as defined in the preamble to this Agreement.
"BORROWING DATE": any Business Day specified in a notice pursuant to
subsection 2.3 or 2.8 as a date on which the Borrower requests the Lenders
to make Loans hereunder.
"BORROWING REQUEST": a certificate of a Responsible Officer
substantially in the form of Exhibit D.
"BUSINESS": as defined in subsection 4.15.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law
to close.
"CABLE ACT": the Cable Television Consumer Protection Act of 1992 and
the rules and regulations promulgated thereunder from time to time.
"CABLE ACT EFFECTS": (i) reductions in existing rates and charges and
projected rates and charges, or rebates, refunds or similar payments,
resulting from the regulation of rates and charges as provided for or
contemplated by the Cable Act; (ii) changes required in billing and
collection
<PAGE>
3
practices as provided for or contemplated by the Cable Act; (iii)
programming, compensation payments and other business changes and charges
resulting from the "must carry" and "retransmission consent" provisions of
the Cable Act; (iv) increased competition resulting from the Cable Act,
including from the program access requirements thereof; (v) changes in
franchise award and renewal practices as provided for in or contemplated by
the Cable Act; (vi) costs and technological and business changes resulting
from compliance with the equal employment opportunity, customer service,
consumer protection, customer privacy, home wiring, equipment compatibility
and technical standards provisions of the Cable Act; (vii) costs and
liabilities resulting from the provisions governing indecent and obscene
programming in or contemplated by the Cable Act; and (viii) other effects
directly resulting from the Cable Act.
"CAPITAL EXPENDITURES": expenditures that are required to be
capitalized for financial reporting purposes in accordance with GAAP.
"CAPITAL LEASE": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance
with GAAP to be capitalized on a balance sheet of the lessee.
"CAPITAL STOCK": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"CASH EQUIVALENTS": (i) marketable, direct obligations of the United
States of America maturing within 365 days of the date of purchase, (ii)
commercial paper rated "P-1" or better by Moody's Investors Service or with
a comparable rating from another nationally recognized rating service, and
(iii) certificates of deposit issued by and demand deposits with any Lender
or a United States national or state bank having capital, surplus and
undivided profits totalling more than $100,000,000 maturing within 365 days
of the date of purchase.
"CASH FLOW RATIO": as at any date, the ratio of (i) Total Debt at
such date to (ii) Annualized Operating Cash Flow at such date.
"CHASE": The Chase Manhattan Bank, N.A.
"CHASE ALTERNATE BASE RATE": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a)
the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect
<PAGE>
4
on such day plus 1/2 of 1%. For purposes hereof: "PRIME RATE" shall mean
the rate of interest per annum publicly announced from time to time by the
Agent as its prime rate in effect at its principal office in New York City
(the Prime Rate not being intended to be the lowest rate of interest
charged by the Agent in connection with extensions of credit to debtors);
and "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers on such
day, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it, or if such day is not a Business Day,
the rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day. If for any reason the Agent
shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms thereof, the
Chase Alternate Base Rate shall be determined without regard to clause (b)
of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Chase Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective
Rate shall be effective as of the opening of business on the effective day
of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"CHASE ALTERNATE BASE RATE LOANS": Loans the rate of interest
applicable to which is based upon the Chase Alternate Base Rate.
"CLOSING DATE": the date on which the conditions precedent set forth
in subsection 5.1 shall be satisfied.
"CO-AGENT": as defined in the preamble to this Agreement.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all assets of the the Borrower and the CSC Parent, now
owned or hereinafter acquired, upon which a Lien is purported to be created
by any Security Document or any assets with respect to which Liens may be
created in the future pursuant to any Security Document.
<PAGE>
5
"COMMITMENT": with respect to any Lender, the collective reference to
such Lender's Revolving Commitment and Term Loan Commitment.
"COMMITTED PERCENTAGE": as to any Lender at any time, the percentage
representing a fraction the numerator of which is the sum of (i) the
aggregate principal amount of such Lender's Term Loans then outstanding
PLUS (ii) the Revolving Commitment of such Lender (or, at any time after
the Revolving Commitments shall have expired or been terminated, the sum of
(x) the aggregate principal amount of such Lender's Revolving Credit Loans
then outstanding PLUS (y) such Lender's Revolving Commitment Percentage of
all L/C Obligations then outstanding), and the denominator of which is the
sum of (i) the aggregate principal amount of Term Loans of all Lenders then
outstanding PLUS (ii) the aggregate Revolving Commitments of all Lenders
(or, at any time after the Revolving Commitments shall have expired or been
terminated, the sum of (x) the aggregate principal amount of Revolving
Credit Loans of all Lenders then outstanding PLUS (y) the aggregate amount
of L/C Obligations of the Issuer and all Lenders then outstanding).
"COMMONLY CONTROLLED ENTITY": an entity, whether or not incorporated,
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate of a Responsible Officer
substantially in the form of Exhibit H.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONTINUATION/CONVERSION NOTICE": a certificate of a Responsible
Officer substantially in the form of Exhibit E.
"CSC PARENT": Cablevision of Framingham Holdings, Inc., a Delaware
corporation.
"DEFAULT": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.
"DIRECT CHARGES": all charges for specifically identified services
necessary in connection with the business of the Borrower provided for and
to the Borrower or its subsidiaries, whether provided by the Manager or
third parties (including without limitation, accounting services,
<PAGE>
6
legal services, engineering services, pro rata charges under contracts
entered into by the Manager or any of its affiliates for and on behalf of
the Manager or its affiliates, PROVIDED that the Borrower received
documentable benefits under such contracts).
"DOLLARS" and "$": dollars in lawful currency of the United States of
America.
"ENVIRONMENTAL LAWS": any and all applicable foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes, ordinances,
codes, decrees or other Requirements of Law (including common law)
regulating, relating to or imposing liability or standards of conduct
concerning protection of human health from exposure to Hazardous Materials
or the environment, as now or may at any time during the effectiveness of
this Agreement be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as applied to a
Eurodollar Loan of any Lender, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) at which such Lender is actually
required to maintain reserves on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves) under any regulations
of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of such Board)
maintained by a member bank of such System.
"EURODOLLAR BASE RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum equal to the
average (rounded upward to the nearest 1/16th of 1%) of the respective
rates notified to the Agent by each of the Reference Lenders as the rate at
which such Reference Lender is offered Dollar deposits at or about 11:00
A.M., London time, two Business Days prior to the beginning of such
Interest Period in the London interbank market for delivery on the first
day of such Interest Period for the number of days comprised therein and in
an amount comparable to the amount of its Eurodollar Loan to be outstanding
during such Interest Period.
"EURODOLLAR LOANS": Loans the rate of interest applicable to which is
based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate
<PAGE>
7
per annum determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
EURODOLLAR BASE RATE
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"EVENT OF DEFAULT": any of the events specified in Section 8,
PROVIDED that any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"EXCESS CASH FLOW": for any period, the total of the following items
for the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP: (i) Operating Cash Flow MINUS
(ii) Total Debt Service MINUS (iii) Capital Expenditures MINUS (iv) tax
expense paid in cash MINUS (v) net increases in working capital PLUS (vi)
net decreases in working capital MINUS (vii) payments of principal and
interest made on the Parents' Loans to the extent permitted hereunder.
"FCC": the Federal Communications Commission or any Governmental
Authority which succeeds to its duties and functions.
"FINAL MATURITY DATE": June 30, 2002.
"FIXED CHARGE COVERAGE RATIO": (a) as at any date on or after June
30, 1995, the ratio of (i) Operating Cash Flow for the period of two
consecutive fiscal quarters ended on or most recently prior to such date to
(ii) Fixed Charges for such period of two consecutive fiscal quarters.
"FIXED CHARGES": for any period, the sum of the following for the
Borrower and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP: (i) Total Interest Expense PLUS (ii)
required principal payments made on the Term Loans PLUS (iii) Capital
Expenditures PLUS (iv) aggregate taxes paid or incurred.
"FRANCHISE": a franchise, license or other authorization or right to
construct, own, operate, promote and/or otherwise exploit any cable
television system granted by the FCC or any state, county, city, town,
village or other local governmental authority.
"G&A ALLOCATIONS": fees in the nature of general and administrative
allocations paid pursuant to the Management Agreement by the Borrower and
any of its Subsidiaries to the Manager or any of its Subsidiaries or any
other Affiliate of the Borrower.
<PAGE>
8
"GAAP": generally accepted accounting principles in the United States
of America in effect on March 31, 1994; PROVIDED that financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles in the United States of America in
effect from time to time, so long as any departure from the principles in
effect on March 31, 1994 shall be approved in writing by the Borrower's
independent certified public accountants.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GUARANTEE": as defined in subsection 7.3.
"HAZARDOUS MATERIALS": any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such
in or under any Environmental Law.
"INDEBTEDNESS": of any Person at any date, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by
a note, bond, debenture or similar instrument, (c) all obligations of such
Person under Capital Leases, (d) all obligations of such Person in respect
of letters of credit or acceptances issued or created for the account of
such Person, (e) all liabilities secured by any Lien on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (f) net liabilities of such Person under
Interest Rate Protection Agreements and (g) any Guarantee by such Person of
the Indebtedness of any other Person.
"INSOLVENCY": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTEREST COVERAGE RATIO": (a) as at any date on or after December
31, 1994, the ratio of (i) Operating Cash Flow for the period of two
consecutive fiscal quarters ended on or most recently prior to such date to
(ii) Total Interest Expense for such period of two consecutive fiscal
quarters; and (b) as at any date prior to December 31, 1994, the ratio of
(i) Operating Cash Flow for the period
<PAGE>
9
commencing with the Closing Date and ending on such date (the "STUB
PERIOD") to (ii) Total Interest Expense for the Stub Period.
"INTEREST PAYMENT DATE": (a) as to any Chase Alternate Base Rate
Loan, the last day of each March, June, September and December to occur
while such Loan is outstanding, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest
Period, and (c) as to any Eurodollar Loan having an Interest Period longer
than three months, each day which is three months or a whole multiple
thereof after the first day of such Interest Period and the last day of
such Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar Loan:
(i) initially, the period commencing on the Borrowing Date or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three, six or, subject to availability as
determined in the sole discretion of each of the Lenders, nine months
thereafter, as selected by the Borrower in its Borrowing Request or
Continuation/ Conversion Notice, as the case may be, given with
respect thereto; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three, six or, subject to availability as determined
in the sole discretion of each of the Lenders, nine months thereafter,
as selected by the Borrower by irrevocable notice in the form of a
Continuation/ Conversion Notice to the Agent not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto;
PROVIDED that the foregoing provisions relating to Interest Periods are
subject to the following:
(1) if any Interest Period pertaining to a Eurodollar Loan would
otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless
the result of such extension would be to carry such Interest Period
into another calendar month in which event such Interest Period shall
end on the immediately preceding Business Day;
(2) any Interest Period that would otherwise extend beyond the
Final Maturity Date shall end on the Final Maturity Date; and
<PAGE>
10
(3) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"INTEREST RATE PROTECTION AGREEMENT": an interest rate swap, cap or
collar agreement or similar arrangement providing for protection against
fluctuations in interest rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"ISSUER": with respect to any Letter of Credit, the Lenders in their
capacities as issuers of such Letter of Credit or Chase in its capacity as
issuer of such Letter of Credit, as the case may be.
"L/C COMMITMENT": $2,000,000.
"L/C FEE PAYMENT DATE": the last Business Day of each March, June,
September and December.
"L/C OBLIGATIONS": at any time, an amount equal to the sum of (a) the
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to subsection 3.5(b) or
3.5(d).
"LENDERS": as defined in the preamble to this Agreement.
"LETTER OF CREDIT": a letter of credit issued by Chase or the
Lenders, as the case may be, pursuant to subsection 3.1.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any Capital Lease having substantially the same economic effect as any
of the foregoing).
"LOAN": any loan made by any Lender pursuant to this Agreement.
"LOAN DOCUMENTS": this Agreement, the Notes, the Applications, the
Subordination Agreement and the Security Documents.
<PAGE>
11
"LOAN PARTIES": the Borrower, the CSC Parent, the WP Parent and each
Subsidiary of the Borrower which is a party to a Loan Document.
"MAJORITY LENDERS": at any time, Lenders the Committed Percentages of
which aggregate at least 66-2/3%.
"MANAGEMENT AGREEMENT": the Management Agreement, to be dated as of
the Closing Date, between the Borrower and Cablevision Systems Corporation,
substantially in the form of Exhibit K, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
subsection 7.6.
"MANAGEMENT FEES": amounts payable by the Borrower or any Subsidiary
to any Person (including, without limitation, the Manager or any other
Affiliate of the Borrower) on account of compensation, fees, salary or
otherwise, for providing management or supervisory services.
"MANAGER": Cablevision Systems Corporation, a Delaware corporation,
or any successor thereto under the Management Agreement and the
Subordination Agreement; PROVIDED that (i) any such successor shall be
reasonably acceptable to the Majority Lenders and (ii) such successor
Manager shall become a party to and agree to the terms of the Subordination
Agreement.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business of the Borrower and its Subsidiaries taken as a whole or on the
operations or financial condition of the Borrower and its Subsidiaries
taken as a whole on a consolidated basis in accordance with generally
accepted accounting principles or (b) the validity or enforceability of
this Agreement, any of the Notes, any Application or any of the other Loan
Documents or the rights or remedies of the Agent or the Lenders hereunder
or thereunder, except, in either case, as may result from Cable Act Effects
or from matters disclosed in the Purchase Agreement (including the
schedules and exhibits thereto) as in effect on the date hereof.
"MATERIALS OF ENVIRONMENTAL CONCERN": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, to the extent defined
or regulated as such in or under any Environmental Law, including, without
limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
<PAGE>
12
"NET CASH PROCEEDS": the gross proceeds received by the Borrower or
any Subsidiary from any voluntary or involuntary disposition of assets less
the sum of (i) all legal, title, recording and transfer tax expenses,
commissions and other customary fees and expenses incurred, and all other
federal, state and local taxes assessed, in connection therewith, (ii) the
principal amount of, premium, if any, and interest on any Indebtedness
(other than the Loans and the L/C Obligations) which is secured by the
asset disposed of and which is required to be repaid in connection with
such disposition and (iii) that portion of such gross proceeds constituting
insurance recoveries, litigation awards and proceeds of other involuntary
dispositions to the extent that such amounts are reinvested by the Borrower
in assets substantially similar to the assets in respect of which such
amounts were paid within 90 days of the receipt thereof. If any amount
payable to the Borrower or any Subsidiary in respect of any such
disposition shall be or become evidenced by any promissory note or other
negotiable or non-negotiable instrument, such note or instrument shall
within ten days of the receipt thereof by the Borrower or such Subsidiary,
be delivered and duly endorsed in a manner satisfactory to, and held
pending payment thereon by, the Agent. The cash proceeds received on any
such note or instrument shall thereupon constitute Net Cash Proceeds.
"NON-EXCLUDED TAXES": as defined in subsection 2.18.
"NOTES": the collective reference to the Revolving Credit Notes and
the Term Notes.
"OPERATING CASH FLOW": for any period, the sum of the following for
the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP: (i) consolidated net income
PLUS (ii) all amounts (without duplication) deducted in determining such
consolidated net income for (A) interest expense, both expensed and
capitalized, (B) depreciation expense, (C) amortization expense, (D) tax
expense, (E) expenses related to non-cash compensation in respect of the
Borrower's employee incentive stock programs (but only to the extent that
such expenses do not exceed in the aggregate for any fiscal year or part
thereof 4% of the Operating Cash Flow for the immediately preceding fiscal
year or corresponding part thereof, as the case may be), (F) all other non-
cash expenses and (G) Management Fees to the extent accrued but not paid
and subordinated pursuant to the Subordination Agreement.
"PARENTS": the collective reference to the CSC Parent and the WP
Parent.
"PARENTS' LOANS": the subordinated loans to be made by the CSC Parent
and the WP Parent to the Borrower on or prior
<PAGE>
13
to the Closing Date in an aggregate principal amount of $1,000,000, which
subordinated loans shall be subject to the terms and provisions of the
Subordination Agreement and shall be evidenced by promissory notes
containing terms and conditions reasonably satisfactory to the Lenders.
"PARTICIPANT": as defined in subsection 10.6(b).
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.
"PERMITTED LIENS": with respect to any Person: (i) pledges or
deposits by such Person under workmen's compensation laws, unemployment
insurance laws or similar legislation, or good faith deposits in connection
with bids, tenders, contracts (other than for the payment of Indebtedness)
or leases to which such Person is a party, or deposits to secure public or
statutory obligations of such Person or deposits of cash or U.S. Government
bonds to secure surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or for the
payment of rent; (ii) Liens imposed by law, such as carriers',
warehousemen's and mechanics' Liens or other Liens arising out of judgments
or awards against such Person with respect to which such Person shall then
be prosecuting appeal or other proceedings for review (and as to which any
foreclosure or other enforcement proceedings shall have been fully bonded
or otherwise effectively stayed); (iii) Liens for property taxes not yet
subject to penalties for non-payment or which are being contested in good
faith and by appropriate proceedings (and as to which foreclosure or other
enforcement proceedings shall have been fully bonded or otherwise
effectively stayed); (iv) Liens in favor of issuers of performance bonds
issued pursuant to the request of and for the account of such Person in the
ordinary course of its business (but only if junior to the Liens created by
the Security Documents); (v) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of real properties
or Liens incidental to the conduct of the business of such Person or to the
ownership of its properties which were not incurred in connection with
Indebtedness or other extensions of credit and which do not in the
aggregate materially detract from the value of said properties or
materially impair their use in the operation of the business of such
Person; or (vi) Liens under the Pole Rental Leases on cables and other
property affixed to transmission poles.
"PERSON": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated
<PAGE>
14
association, joint venture, Governmental Authority or other entity of
whatever nature.
"PLAN": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"POLE RENTAL LEASES": leases under which the Borrower and its
Subsidiaries have the right to use telephone or utility poles, conduits or
trenches for the purpose of supporting or housing cables of the System.
"PROPERTIES": as defined in subsection 4.15.
"PURCHASE AGREEMENT": the collective reference to (i) the Asset
Purchase Agreement, dated as of October 26, 1993, between Framingham
Cablevision Associates, Limited Partnership, and Cablevision MFR, Inc., as
amended and assigned to Cablevision of Framingham Holdings Inc., by
Amendment No. 1 thereto, dated as of April 6, 1994, and as further amended
by Amendment No. 2 thereto, dated as of June 3, 1994; and (ii) the Master
Agreement, dated as of October 26, 1993, between Cablevision MFR, Inc.,
Monmouth Cablevision Associates, Framingham Cablevision Associates Limited
Partnership and Riverview Cablevision Associates, L.P., as amended and
assigned to Cablevision of Framingham Holdings Inc., by Amendment No. 1
thereto, dated as of April 6, 1994, and as further amended by Amendment No.
2 thereto, dated as of June 3, 1994.
"REFERENCE LENDERS": Chase and CIBC Inc.
"REGISTER": as defined in subsection 10.6(d).
"REGULATION U": Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"REIMBURSEMENT OBLIGATION": the obligation of the Borrower to
reimburse the Issuer pursuant to subsection 3.5(b) or 3.5(d) for amounts
drawn under Letters of Credit.
"REORGANIZATION": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section 2615.
<PAGE>
15
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws, partnership agreement or other organizational or
governing documents of such Person, any Franchise granted to such Person,
and any law, treaty, rule or regulation or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, the president and
any vice president of the Borrower or, with respect to financial matters,
the chief financial officer, the treasurer and any assistant treasurer of
the Borrower.
"RESTRICTED PAYMENT": as defined in subsection 7.7.
"REVOLVING COMMITMENT": as to any Lender, the obligation of such
Lender to make Revolving Credit Loans to and/or issue or participate in
Letters of Credit issued on behalf of the Borrower hereunder in an
aggregate principal and/or face amount at any one time outstanding not to
exceed the amount set forth opposite such Lender's name under the heading
"Revolving Commitment" on Schedule II, as such amount may be reduced from
time to time in accordance with the provisions of this Agreement.
"REVOLVING COMMITMENT PERCENTAGE": as to any Lender at any time, the
percentage representing a fraction the numerator of which is such Lender's
Revolving Commitment (or, at any time after the Revolving Commitments shall
have expired or been terminated, the sum of (x) the aggregate principal
amount of such Lender's Revolving Credit Loans then outstanding PLUS (y)
such Lender's PRO RATA share of all L/C Obligations then outstanding), and
the denominator of which is the aggregate Revolving Commitments of all the
Lenders (or, at any time after the Revolving Commitments shall have expired
or been terminated, the sum of (x) the aggregate principal amount of the
Revolving Credit Loans of all the Lenders then outstanding PLUS (y) the
aggregate amount of L/C Obligations then outstanding).
"REVOLVING COMMITMENT PERIOD": the period from and including the date
hereof to but not including the Final Maturity Date or such earlier date on
which the Revolving Commitments shall terminate as provided herein.
"REVOLVING CREDIT LOANS": as defined in subsection 2.1.
"REVOLVING CREDIT NOTE": as defined in subsection 2.2.
<PAGE>
16
"SECURITY AGREEMENT": the Security Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit C, as the
same may be amended, supplemented or otherwise modified from time to time.
"SECURITY DOCUMENTS": the collective reference to the Security
Agreement, the Stock Pledge Agreement and all other security documents
hereafter delivered to the Agent granting a Lien on any asset or assets of
any Person to secure the obligations and liabilities of the Borrower
hereunder, under the Notes and/or under any of the other Loan Documents.
"SELLERS": as defined in the Purchase Agreement.
"SINGLE EMPLOYER PLAN": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"STOCK PLEDGE AGREEMENT": the Stock Pledge Agreement to be executed
and delivered by the CSC Parent, substantially in the form of Exhibit J, as
the same may be amended, supplemented or otherwise modified from time to
time.
"SUBORDINATION AGREEMENT": The Subordination Agreement to be executed
and delivered by the CSC Parent, the WP Parent and Cablevision Systems
Corporation, substantially in the form of Exhibit F, as the same may be
amended, supplemented or otherwise modified from time to time.
"SUBSCRIBERS CERTIFICATE": a certificate of a Responsible Officer
substantially in the form of Exhibit G.
"SUBSIDIARY": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.
"SYSTEM": as defined in the Purchase Agreement.
"TERM LOAN": as defined in subsection 2.6.
"TERM LOAN COMMITMENT": as to any Lender, the obligation of such
Lender to make a Term Loan to the Borrower on the Closing Date in the
amount set forth opposite such
<PAGE>
17
Lender's name under the heading "Term Loan Commitment" on Schedule II.
"TERM LOAN PERCENTAGE": as to any Lender at any time, the percentage
which such Lender's outstanding Term Loans then constitutes of the
aggregate outstanding Term Loans of all the Lenders.
"TERM NOTE": as defined in subsection 2.7.
"TOTAL DEBT": as at any time, (i) the aggregate principal amount of
all Indebtedness of the Borrower and its Subsidiaries on a consolidated
basis outstanding at such time (including the aggregate undrawn face amount
of all Letters of Credit outstanding on such date) MINUS (ii) all
Indebtedness in respect of the Parents' Loans.
"TOTAL DEBT SERVICE": for any period, the sum of the following for
the Borrower and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP: (i) Total Interest Expense
PLUS (ii) scheduled repayments of principal of Total Debt.
"TOTAL INTEREST EXPENSE": for any period, the aggregate amount of
interest expense in respect of Total Debt (including the interest component
of obligations in respect of Capital Leases) determined on a consolidated
basis in accordance with GAAP, together with (without duplication) the
aggregate amount of fees accrued hereunder during such period in respect of
Letters of Credit.
"TRANCHE": the collective reference to Eurodollar Loans the then
current Interest Periods with respect to all of which begin on the same
date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"TRANSFEREE": as defined in subsection 10.6(f).
"TYPE": as to any Loan, its nature as a Chase Alternate Base Rate
Loan or a Eurodollar Loan.
"UNIFORM CUSTOMS": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"WP PARENT": Warburg, Pincus Investors, L.P., a Delaware limited
partnership.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Notes or any certificate or other document made or delivered
pursuant hereto.
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18
(b) As used herein and in the Notes, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Lender severally agrees to make revolving credit loans
("REVOLVING CREDIT LOANS") to the Borrower from time to time during the
Revolving Commitment Period in an aggregate principal amount at any one time
outstanding which, when added to such Lender's Revolving Commitment Percentage
of the then outstanding L/C Obligations does not exceed the amount of such
Lender's Revolving Commitment. During the Revolving Commitment Period the
Borrower may use the Revolving Commitments by borrowing, prepaying the Revolving
Credit Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof.
(b) The Revolving Credit Loans may from time to time be (i)
Eurodollar Loans, (ii) Chase Alternate Base Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with subsections 2.3 and 2.10, PROVIDED that no Revolving Credit Loan shall be
made as a Eurodollar Loan after the day that is one month prior to the Final
Maturity Date.
2.2 REVOLVING CREDIT NOTES. The Revolving Credit Loans made by each
Lender shall be evidenced by a promissory note of the Borrower, substantially in
the form of Exhibit A, with appropriate insertions as to payee, date and
principal amount (a "REVOLVING CREDIT NOTE"), payable to the order of such
Lender and in a principal amount equal to the lesser of (a) the amount of the
Revolving Commitment of such Lender and (b) the aggregate unpaid principal
amount of all Revolving Credit Loans made by such Lender. Each Lender is hereby
authorized to record the date, Type and amount of each Revolving Credit Loan
made by such Lender, each continuation thereof, each conversion of all or a
portion thereof to another Type, the date and amount of each payment or
prepayment of principal thereof and, in the case of
<PAGE>
19
Eurodollar Loans, the length of each Interest Period with respect thereto, on
the schedule annexed to and constituting a part of its Revolving Credit Note,
and any such recordation shall constitute PRIMA FACIE evidence of the accuracy
of the information so recorded. Each Revolving Credit Note shall (x) be dated
the Closing Date, (y) be stated to mature on the Final Maturity Date and (z)
provide for the payment of interest in accordance with subsection 2.12.
2.3 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may
borrow under the Revolving Commitments during the Revolving Commitment Period on
any Business Day, PROVIDED that the Borrower shall give the Agent irrevocable
notice in the form of a Borrowing Request (which notice must be received by the
Agent prior to 11:00 A.M., New York City time, (a) three Business Days prior to
the requested Borrowing Date, if all or any part of the requested Revolving
Credit Loans are to be initially Eurodollar Loans or (b) on the requested
Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the
requested Borrowing Date, (iii) whether the borrowing is to be of Eurodollar
Loans, Chase Alternate Base Rate Loans, or a combination thereof and (iv) if the
borrowing is to be entirely or partly of Eurodollar Loans, the amount of such
Type of Loan and the length of the initial Interest Periods therefor. Each
borrowing under the Revolving Commitments shall be in an amount equal to (x) in
the case of Chase Alternate Base Rate Loans, $100,000 or a whole multiple
thereof and (y) in the case of Eurodollar Loans, $1,000,000 or a whole multiple
of $100,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Agent shall promptly notify each Lender thereof. Each Lender will
make an amount equal to its Revolving Commitment Percentage of each borrowing
available to the Agent for the account of the Borrower at the office of the
Agent specified in subsection 10.2 prior to 12:00 noon, New York City time, on
the Borrowing Date requested by the Borrower in funds immediately available to
the Agent. The Agent shall immediately credit the account of the Borrower on
the books of such office with the aggregate of the amounts made available to the
Agent by the Lenders and in like funds as received by the Agent.
2.4 FEES. (a) The Borrower agrees to pay to the Agent for the
account of each Lender a commitment fee for the period from and including the
first day of the Revolving Commitment Period to the Final Maturity Date,
computed at the rate of 3/8ths of 1% per annum on the average daily amount of
the Available Revolving Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the last Business Day of each
March, June, September and December and on the Final Maturity Date or such
earlier date as the Revolving Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Agent the agency fees referred
to in the commitment letter and the fee letter
<PAGE>
20
agreement dated June 10, 1994 between Chase and the Borrower, payable quarterly
in arrears on the Closing Date and on the last Business Day of each March, June,
September and December and on the Final Maturity Date.
2.5 TERMINATION OR REDUCTION OF REVOLVING COMMITMENTS. (a) The
Borrower shall have the right, upon not less than five Business Days' notice to
the Agent, to terminate the Revolving Commitments or, from time to time, to
reduce the amount of the Revolving Commitments. Any such reduction shall be in
an amount equal to $100,000 or a whole multiple thereof and shall reduce
permanently the Revolving Commitments then in effect.
(b) The aggregate Revolving Commitments shall automatically be
reduced on the dates and in the amounts specified in subsection 2.9(b) and
2.9(c).
2.6 TERM LOANS. Subject to the terms and conditions hereof, each
Lender severally agrees to make a term loan (a "TERM LOAN") to the Borrower on
the Closing Date in an amount equal to the Term Loan Commitment of such Lender.
The Term Loans may from time to time be (a) Eurodollar Loans, (b) Chase
Alternate Base Rate Loans or (c) a combination thereof, as determined by the
Borrower and notified to the Agent in accordance with subsections 2.8 and 2.10.
2.7 TERM NOTES. The Term Loan made by each Lender shall be evidenced
by a promissory note of the Borrower, substantially in the form of Exhibit B,
with appropriate insertions as to payee, date and principal amount (a "TERM
NOTE"), payable to the order of such Lender and in a principal amount equal to
the Term Loan of such Lender. Each Lender is hereby authorized to record the
date and amount of each payment or prepayment of principal of its Term Loan,
each continuation thereof, each conversion of all or a portion thereof to
another Type and, in the case of Eurodollar Loans, the length of each Interest
Period with respect thereto, on the schedule annexed to and constituting a part
of its Term Note, and any such recordation shall constitute PRIMA FACIE evidence
of the accuracy of the information so recorded. The Term Note of each Lender
shall (a) be dated the Closing Date, (b) provide for the payment of interest in
accordance with subsection 2.12 and (c) be stated to mature in 27 consecutive
quarterly installments on the dates set forth below, each of which installments
shall be in an amount equal to such Lender's Term Loan Percentage of the
percentage of the initial aggregate Term Loans set forth below opposite the
respective date thereof:
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL
DATE AGGREGATE TERM LOANS
---- ---------------------
<S> <C>
December 31, 1995 0.50%
March 31, 1996 1.00%
</TABLE>
<PAGE>
21
<TABLE>
<CAPTION>
PERCENTAGE OF INITIAL
DATE AGGREGATE TERM LOANS
---- ---------------------
<S> <C>
June 30, 1996 1.00%
September 30, 1996 1.00%
December 31, 1996 1.00%
March 31, 1997 2.00%
June 30, 1997 2.00%
September 30, 1997 2.00%
December 31, 1997 2.00%
March 31, 1998 3.75%
June 30, 1998 3.75%
September 30, 1998 3.75%
December 31, 1998 3.75%
March 31, 1999 4.50%
June 30, 1999 4.50%
September 30, 1999 4.50%
December 31, 1999 4.50%
March 31, 2000 5.25%
June 30, 2000 5.25%
September 30, 2000 5.25%
December 31, 2000 5.25%
March 31, 2001 5.25%
June 30, 2001 5.25%
September 30, 2001 5.25%
December 31, 2001 5.25%
March 31, 2002 6.25%
June 30, 2002 6.25%
</TABLE>
2.8 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the
Agent irrevocable notice in the form of a Borrowing Request (which notice must
be received by the Agent prior to 11:00 A.M., New York City time, (a) three
Business Days prior to the Closing Date, if all or any part of the Term Loans
are to be initially Eurodollar Loans or (b) on the Closing Date, otherwise)
requesting that the Lenders make the Term Loans on the Closing Date and
specifying (i) the amount to be borrowed (which amount shall be equal to the
aggregate Term Loan Commitments), (ii) whether the Term Loans are to be
initially Eurodollar Loans,
<PAGE>
22
Chase Alternate Base Rate Loans, or a combination thereof, and (iii) if the Term
Loans are to be entirely or partly Eurodollar Loans, the amount of such Type of
Loan and the length of the initial Interest Periods therefor. Upon receipt of
such notice from the Borrower, the Agent shall promptly notify each Lender
thereof. Not later than 12:00 noon on the Closing Date each Lender shall make
available to the Agent at its office specified in subsection 10.2 the amount of
such Lender's Term Loan in immediately available funds. The Agent shall
immediately credit the account of the Borrower on the books of such office of
the Agent with the aggregate of the amounts made available to the Agent by the
Lenders and in like funds as received by the Agent.
2.9 OPTIONAL AND MANDATORY PREPAYMENTS. (a) The Borrower may at any
time and from time to time prepay the Loans, in whole or in part, without
premium or penalty, upon at least two Business Days' irrevocable notice to the
Agent, specifying the date and amount of prepayment, whether Revolving Credit
Loans or Term Loans are being prepaid and whether the prepayment is of
Eurodollar Loans, Chase Alternate Base Rate Loans or a combination thereof, and,
if of a combination thereof, the amount allocable to each. Upon receipt of any
such notice the Agent shall promptly notify each Lender thereof. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with any amounts payable pursuant to
subsection 2.19. Partial prepayments shall be in an aggregate principal amount
of $500,000 or a whole multiple of $100,000 in excess thereof.
(b) The Borrower shall prepay the Term Loans (or, after the Term
Loans shall have been repaid in full, the Revolving Commitments shall be
automatically reduced) in an amount equal to 50% of Excess Cash Flow (if
positive) for each fiscal year ending on or subsequent to December 31, 1995.
Such prepayment shall be made (or such reduction of the Revolving Commitments
shall automatically occur) on the earlier of (i) the date the Borrower delivers
yearly financial statements with respect to such fiscal year pursuant to
subsection 6.1(a) and (ii) 120 days after the end of such fiscal year.
Notwithstanding anything to the contrary contained herein, no prepayment of the
Term Loans or reduction of the Revolving Commitments shall be required to be
made under this subsection 2.9(b) in respect of the first $250,000 of Excess
Cash Flow in respect of which prepayments or Revolving Commitment reductions
would otherwise be required pursuant to this paragraph.
(c) On the date on which the Borrower receives Net Cash Proceeds from
any asset disposition made pursuant to subsection 7.9(d), the Borrower shall
prepay the Term Loans (or, after the Term Loans shall have been repaid in full,
the Revolving Commitments shall be automatically reduced) in an amount equal to
such Net Cash Proceeds.
<PAGE>
23
(d) Partial prepayments of the Term Loans pursuant to this subsection
2.9 shall be applied to the installments of principal of the Term Loans in the
inverse order of their scheduled maturities and shall be accompanied by accrued
interest to the date of prepayment on the amount prepaid. Amounts prepaid on
account of the Term Loans may not be reborrowed. Unless the Borrower shall have
delivered a notice to the Agent to the contrary prior to the date of any
prepayment pursuant to this subsection, such prepayment shall be applied first
to Chase Alternate Base Rate Loans and then to Eurodollar Loans in the order in
which their respective Interest Periods then in effect are scheduled to end.
2.10 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Chase Alternate Base Rate Loans
by giving the Agent at least three Business Days' prior irrevocable notice of
such election, PROVIDED that any such conversion may only be made on the last
day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert Chase Alternate Base Rate Loans to Eurodollar Loans by
giving the Agent at least three Business Days' prior irrevocable notice of such
election. Any such notice of conversion shall be made pursuant to a
Continuation/Conversion Notice and shall, in the case of a conversion to
Eurodollar Loans, specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice the Agent shall promptly
notify each Lender thereof. All or any part of outstanding Eurodollar Loans and
Chase Alternate Base Rate Loans may be converted as provided herein, PROVIDED
that no Loan may be converted into a Eurodollar Loan (i) when any Event of
Default has occurred and is continuing and the Agent has or the Majority Lenders
have determined that such a conversion is not appropriate or (ii) after the date
that is one month prior to the Final Maturity Date.
(b) Any Eurodollar Loans may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
a Continuation/Conversion Notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in subsection 1.1, of the
length of the next Interest Period to be applicable to such Loans, PROVIDED that
no Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Agent has or the Majority Lenders have
determined that such a continuation is not appropriate or (ii) after the date
that is one month prior to the Final Maturity Date, and PROVIDED, FURTHER, that
if the Borrower shall fail to give any required notice as described above in
this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to Chase Alternate
Base Rate Loans on the last day of such then expiring Interest Period.
<PAGE>
24
2.11 MINIMUM AMOUNTS AND MAXIMUM NUMBER OF TRANCHES. All borrowings,
conversions and continuations of Eurodollar Loans hereunder and all selections
of Interest Periods hereunder shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate principal
amount of the Eurodollar Loans comprising each Tranche shall be equal to
$1,000,000 or a whole multiple of $100,000 in excess thereof. In no event shall
there at any time be more than five (5) Tranches outstanding.
2.12 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each Chase Alternate Base Rate Loan shall bear interest for each
day during which such Loan is outstanding at a rate per annum equal to the Chase
Alternate Base Rate plus the Applicable Margin.
(c) If all or a portion of (i) the principal amount of any Loan, (ii)
any interest payable thereon or (iii) any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
subsection plus 2% or (y) in the case of overdue interest, commitment fee or
other amount, the rate described in paragraph (b) of this subsection plus 2%, in
each case from the date of such non-payment until such amount is paid in full
(as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, PROVIDED that interest accruing pursuant to paragraph (c) of this
subsection shall be payable from time to time on demand.
2.13 COMPUTATION OF INTEREST AND FEES. (a) Fees and, whenever it is
calculated on the basis of the Chase Alternate Base Rate, interest shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed; and, otherwise, interest shall be calculated on the basis
of a 360-day year for the actual days elapsed. The Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Loan resulting from a
change in the Chase Alternate Base Rate or the Eurocurrency Reserve Requirements
shall become effective as of the opening of business on the day on which such
change becomes effective. The Agent shall as soon as practicable notify the
Borrower and the Lenders of the effective date and the amount of each such
change in interest rate.
<PAGE>
25
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error. The Agent shall, at the
request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
subsection 2.12(a).
(c) If any Reference Lender shall for any reason no longer have a
Revolving Commitment or any Loans, such Reference Lender shall thereupon cease
to be a Reference Lender, and if, as a result, there shall only be one Reference
Lender remaining, the Agent (after consultation with the Borrower and the
Lenders) shall, with the consent of the Borrower and after notice to the
Lenders, designate another Lender as a Reference Lender so that there shall at
all times be at least two Reference Lenders.
(d) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the
Reference Lenders shall be unable or shall otherwise fail to supply such rates
to the Agent upon its request, the rate of interest shall, subject to the
provisions of subsection 2.14, be determined on the basis of the quotations of
the remaining Reference Lenders or Reference Lender.
2.14 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day
of any Interest Period:
(a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Agent shall have received notice from the Majority Lenders
that the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the Lenders as soon as practicable thereafter. If such notice is given (x) any
Eurodollar Loans requested to be made on the first day of such Interest Period
shall be made as Chase Alternate Base Rate Loans, (y) any Chase Alternate Base
Rate Loans that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as Chase Alternate Base Rate Loans
and (z) any outstanding Eurodollar Loans shall be converted, on the first day of
such Interest Period, to Chase Alternate Base Rate Loans. Until such notice has
been withdrawn by the Agent, no further Eurodollar Loans shall be made or
continued as such, nor shall the Borrower
<PAGE>
26
have the right to convert Chase Alternate Base Rate Loans to Eurodollar Loans.
2.15 PRO RATA TREATMENT AND PAYMENTS. (a) Each borrowing of
Revolving Credit Loans by the Borrower from the Lenders hereunder, each payment
by the Borrower on account of any commitment fee hereunder and any reduction of
the Revolving Commitments of the Lenders shall be made pro rata according to the
respective Revolving Commitment Percentages of the Lenders. Each payment
(including each prepayment) by the Borrower on account of principal of and
interest on the Loans shall be made pro rata according to the respective
outstanding principal amounts of the relevant Loans then held by the Lenders.
All payments (including prepayments) to be made by the Borrower hereunder and
under the Notes, whether on account of principal, interest, fees or otherwise,
shall be made prior to 12:00 Noon, New York City time, on the due date thereof
to the Agent, for the account of the Lenders, at the Agent's office specified in
subsection 10.2, in Dollars and in immediately available funds. The Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make the amount that would
constitute its Revolving Commitment Percentage of such borrowing available to
the Agent, the Agent may assume that such Lender is making such amount available
to the Agent, and the Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not made
available to the Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Agent, together
with any customary administration fees which are applicable. A certificate of
the Agent submitted to any Lender with respect to any amounts owing under this
subsection shall be conclusive in the absence of manifest error. If such
Lender's Revolving Commitment Percentage of such borrowing is not made available
to the Agent by such Lender within three Business Days of such Borrowing Date,
the Agent shall also (but without duplication) be entitled to recover such
amount with interest thereon at the rate per annum
<PAGE>
27
applicable to Chase Alternate Base Rate Loans hereunder, on demand, from the
Borrower.
2.16 ILLEGALITY. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Chase Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
suspended until such time as such Lender may again make and maintain Eurodollar
Loans and (b) such Lender's Loans then outstanding as Eurodollar Loans, if any,
shall be converted automatically to Chase Alternate Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurodollar Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrower shall pay to such
Lender such amounts, if any, as may be required pursuant to subsection 2.19.
2.17 REQUIREMENTS OF LAW. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall change the basis of taxation of payments to such Lender in
respect of this Agreement, any Note, any Letter of Credit, any Application
or any Eurodollar Loan (except for Non-Excluded Taxes covered by subsection
2.18 and changes in the rate of tax on the overall net income of such
Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition affecting this
Agreement or the obligations of such Lender hereunder;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit or to reduce any amount receivable hereunder in respect
thereof, then,
<PAGE>
28
in any such case, the Borrower shall promptly pay such Lender, upon its demand,
any additional amounts necessary to compensate such Lender for such increased
cost or reduced amount receivable; PROVIDED that the Borrower shall not be
obligated to compensate any Lender under this subsection 2.17(a) for any
additional amounts incurred more than six months prior to the date the
respective Lender requests such compensation from the Borrower, except for
periods preceding such date but that are after the date such Lender notified the
Borrower of the possibility that such additional amounts might be incurred as a
result of the respective adoption of or change in a Requirement of Law. If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall promptly notify the Borrower, through the Agent, of the
event by reason of which it has become so entitled and (if so requested by the
Borrower through the Agent) will designate a different lending office for the
Loans of such Lender affected by such event if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Lender, be disadvantageous to such Lender. A certificate as to
any additional amounts payable pursuant to this subsection submitted by such
Lender to the Borrower (with a copy to the Agent) shall be conclusive in the
absence of manifest error. If any Lender requests compensation from the
Borrower under this subsection 2.17(a), the Borrower may, by notice to such
Lender through the Agent, require that such Lender's Loans of the Type with
respect to which such compensation is requested be converted into Chase
Alternate Base Rate Loans in accordance with subsection 2.10 hereof.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
reducing the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under any Letter of Credit to a
level below that which such Lender or such corporation could have achieved but
for such change or compliance (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Agent) of a written request therefor,
the Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction; PROVIDED that the Borrower shall not
be obligated to compensate any Lender under this subsection 2.17(b) for any such
costs incurred more than six months prior to the date the respective Lender
requests such compensation from the Borrower, except for periods preceding such
date but that are after the date such Lender notified the Borrower of the
possibility that such costs might be incurred.
<PAGE>
29
(c) The covenants contained in this subsection 2.17 shall survive the
termination of this Agreement and the payment of the Notes and all other amounts
payable hereunder.
2.18 TAXES. (a) All payments made by the Borrower under this
Agreement and the Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Agent or any Lender as a result of a
present or former connection between the Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or the Notes). If any such non-excluded taxes, levies, imposts,
duties, charges, fees deductions or withholdings ("NON-EXCLUDED TAXES") are
required to be withheld from any amounts payable to the Agent or any Lender
hereunder or under the Notes, the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this Agreement and
the Notes, PROVIDED, HOWEVER, that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this subsection. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Agent for its own account or for the
account of such Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment thereof. If the
Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by the
Agent or any Lender as a result of any such failure. The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:
(i) deliver to the Borrower and the Agent (A) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case
<PAGE>
30
may be, and (B) an Internal Revenue Service Form W-8 or W-9, or successor
applicable form, as the case may be;
(ii) deliver to the Borrower and the Agent two further copies of any
such form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of any
event requiring a change in the most recent form previously delivered by it
to the Borrower; and
(iii) obtain such extensions of time for filing and complete such forms
or certifications as may reasonably be requested by the Borrower or the
Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the Agent.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax. Each Person that shall become a Lender or a Participant
pursuant to subsection 10.6 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms and statements required
pursuant to this subsection, provided that in the case of a Participant such
Participant shall furnish all such required forms and statements to the Lender
from which the related participation shall have been purchased.
2.19 INDEMNITY. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. This covenant
shall survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder.
SECTION 3. LETTERS OF CREDIT
3.1 LETTERS OF CREDIT. Subject to the terms and conditions hereof,
(i) the Lenders severally agree to issue one or more Letters of Credit (each
Lender's liability under each of which shall be limited to its Revolving
Commitment Percentage of
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31
the face amount thereof) for the account of the Borrower, and (ii) Chase, in its
sole discretion and without obligation, agrees to issue as face bank one or more
Letters of Credit for the account of the Borrower. The following provisions
shall apply to Letters of Credit:
(i) No Letter of Credit shall be issued if, after giving effect to
such issuance, either (A) the aggregate L/C Obligations would exceed the
L/C Commitment or (B) the sum of (i) the then outstanding L/C Obligations
PLUS (ii) the aggregate amount of the then outstanding Revolving Credit
Loans would exceed the aggregate Revolving Commitments.
(ii) The Letters of Credit (A) shall each have a minimum face amount
of $25,000, (B) shall be denominated
in Dollars, (C) shall each have a term not in excess of one year, (D) may,
at the sole option of the Issuer, be renewable, (E) shall not extend beyond
the Final Maturity Date, (F) shall be utilized for such general business
purposes as shall be acceptable to the Issuer and (G) shall be subject to
the Uniform Customs and, to the extent not inconsistent therewith, the laws
of the State of New York.
3.2 PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT. The Borrower shall
give the Agent at least five Business Days' prior notice (effective upon
receipt) specifying the date each Letter of Credit is to be issued and attaching
a completed form of such Letter of Credit and a description of the nature of the
transactions proposed to be supported thereby. Upon receipt of such notice the
Agent shall notify Chase and each Lender of the contents thereof. Unless Chase
notifies the Agent at least three Business Days before the date such Letter of
Credit is to be issued that it will be the Issuer of such Letter of Credit, such
Letter of Credit shall be issued by the Lenders.
3.3 L/C PARTICIPATIONS. (a) Upon the date of issuance of a Letter
of Credit by Chase, Chase shall be deemed, without further action by any party
hereto, to have sold to each Lender, and each Lender shall be deemed, without
further action by any party hereto, to have purchased from Chase an undivided
and continuing participation, to the extent of such Lender's Revolving
Commitment Percentage, in such Letter of Credit.
(b) In the case of a Letter of Credit issued by Chase, each Lender
shall promptly, upon demand by Chase, remit to Chase, through the Agent, its pro
rata share of each payment made by Chase under such Letter of Credit, together
with interest thereon for each day from the day of demand by Chase through the
day of payment at a rate equal to the Federal Funds Effective Rate for the first
three Business Days and thereafter at the Chase Alternate Base Rate.
3.4 FUNDING OF LENDER LETTERS OF CREDIT. In the case of each Letter
of Credit issued by the Lenders, such Letter of
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Credit shall provide that each Lender shall, not later than 12:00 noon (New York
time) on the Business Day on which a payment is required to be made under such
Letter of Credit, remit to the Agent its Revolving Commitment Percentage of such
required payment in Dollars immediately available to the Agent, and the Agent
will make the payments so received from the Lenders available to the beneficiary
of such Letter of Credit in accordance with the terms thereof. Unless the Agent
shall have received notice from a Lender prior to 12:00 noon (New York time) on
the date any payment is required to be made under a Letter of Credit that such
Lender will not make available to the Agent such Lender's Revolving Commitment
Percentage of such payment, the Agent may assume that such Lender has made such
amount available to the Agent on the date of such payment in accordance with
this subsection 3.4 and the Agent in its sole discretion may, in reliance upon
such assumption, make available to the beneficiary of such Letter of Credit on
such date a corresponding amount on behalf of such Lender. Any such amount so
made available by the Agent on behalf of such Lender shall be deemed a funding
by such Lender. If and to the extent such Lender shall not have so made
available to the Agent such Lender's Revolving Commitment Percentage of such
payment and the Agent shall have so made available to the beneficiary of such
Letter of Credit a corresponding amount on behalf of such Lender, the Agent
shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from the date such
corresponding amount shall have been so made available by the Agent to the
beneficiary of such Letter of Credit until the date such corresponding amount
shall have been repaid to the Agent, at the Federal Funds Rate for the first
three Business Days and thereafter at the Chase Alternate Base Rate. Nothing in
this subsection shall be deemed to relieve any Lender of its obligation to
fulfill its Revolving Commitment or to prejudice any rights that the Borrower
may have against any Lender as a result of any default by such Lender hereunder.
3.5 REIMBURSEMENT OBLIGATION OF THE BORROWER. (a) Upon receipt from
the beneficiary of any Letter of Credit of any demand for payment under such
Letter of Credit, Chase, in the case of a Letter of Credit issued by Chase, or
the Agent, in the case of a Letter of Credit issued by the Lenders, shall
promptly notify the Borrower as to the amount to be paid as a result of such
demand and the applicable payment date.
(b) The Borrower shall not later than 1:00 p.m. (New York time) on
the date of payment of each drawing, reimburse the Issuer, through the Agent,
for any amounts paid by the Issuer under any Letter of Credit. In the case of a
Letter of Credit issued by Chase, Chase shall promptly remit to each Lender,
through the Agent, such Lender's pro rata share of any payment received by Chase
from the Borrower to the extent that such Lender has reimbursed Chase in
accordance with subsection 3.3(b).
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33
(c) Interest shall be payable on any and all amounts remaining unpaid
by the Borrower under this subsection 3.5 from the date such amounts become
payable until payment in full (including any payment made with the proceeds of
Revolving Credit Loans made pursuant to paragraph (d) immediately below) at the
rate which would be payable on any outstanding Chase Alternate Base Rate Loans
which were then overdue.
(d) Each drawing under any Letter of Credit not reimbursed on the
drawing date shall constitute an immediate request by the Borrower to the Agent
for a borrowing of Chase Alternate Base Rate Loans pursuant to subsection 2.3.
3.6 LETTER OF CREDIT FEE. (a) The Borrower shall pay to the Agent,
for the account of Chase and the Lenders, a letter of credit fee for the period
from and including the first day of the Revolving Commitment Period to the Final
Maturity Date, computed at a rate per annum equal to the Applicable Margin then
applicable to Eurodollar Loans hereunder on the average daily amount of the L/C
Obligations outstanding during the period for which payment is being made,
payable quarterly in arrears on each L/C Fee Payment Date and on the Final
Maturity Date or such earlier date as the Revolving Commitments shall terminate
as provided herein, commencing on the first of such dates to occur after the
date hereof. Such fee shall be payable to the Lenders to be shared ratably
among them in accordance with their respective Revolving Commitment Percentages.
(b) The Borrower shall pay or reimburse each Issuer for such normal
and customary costs and expenses as are incurred or charged by such Issuer in
issuing, effecting payment under, amending or otherwise administering any Letter
of Credit.
(c) The Agent shall, promptly following its receipt thereof,
distribute to the Lenders all fees received by the Agent for their respective
accounts pursuant to this subsection.
3.7 CONDITIONS TO ISSUANCE. The issuance by the Issuer of each
Letter of Credit shall, in addition to the conditions precedent set forth in
subsections 5.1 and 5.2 hereof, be subject to the conditions precedent that such
Letter of Credit shall be completed in such form as shall be satisfactory to
Chase, in the case of a Letter of Credit issued by Chase, or the Agent and the
Majority Lenders, in the case of a Letter of Credit issued by the Lenders and
that the Borrower shall have executed and delivered such other instruments and
agreements (including, without limitation, any Application) relating to such
Letter of Credit as Chase, in the case of a Letter of Credit issued by Chase, or
the Agent, in the case of a Letter of Credit issued by the Lenders, shall have
reasonably requested.
3.8 REIMBURSEMENT OF COSTS AND EXPENSES. The Borrower agrees to
reimburse the Agent, the Lenders and Chase for any out-of-pocket costs and
expenses incurred by such parties in
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34
connection with the preparation of any Letter of Credit pursuant to a notice
from the Borrower which notice was revoked.
3.9. OBLIGATIONS NOT AFFECTED. Without affecting any rights the
Lenders may have under applicable law (including under the Uniform Customs), the
Borrower agrees that none of the Lenders, the Agent, Chase, nor any of their
respective officers or directors shall be liable or responsible for, and the
obligations of the Borrower to the Lenders, the Agent, and Chase hereunder shall
not in any manner be affected by: (i) the use which may be made of any Letter
of Credit or the proceeds thereof by the beneficiary thereof or any other
Person; (ii) the validity, sufficiency or genuineness of documents other than
the Letters of Credit, or of any endorsement(s) thereon, even if such documents
should, in fact, prove to be in any or all respects, invalid, insufficient,
fraudulent or forged; or (iii) any other circumstances whatsoever in making or
failing to make payment under any Letter of Credit, except that the Borrower
shall have a claim against the Issuer and the Issuer shall be liable to the
Borrower, to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Borrower which are caused by the Issuer's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit complied with the terms of such Letter of
Credit or the Issuer's willful failure to pay under such Letter of Credit after
the presentation to it of documents strictly complying with the terms and
conditions of such Letter of Credit. In furtherance and not in limitation of
the foregoing, the Issuer may accept documents that appear on their face to be
in order without responsibility for further investigation, regardless of any
notice or information to the contrary.
3.10. APPLICATION. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, the
Borrower hereby represents and warrants to the Agent and each Lender that,
except for matters disclosed in the Purchase Agreement (including the schedules
and exhibits thereto) as in effect on the date hereof:
4.1 NO CHANGE. Since March 31, 1994, there has been no event which
has had or could reasonably be expected to have a Material Adverse Effect.
4.2 EXISTENCE; COMPLIANCE WITH LAW. Each of the Borrower and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction
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35
of its organization, (b) has the power and authority, and the legal right, to
own and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign partnership or corporation and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification and (d) except as disclosed in the
Purchase Agreement or the schedules and exhibits thereto, is in compliance with
all Requirements of Law, except, in the case of each of clauses (b), (c) and
(d), to the extent that the failure to have or be so could not reasonably be
expected, in the aggregate, to have a Material Adverse Effect.
4.3 SUBSIDIARIES. The Borrower has no Subsidiaries on the Closing
Date.
4.4 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The Borrower has
the corporate power and authority, and the legal right, to make, deliver and
perform the Purchase Agreement and the Loan Documents to which it is a party and
to borrow hereunder and has taken all necessary corporate action to authorize
the borrowings on the terms and conditions of this Agreement, the Notes and the
Applications and to authorize the execution, delivery and performance of the
Purchase Agreement and the Loan Documents to which it is a party. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required by the Borrower in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of the Purchase Agreement and the Loan
Documents to which the Borrower is a party, other than such as have been duly
made or obtained. This Agreement has been, and each other Loan Document to
which it is a party will be, duly executed and delivered on behalf of the
Borrower. This Agreement constitutes, and each other Loan Document to which it
is a party when executed and delivered will constitute, a legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
4.5 NO LEGAL BAR. Except as disclosed in Schedule V, the execution,
delivery and performance of the Purchase Agreement and the Loan Documents to
which the Borrower is a party, the borrowings hereunder and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of the Borrower or of any of its Subsidiaries and will not result in,
or require, the creation or imposition of any Lien on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
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36
4.6 NO MATERIAL LITIGATION. No litigation or, to the knowledge of
the Borrower, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against the Borrower or any of its Subsidiaries or against any
of its or their respective properties or revenues (a) with respect to the
Purchase Agreement or any of the Loan Documents or any of the transactions
contemplated hereby or thereby or (b) which could reasonably be expected to have
a Material Adverse Effect.
4.7 TAXES. Except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect, each of the Borrower and its
Subsidiaries has filed or caused to be filed all tax returns which, to the
knowledge of the Borrower, are required to be filed and has paid or made
provision for the payment of all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and has
paid all other taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority (other than any the amount or validity of which
are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with generally accepted accounting
principles have been provided on the books of the Borrower or its Subsidiaries,
as the case may be); to the knowledge of the Borrower, no tax Lien has been
filed, and no claim is being asserted, with respect to any such tax, fee or
other charge.
4.8 OWNERSHIP OF PROPERTY; LIENS. Each of the Borrower and its
Subsidiaries has marketable title to, or a valid leasehold interest in, all its
real property, and good title to, or a valid leasehold interest in, all its
other property, and none of such property is subject to any Lien except as
permitted by subsection 7.4.
4.9 FRANCHISES. (a) Schedule IV contains a complete and correct
list, as of the Closing Date, of all of the Franchises held by the Borrower and
its Subsidiaries, in each case together with the expiration date thereof, or for
which applications have been made, or are planned to be made, by the Borrower
and its Subsidiaries.
(b) Except as set forth in Schedule IV, no consents or authorizations
of, filings with, notices to or other acts by or in respect of, any Governmental
Authority are required in order to operate the System or to permit the Borrower
to carry on the business of the System as presently conducted, other than those
the absence of which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
4.10 ABSENCE OF DEFAULT. As of the date of this Agreement, the
Borrower, each of its Subsidiaries and the CSC Parent is in compliance with all
of the provisions of their respective articles of incorporation and by-laws or
other constituent documents, as the case may be, and no event has
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37
occurred, or failed to occur, which has not been remedied or waived, the
occurrence or non-occurrence of which constitutes, or which with the passage of
time or giving of notice or both would constitute, (a) an Event of Default or
(b) a default by the Borrower or any of its Subsidiaries or the CSC Parent under
any material indenture, agreement or other instrument, or any judgment, decree
or order to which the Borrower or any of its Subsidiaries or the CSC Parent is a
party or by which the Borrower or any of its Subsidiaries or the CSC Parent or
any of their respective properties may be bound which default could reasonably
be expected to have a Material Adverse Effect.
4.11 ERISA. To the knowledge of Borrower (i) no Single Employer Plan
has an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and each Plan is in
substantial compliance with ERISA, other than any noncompliance which could not
reasonably be expected to have a Material Adverse Effect; (ii) no material
liability under Subtitle C or D of Title IV of ERISA has been incurred by the
Borrower with respect to any Single Employer Plan and (iii) the Borrower has not
incurred any material withdrawal liability under Subtitle E of Title IV of
ERISA. The Borrower does not maintain or contribute to any Multiemployer Plans.
4.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose which violates the provisions of the
Regulations of such Board of Governors. If requested by any Lender or the
Agent, the Borrower will furnish to the Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 referred to
in said Regulation U.
4.13 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The Borrower 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.
4.14 PURPOSE OF LOANS. The proceeds of the Term Loans shall be used
by the Borrower to finance the acquisition of the System pursuant to the
Purchase Agreement. The Revolving Credit Loans shall be used by the Borrower
for such purpose and general corporate purposes.
4.15 ENVIRONMENTAL MATTERS. Except as set forth on Schedule III:
(a) To the actual knowledge of the Borrower, the facilities and
properties owned, leased or operated by the Borrower or any of its
Subsidiaries (the "PROPERTIES") do not contain any Materials of
Environmental Concern which
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38
have been released in amounts or concentrations which (i) constitute a violation
of, or (ii) could reasonably be expected to give rise to liability under, any
Environmental Law, except in either case insofar as such violation or liability,
or any aggregation thereof, could not reasonably be expected to have a Material
Adverse Effect.
(b) To the actual knowledge of the Borrower, the Properties and all
operations at the Properties are in compliance, and have in the last 3
years been in compliance, in all material respects, with all applicable
Environmental Laws, and there is no contamination at, under or about the
Properties in violation of any Environmental Law with respect to the
Properties or the business operated by the Borrower or any of its
Subsidiaries (the "BUSINESS") which could reasonably be expected to
interfere materially with the continued operation of the Properties or
materially impair the fair saleable value thereof, except in each case
insofar as such violation or failure to comply could not reasonably be
expected to have a Material Adverse Effect.
(c) To the actual knowledge of the Borrower, neither the Borrower nor
any of its Subsidiaries has received any written notice of violation,
alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does the Borrower have
knowledge or reason to believe that any such notice will be received or is
being threatened, except insofar as such notice or threatened notice
referred to in this paragraph, or any aggregation thereof, does not involve
matters that could reasonably be expected to have a Material Adverse
Effect.
(d) To the actual knowledge of the Borrower, Materials of
Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which could
reasonably be expected to give rise to liability under, any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties in
violation of any applicable Environmental Law, except insofar as any such
violation or liability referred to in this paragraph, or any aggregation
thereof, could not reasonably be expected to have a Material Adverse
Effect.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the actual knowledge of the Borrower, threatened, under
any Environmental Law to which the Borrower or any Subsidiary is or will be
named as a party with respect to the Properties or the Business, nor are
there any consent decrees or other decrees, consent orders, administrative
orders or other orders, or other administrative or judicial requirements
outstanding under
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39
any Environmental Law with respect to the Properties or the Business,
except insofar as such proceeding, action, decree, order or other
requirement referred to in this paragraph, or any aggregation thereof,
could not reasonably be expected to have a Material Adverse Effect.
(f) To the actual knowledge of the Borrower, there has been no
release or threat of release of Materials of Environmental Concern at or
from the Properties, or arising from or related to the operations of the
Borrower or any Subsidiary in connection with the Properties or otherwise
in connection with the Business, in violation of Environmental Laws, except
insofar as any such violation or liability referred to in this paragraph,
or any aggregation thereof, could not reasonably be expected to have a
Material Adverse Effect.
4.16 LINES OF BUSINESS. The Borrower and its Subsidiaries are
engaged in no business except for the business of constructing, owning,
altering, repairing, financing, operating, promoting and otherwise exploiting
the System for audio, video and other data applications.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS TO INITIAL EXTENSION OF CREDIT. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, immediately prior to or concurrently with the
making of such extension of credit on the Closing Date, of the following
conditions precedent:
(a) LOAN DOCUMENTS. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of the
Borrower, with a counterpart for each Lender, (ii) for the account of each
Lender, a Revolving Credit Note and/or a Term Note, as appropriate, in each
case conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower, (iii) the Subordination Agreement,
executed and delivered by a duly authorized officer of each Loan Party
which is a party thereto, with a counterpart or a conformed copy for each
Lender, (iv) the Security Agreement, executed and delivered by a duly
authorized officer of the Borrower, with a counterpart or a conformed copy
for each Lender and (v) the Stock Pledge Agreement, executed and delivered
by a duly authorized officer of the CSC Parent, with a counterpart or a
conformed copy for each Lender.
(b) RELATED AGREEMENTS. The Agent shall have received, with a copy
for each Lender, true and correct copies, certified as to authenticity by
the Borrower, of the Purchase Agreement and the Management Agreement.
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(c) CASH FLOW RATIO CERTIFICATE. The Agent shall have received, with
a counterpart for each Lender, a certificate of the Borrower, dated the
Closing Date, setting forth a pro forma calculation of the Cash Flow Ratio
as of the Closing Date after giving effect to the transactions contemplated
hereby and by the Purchase Agreement, executed by a Responsible Officer,
which certificate shall demonstrate a Cash Flow Ratio of not more than 6.5.
(d) CORPORATE PROCEEDINGS OF THE BORROWER. The Agent shall have
received, with copies for each Lender, copies of the resolutions, in form
and substance reasonably satisfactory to the Agent, of the Board of
Directors of the Borrower authorizing (i) the execution, delivery and
performance by the Borrower of this Agreement, the Notes and the other Loan
Documents to which the Borrower is a party, (ii) the borrowings
contemplated hereunder and (iii) the granting by the Borrower of the Liens
created pursuant to the Security Documents, certified by the Secretary or
an Assistant Secretary of the Borrower, as of the Closing Date, which
certificates shall be in form and substance reasonably satisfactory to the
Agent and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(e) CORPORATE PROCEEDINGS OF THE CSC PARENT AND CABLEVISION SYSTEMS
CORPORATION. The Agent shall have received, with counterparts for each
Lender, copies of the resolutions, in form and substance reasonably
satisfactory to the Agent, of the Boards of Directors of the CSC Parent and
Cablevision Systems Corporation authorizing the execution, delivery and
performance of the Loan Documents to which the CSC Parent and Cablevision
Systems Corporation are parties, certified by the Secretary or an Assistant
Secretary of the CSC Parent or Cablevision Systems Corporation, as the case
may be, as of the Closing Date, which certificate shall be in form and
substance reasonably satisfactory to the Agent and shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded.
(f) INCUMBENCY CERTIFICATES. The Agent shall have received, with
counterparts for each Lender, certificates of each of the Borrower, the CSC
Parent, the WP Parent and Cablevision Systems Corporation, dated the
Closing Date, as to the incumbency and signature of the officers or
partners, as the case may be, of each of the Borrower, the CSC Parent, the
WP Parent and Cablevision Systems Corporation executing any Loan Document,
reasonably satisfactory in form and substance to the Agent, executed by the
President or any Vice President and the Secretary or any Assistant
Secretary of the Borrower, the CSC Parent or Cablevision Systems
Corporation, as the case may be, and any partner of the WP Parent.
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41
(g) CONSTITUENT DOCUMENTS. The Agent shall have received, with a
counterpart for each Lender, true and complete copies of the certificate of
incorporation and by-laws, as the case may be, of each of the Borrower, the
CSC Parent and Cablevision Systems Corporation, certified as of the Closing
Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of the Borrower, the CSC Parent and Cablevision Systems
Corporation, as the case may be.
(h) FEES. The Agent shall have received the fees to be received on
the Closing Date referred to in the commitment letter and the fee letter,
each between Cablevision Systems Corporation and Chase and each dated June
10, 1994.
(i) LEGAL OPINIONS. The Agent shall have received, with a copy for
each Lender, the following executed legal opinions:
(i) the executed legal opinion of Sullivan & Cromwell, counsel
to the Borrower and the other Loan Parties, in form and substance
satisfactory to the Agent;
(ii) the executed legal opinion of Robert Lemle, counsel of the
Borrower and the other Loan Parties, in form and substance
satisfactory to the Agent;
(iii) the executed legal opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., local counsel to the Borrower, in form and
substance satisfactory to the Agent;
(iv) the executed legal opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., special FCC counsel to the Borrower, in form
and substance satisfactory to the Agent;
(v) the executed legal opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., special Massachusetts regulatory counsel to
the Borrower, in form and substance satisfactory to the Agent; and
(vi) the executed legal opinion of Stroock & Stroock & Lavan,
counsel to the WP Parent, in form and substance satisfactory to the
Agent.
(j) ACTIONS TO PERFECT LIENS. The Agent shall have received evidence
in form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the filing
of duly executed financing statements on form UCC-1, necessary or, in the
reasonable opinion of the Agent, desirable to perfect
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42
the Liens created by the Security Documents shall have been completed.
(k) LIEN SEARCHES. The Agent shall have received the results of a
recent search by a Person reasonably satisfactory to the Agent, of the
Uniform Commercial Code, judgement and tax lien filings which may have been
filed with respect to personal property of the Borrower, including filings
made both against the Sellers and against the Borrower, and the results of
such search shall be reasonably satisfactory to the Agent.
(l) PLEDGED STOCK; STOCK POWERS. The Agent shall have received the
certificates representing the shares pledged pursuant to the Stock Pledge
Agreement, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof.
(m) INSURANCE. The Agent shall have received evidence, in form and
substance reasonably satisfactory to it, that the Borrower shall have
obtained insurance policies and endorsements satisfying the requirements of
subsection 6.4, including endorsements naming the Agent as loss payee or
additional insured.
(n) ACQUISITION OF SYSTEM. The Lenders shall have received evidence,
in form and substance reasonably satisfactory to them, that (i) all
material conditions precedent to the acquisition of the System, including,
without limitation, all material conditions precedent specified in Section
7 of the Purchase Agreement, shall have been reasonably satisfied in all
material respects, or the Majority Lenders shall have consented to such
failure of such conditions to be satisfied (such consent not to be
unreasonably withheld), (ii) all rights of first refusal to buy the System
shall have been waived and (iii) the acquisition of the System shall have
been accomplished.
(o) CONTRIBUTION OF SYSTEM. The Lenders shall have received
evidence, in form and substance reasonably satisfactory to them, that the
CSC Parent shall have contributed the System to the Borrower as a capital
contribution prior to or immediately upon acquisition by the CSC Parent of
the System.
(p) CAPITALIZATION OF BORROWER. The Lenders shall have received
evidence, in form and substance satisfactory to them, that (i) the CSC
Parent shall have executed and be the obligor under senior subordinated
notes in favor of the Sellers in the amount of $9,732,000, (ii) the CSC
Parent shall have contributed to the Borrower cash equity in an aggregate
amount of at least $4,400,000 and (iii) the Parents shall have made
subordinated loans to the Borrower,
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43
on terms and conditions satisfactory to the Lenders, in an aggregate
principal amount of $1,000,000.
(q) The Agent shall have received a Certificate, executed by a
Responsible Officer, setting forth the Permitted Liens existing as of the
Closing Date.
5.2 CONDITIONS TO EACH EXTENSION OF CREDIT. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Borrower and the other Loan Parties in or pursuant
to the Loan Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date.
(b) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and each Letter of Credit issued on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such Loan that the conditions contained in this subsection 5.2 have
been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Note or any Letter of Credit remains outstanding and
unpaid or any other amount is owing to any Lender or the Agent hereunder, the
Borrower shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Subsidiaries to:
6.1 FINANCIAL STATEMENTS. Furnish to each Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the consolidated balance
sheet of the Borrower and its consolidated Subsidiaries (if any) as at the
end of such year and the related consolidated statements of income and
retained earnings and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, reported on
(except for such projections, which need not be audited) without a "going
concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by KPMG Peat Marwick or other independent
certified public accountants of nationally
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44
recognized standing not unacceptable to the Majority Lenders; and
(b) as soon as available, but in any event not later than 60 days
after the end of each fiscal quarter of the Borrower, the unaudited
consolidated balance sheet of the Borrower and its consolidated
Subsidiaries (if any) as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of
cash flows of the Borrower and its consolidated Subsidiaries for such
quarter and the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the previous
year;
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Lender:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a), a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default, except as specified in such
certificate;
(b) not later than 60 days after the end of each fiscal quarter, a
Compliance Certificate executed by a Responsible Officer (i) stating that,
to the best of such Officer's knowledge, the Borrower during such period
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and in the Notes and
the other Loan Documents to which it is a party to be observed, performed
or satisfied by it, and that such Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate and
(ii) demonstrating compliance with the financial covenants contained herein
during the fiscal quarter covered thereby;
(c) concurrently with the delivery of the financial statements
referred to in subsection 6.1(a) and 6.1(b), a Subscribers Certificate
executed by a Responsible Officer setting forth the information required to
be completed thereby and providing a comparison of the financial results
reflected in such statements against the corresponding figures from (x) the
projections furnished to the Lenders on the Closing Date (in the case of
financial statements
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45
covering fiscal quarters ending on or before December 31, 1994) or (y) the
budget previously furnished to the Lenders pursuant to subsection 6.2(f)
(in the case of financial statements covering fiscal quarters ending after
December 31, 1994);
(d) not later than ten days after the end of each calendar month, a
statement setting forth the principal amount of overdraft loans, if any,
outstanding as of the last Business Day of such calendar month;
(e) within five days after the same are filed, sent or received, as
the case may be, copies of all material filings made with the FCC and any
other Governmental Authority administering the Franchises for the System;
(f) not later than sixty days after the end of each fiscal year of
the Borrower, a copy of the operating budget and cash flow budget of the
Borrower and its Subsidiaries for the succeeding fiscal year; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Continue to
engage in the business of constructing, owning, altering, repairing, financing,
operating, promoting and otherwise exploiting the System for video, audio and
other data applications and preserve, renew and keep in full force and effect
its legal existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business (including, without limitation, all Franchises covering the System)
except as otherwise permitted pursuant to subsection 7.8 or where the failure to
do so could not reasonably be expected to have a Material Adverse Effect; comply
with all Contractual Obligations and Requirements of Law the breach of which
could reasonably be expected to have a Material Adverse Effect, except where the
need to comply therewith is being contested in good faith by appropriate
proceedings and the Borrower or such Subsidiary has set aside adequate reserves
in respect thereof in conformity with generally accepted accounting principles.
6.4 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted; maintain with financially sound and reputable insurance companies
insurance on all its property in at least such amounts and against at least such
risks (but including in any event public liability, product liability and
business interruption) as are usually insured against in the same general area
by companies engaged in the same or a similar business; cause all such
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46
insurance policies to name the Agent as loss payee or additional insured, as the
case may be.
6.5 INTEREST RATE PROTECTION. Enter into one or more Interest Rate
Protection Agreements whereby, directly or indirectly, the Borrower is entitled
to receive from time to time periodic payments calculated by applying a floating
rate of interest on a stated notional amount in exchange for making periodic
payments to the other party thereto calculated by applying a fixed rate of
interest on the same notional amount, satisfactory in form and substance to the
Agent, with one or more Lenders at such time and in such manner to ensure that
no later than 180 days after the Closing Date, at least 40% of the aggregate
principal amount of the Term Loans shall be subject to such Interest Rate
Protection Agreements for a term of at least 36 months.
6.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Keep
proper books of records and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time during normal business hours and as often as may reasonably be desired.
6.7 NOTICES. Promptly give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any litigation, investigation or proceeding which may exist at
any time between the Borrower or any of its Subsidiaries and any
Governmental Authority which could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect;
(d) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to
make any material required contribution to a Plan or the creation of any
Lien in favor of the PBGC or a Plan or (ii) the institution of proceedings
or the taking of any other action by the PBGC or the Borrower or any
Commonly Controlled Entity with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan, which could
reasonably be expected to have a Material Adverse Effect; and
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47
(e) any development or event which could reasonably be expected to
have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth in reasonable detail the occurrence referred
to therein and stating what action the Borrower proposes to take with respect
thereto.
6.8 ENVIRONMENTAL LAWS. (a) Comply with, and seek to ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply with and maintain, and seek to ensure
that all tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably expected to have a
Material Adverse Effect.
SECTION 7. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Revolving Commitments
remain in effect, any Note or any Letter of Credit remains outstanding and
unpaid or any other amount is owing to any Lender or the Agent hereunder, the
Borrower shall not, and (except with respect to subsection 7.1) shall not permit
any of its Subsidiaries to, directly or indirectly:
7.1 FINANCIAL CONDITION COVENANTS.
(a) CASH FLOW RATIO. Permit the Cash Flow Ratio on the last day of
any fiscal quarter ending during any period set forth below to exceed the
ratio set forth opposite such period below:
Period Ratio
Closing Date - March 31, 1995 6.50:1
April 1, 1995 - June 30, 1995 6.25:1
July 1, 1995 - March 31, 1996 6.00:1
April 1, 1996 - March 31, 1997 5.50:1
April 1, 1997 March 31, 1998 5.00:1
Thereafter 4.50:1
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(b) INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio on
the last day of any fiscal quarter ending during any period set forth below
to be less than the ratio set forth opposite such period below:
Period Ratio
------ -----
Closing Date - December 31, 1994 1.75:1
January 1, 1995 - December 31, 1995 2.00:1
January 1, 1996 - December 31, 1996 2.25:1
Thereafter 2.50:1
(c) FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage
Ratio for any two fiscal quarters ending on or after June 30, 1995 to be
less than 1.0:1.
7.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of the Borrower under this Agreement;
(b) Indebtedness of the Borrower to any Subsidiary and of any wholly
owned Subsidiary to any other Subsidiary;
(c) Indebtedness of the Borrower and any of its Subsidiaries in
respect of Capital Leases in an aggregate principal amount not exceeding as
to the Borrower and its Subsidiaries $1,000,000 at any time outstanding;
(d) any Guarantee permitted under subsection 7.3;
(e) Indebtedness arising under Interest Rate Protection Agreements in
respect of the Term Loans;
(f) Indebtedness in respect of the Parents' Loans in an aggregate
principal amount not to exceed $1,000,000 plus accrued interest;
(g) so long as no Default or Event of Default shall have occurred and
be continuing at the time of the incurrence thereof, Indebtedness
subordinated to the obligations of the Borrower hereunder; PROVIDED that
all of the material terms and conditions of such subordinated Indebtedness
shall be reasonably satisfactory to the Agent and the Majority Lenders, as
evidenced by their written approval thereof; and
(h) Indebtedness for overdraft loans in an aggregate amount
outstanding at any time not to exceed $1,000,000.
7.3 LIMITATION ON GUARANTEES. Directly or indirectly (including,
without limitation, by means of causing a bank to open a letter of credit),
guarantee, endorse, contingently agree to purchase or to furnish funds for the
payment or maintenance
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49
of, or otherwise be or become contingently liable upon or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or guarantee the payment of dividends or other distributions upon the
stock or other ownership interests of any Person, or agree to purchase, sell or
lease (as lessee or lessor) property, products, materials, supplies or services
primarily for the purpose of enabling a debtor to make payment of its
obligations or to assure a creditor against loss (any such transaction being
herein called a "GUARANTEE"), except:
(a) any Guarantee in respect of the Letters of Credit; and
(b) endorsements of negotiable instruments for deposit or collection
in the ordinary course of business.
7.4 LIMITATION ON LIENS. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except for:
(a) Permitted Liens;
(b) restrictions on the transfer of assets imposed by the Franchises
in respect of the System or by the Federal Communications Act of 1934; and
(c) Liens created pursuant to the Security Documents.
7.5 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except:
(a) investments in Cash Equivalents;
(b) investments by Subsidiaries of the Borrower in the Borrower and
in other then-existing wholly owned Subsidiaries; and
(c) other investments in an aggregate amount not to exceed $250,000.
7.6 LIMITATION ON MODIFICATIONS OF CERTAIN DOCUMENTS. Amend, modify,
terminate or change the Management Agreement, the Purchase Agreement or any
instrument governing the terms of the Parents' Loans, without the prior written
consent of the Majority Lenders; PROVIDED that the Borrower may without such
prior consent amend any such document or instrument (other than any amendment of
the subordination provisions of the Parents' Loans) to cure any ambiguity or
correct or supplement any provision contained in such document which may be
incomplete or inconsistent with any other provision contained therein so long
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50
as such amendment does not materially adversely affect the interests of the
Lenders. Promptly after execution of any such amendment, the Borrower shall
deliver copies of such amendment to the Agent and the Lenders.
7.7 LIMITATION ON RESTRICTED PAYMENTS. Declare or pay any dividend
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of Capital Stock of the Borrower
or any warrants or options to purchase any such Capital Stock, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary (such declarations, payments, setting apart,
purchases, redemptions, defeasances, retirements, acquisitions and distributions
being herein called "RESTRICTED PAYMENTS"), except that the Borrower and its
Subsidiaries may make any Restricted Payment which is expressly permitted by
subsection 7.12 or 7.15.
7.8 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any one or more wholly owned
Subsidiaries of the Borrower (PROVIDED that the wholly owned Subsidiary or
Subsidiaries shall be the continuing or surviving corporation); and
(b) any wholly owned Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary liquidation
or otherwise) to the Borrower or any other wholly owned Subsidiary of the
Borrower.
7.9 LIMITATION ON SALE OF ASSETS. Voluntarily or involuntarily
convey, sell, lease, assign, transfer or otherwise dispose of any of its
property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person other than the Borrower or any wholly owned Subsidiary, except:
(a) the sale or other disposition of any property in the ordinary
course of business, including, without limitation, the disposition of
inventory or obsolete or worn out property in the ordinary course of
business;
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51
(b) the sale or discount without recourse of accounts receivable
arising in the ordinary course of business in connection with the
compromise or collection thereof;
(c) as permitted by subsection 7.8(b); and
(d) any disposition of assets not otherwise permitted hereunder;
PROVIDED that (i) such disposition is at fair market value, (ii) 100% of
the proceeds from any disposition which gives rise to an obligation to
prepay the Term Loans or reduce the Revolving Commitments pursuant to
clause (iv) below consist of cash, (iii) all such assets disposed of during
any fiscal year shall not in the aggregate have generated more than 10% of
Operating Cash Flow for the fiscal year immediately preceding such fiscal
year and (iv) the Net Cash Proceeds of each such disposition are applied to
the prepayment of the Term Loans (or the Revolving Commitments are reduced
by an amount equal to such Net Cash Proceeds, as the case may be) as
provided in subsection 2.9(c); PROVIDED that no such prepayment shall be
required to be made in respect of the first $250,000 of net proceeds of
dispositions made after the Closing Date.
7.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate;
PROVIDED that nothing in this subsection shall forbid the Borrower from entering
into the Management Agreement and paying Management Fees, G&A Allocations and
Direct Charges thereunder to the extent permitted by subsection 7.12 or making
payments on the Parents' Loans to the extent not prohibited by subsection 7.15.
7.11 LIMITATION ON NEGATIVE PLEDGE CLAUSES. Enter into with any
Person any agreement, other than (a) this Agreement and (b) any industrial
revenue bonds, purchase money mortgages or Capital Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be effective
against the assets financed thereby), which prohibits or limits the ability of
the Borrower or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired.
7.12 LIMITATION ON MANAGEMENT FEES AND G&A ALLOCATIONS. Pay any
Management Fees or G&A Allocations to any Person or permit any Management Fees
to accrue; PROVIDED that (i) Management Fees may accrue (but may not be paid in
cash) pursuant to and in accordance with the Management Agreement in an
aggregate amount during any fiscal year not to exceed 3.5% of the aggregate
revenues of the Borrower and its Subsidiaries during
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52
such fiscal year, (ii) the Borrower may pay G&A Allocations in an aggregate
amount not to exceed $82,000 during fiscal year 1994, $175,000 during fiscal
year 1995, $185,000 during fiscal year 1996, $195,000 during fiscal year 1997,
$205,000 during fiscal year 1998, $215,000 during fiscal year 1999, $225,000
during fiscal year 2000, $235,000 during fiscal year 2001 and $245,000 during
fiscal year 2002 and (iii) the Borrower may pay Direct Charges in conformity
with the Management Agreement.
7.13 LIMITATION ON SALES AND LEASEBACKS. Enter into any arrangement
with any Person providing for the leasing by the Borrower or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Borrower or such Subsidiary.
7.14 LIMITATION ON CHANGES IN FISCAL YEAR. Permit the fiscal year of
the Borrower to end on a day other than December 31.
7.15 LIMITATION ON OPTIONAL PAYMENTS ON PARENTS' LOANS. Make any
principal or cash interest payment on the Parents' Loans at any time (i) when
the Cash Flow Ratio is greater than 5.75 both before and after giving effect to
such payment or (ii) when a Default or an Event of Default shall have occurred
and be continuing either before or after giving effect to such payment.
7.16 LIMITATION ON LINES OF BUSINESS. Enter into any business,
either directly or through any Subsidiary, except for the business of
constructing, owning, altering, repairing, financing, operating, promoting and
otherwise exploiting the System for video, audio and other data applications.
7.17 SUBSIDIARIES. Create or suffer to exist any Subsidiaries
without the prior written consent of the Majority Lenders.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Note or any
Reimbursement Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Note, or any
other amount payable hereunder, within two days after any such interest or
other amount becomes due in accordance with the terms thereof or hereof; or
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53
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document or
which is contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with this
Agreement or any such other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
or
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in Section 7 hereof or
any material agreement contained in the Subordination Agreement; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in paragraphs
(a) through (c) of this Section), and such default shall continue
unremedied for a period of 30 days; or
(e) Any Indebtedness or current trade liabilities of the Borrower or
any Subsidiary in an aggregate principal amount of $300,000 or more,
excluding any current trade payables or Indebtedness for the deferred
purchase price of property or services owed to the Person providing such
property or services as to which the Borrower or such Subsidiary is
contesting its obligation to pay the same in good faith and by proper
proceedings and for which the Borrower or such Subsidiary has established
appropriate reserves (herein called "EXCLUDED DEBT"), shall (i) become due
before stated maturity by the acceleration of the maturity thereof by
reason of default or (ii) become due by its terms and shall not be promptly
paid or extended; or
(f) Any default under any indenture, credit agreement or loan
agreement or other agreement or instrument under which Indebtedness of the
Borrower or any Subsidiary in an aggregate principal amount of $300,000 or
more is outstanding (other than Excluded Debt), or by which any such
Indebtedness is evidenced, shall have occurred and shall continue for a
period of time sufficient to permit the holder or holders of any such
Indebtedness (or a trustee or agent on its or their behalf) to accelerate
the maturity thereof or to enforce any Lien provided for by any such
indenture, agreement or instrument, as the case may be, unless the same
shall have been permanently waived by the respective holder of such
Indebtedness; or
(g) (i) The Borrower or any of its Subsidiaries or either Parent
shall commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
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54
have an order for relief entered with respect to it, or seeking to
adjudicate it bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or the Borrower or
any of its Subsidiaries or any Parent shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Subsidiaries or any Parent in any case, proceeding
or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against the Borrower
or any of its Subsidiaries or any Parent any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its Subsidiaries or
any Parent shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) the Borrower or any of its
Subsidiaries or any Parent shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
or
(h) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA or (iv) any other event
or condition shall occur or exist with respect to a Plan; and in each case
in clauses (i) through (iv) above, such event or condition, together with
all other such events or conditions set forth in clauses (i) through (iv),
if any, could reasonably be expected to have a Material Adverse Effect; or
(i) (i) Final judgments or orders for the payment of money in an
aggregate amount in excess of $100,000 shall be entered against the
Borrower or any of its Subsidiaries by any court, and such judgments or
orders shall continue undischarged and unstayed for a period of 30 days
without having been fully bonded; or
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55
(j) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect, or the Borrower or any other Loan Party which
is a party to any of the Security Documents shall so assert or (ii) the
Lien created by any of the Security Documents shall, for any reason other
than as a result of the actions or inaction of the Agent or any Lender,
cease to be enforceable and of the same effect and priority purported to be
created thereby; or
(k) Any Franchise issued to the Borrower or any of its Subsidiaries
(A) shall be revoked or canceled and such revocation or cancellation shall
not be waived or stayed, (B) expire by its terms and not be renewed or (C)
shall be modified in a manner adverse to the Borrower or such Subsidiary,
which revocation, cancellation or modification pursuant to either clause
(A) or (B) could reasonably be expected to have a Material Adverse Effect;
or
(l) Cablevision Systems Corporation shall cease to own, directly or
indirectly, shares of Capital Stock of the Borrower representing at least
30% of the total ordinary voting power of all shares of Capital Stock of
the Borrower; or
(m) The Management Agreement shall cease to be in full force and
effect, or the Manager or a successor reasonably acceptable to the Majority
Lenders shall cease, regardless of whether such cessation is justified
under the terms of the Management Agreement, to provide the services called
for thereby;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (g) above with respect to the Borrower,
automatically the Revolving Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement (including, without limitation, all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and the Notes
shall immediately become due and payable, and (B) if such event is any other
Event of Default, either or both of the following actions may be taken: (i)
with the consent of the Majority Lenders, the Agent may, or upon the request of
the Majority Lenders, the Agent shall, by notice to the Borrower declare the
Revolving Commitments to be terminated forthwith, whereupon the Commitments
shall immediately terminate; and (ii) with the consent of the Majority Lenders,
the Agent may, or upon the request of the Majority Lenders, the Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) and the Notes to be due and payable
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56
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to the preceding paragraph, the Borrower shall at such time deposit in
a cash collateral account opened by the Agent an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit. The Borrower
hereby grants to the Agent, for the benefit of the Issuer and the Lenders, a
security interest in such cash collateral (and all investments of such amounts
and earnings and proceeds of such investments) to secure all obligations of the
Borrower under this Agreement and the other Loan Documents. The balance in such
cash collateral account from time to time (including all earnings thereon) shall
be invested and reinvested by the Agent in such Cash Equivalents as the Agent
shall from time to time select, and the Borrower hereby authorizes and directs
the Agent to collect and receive any earnings and proceeds of any such
investments and to credit the net amount of all such receipts to such cash
collateral account. Amounts held in such cash collateral account shall be
applied by the Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the Notes. After all such
Letters of Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other obligations of the Borrower
hereunder and under the Notes shall have been paid in full, the balance, if any,
in such cash collateral account shall be returned to the Borrower. The Borrower
shall execute and deliver to the Agent, for the account of the Issuer and the
Lenders, such further documents and instruments as the Agent may request to
evidence the creation and perfection of the within security interest in such
cash collateral account.
Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
SECTION 9. THE AGENT
9.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints Chase as the Agent of such Lender under this Agreement and the other
Loan Documents, and each such Lender irrevocably authorizes Chase, as the Agent
for such Lender, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the
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57
contrary elsewhere in this Agreement, the Agent shall not have any duties or
responsibilities except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
9.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 EXCULPATORY PROVISIONS. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or the Notes or any other Loan
Document or for any failure of the Borrower to perform its obligations hereunder
or thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower. In
particular, the Agent shall have no responsibility to ascertain the amount of
overdraft loans, if any, at any time outstanding, nor shall the Agent have any
liability hereunder arising out of the fact that at any time the outstanding
Revolving Credit Loans and L/C Obligations, when added to any outstanding
overdraft loans, exceed the aggregate Revolving Commitments, unless the Borrower
or the lender of the overdraft loans shall have theretofore notified the Agent
of the amount of overdraft loans outstanding at such time.
9.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower),
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independent accountants and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Agent. The Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Majority Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and the Notes and the other Loan Documents in accordance with a
request of the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
9.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent has received notice from a Lender or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the Agent
receives such a notice, the Agent shall give notice thereof to the Lenders. The
Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Majority Lenders; PROVIDED that unless and
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
9.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereafter taken, including any
review of the affairs of the Borrower, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations,
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property, financial and other condition and creditworthiness of the Borrower.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
9.7 INDEMNIFICATION. The Lenders agree to indemnify the Agent in its
capacity as such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably according to their
respective Committed Percentages in effect on the date on which indemnification
is sought under this subsection (or, if indemnification is sought after the date
upon which the Revolving Commitments shall have terminated and the Loans shall
have been paid in full, ratably in accordance with their Committed Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; PROVIDED that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Notes and all
other amounts payable hereunder.
9.8 AGENT IN ITS INDIVIDUAL CAPACITY. The Agent and its Affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower as though the Agent were not the Agent hereunder and
under the other Loan Documents. With respect to its Loans made or renewed by it
and any Note issued to it and with respect to any Letter of Credit issued or
participated in by it, the Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not the Agent, and the terms "Lender" and "Lenders" shall
include the Agent in its individual capacity.
9.9 SUCCESSOR AGENT. The Agent may resign as Agent upon 10 days'
notice to the Lenders. If the Agent shall resign as Agent under this Agreement
and the other Loan Documents, then the Majority Lenders shall appoint from among
the Lenders a
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successor agent for the Lenders, which successor agent must be approved by the
Borrower, whereupon such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such successor agent
effective upon such appointment and approval, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Agent's resignation as Agent,
the provisions of this subsection shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement and
the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any Note or any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. The Majority Lenders may, or, with the written consent of the
Majority Lenders, the Agent may, from time to time, (a) enter into with the
Borrower written amendments, supplements or modifications hereto and to the
Notes and the other Loan Documents for the purpose of adding any provisions to
this Agreement, the Notes or the other Loan Documents or changing in any manner
the rights of the Lenders or of the Borrower hereunder or thereunder or (b)
waive, on such terms and conditions as the Majority Lenders or the Agent, as the
case may be, may specify in such instrument, any of the requirements of this
Agreement, the Notes or the other Loan Documents or any Default or Event of
Default and its consequences; PROVIDED, HOWEVER, that no such waiver and no such
amendment, supplement or modification shall (i) reduce the amount or extend the
scheduled date of maturity of any Note or of any installment thereof, or reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof or increase the amount or extend the expiration date
of any Lender's Revolving Commitment, in each case without the consent of each
Lender affected thereby, or (ii) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Majority
Lenders, or consent to the assignment or transfer by the Borrower of any of its
rights and obligations under this Agreement and the other Loan Documents or
release all or substantially all of the Collateral, in each case without the
written consent of all the Lenders, or (iii) amend, modify or waive any
provision of Section 9 without the written consent of the then Agent. Any such
waiver and any such amendment, supplement or modification shall apply equally to
each of the Lenders and shall be binding upon the Borrower, the Lenders, the
Agent and all future holders of the Notes. In the case of any waiver, the
Borrower, the Lenders and the Agent shall be restored to their former position
and rights hereunder and under the outstanding Notes and any other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured
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and not continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
10.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or 3 days after being
deposited in the mail, first class postage prepaid, or, in the case of telecopy
notice, when received, addressed as set forth in Schedule I in the case of the
Borrower, the Agent and the Issuer, and as set forth in Schedule II in the case
of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Notes;
PROVIDED that any notice, request or demand to or upon the Agent or the Lenders
pursuant to subsection 2.3, 2.5, 2.8, 2.9, 2.10 or 2.15 shall not be effective
until received.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans hereunder.
10.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay
or reimburse the Agent for all its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement, the Notes and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of one counsel acting for the Agent and the several
Lenders, (b) to pay or reimburse each Lender and the Agent for all its
reasonable costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Notes, the other Loan
Documents and any such other documents, including, without limitation, the
reasonable fees and disbursements of one counsel acting for the Agent and the
several Lenders, and (c) to pay, indemnify, and hold each Lender and the
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62
Agent harmless from, any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, which may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the Notes, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the Agent
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the Notes, the
other Loan Documents, the Purchase Agreement and any such other documents (all
the foregoing in this clause (d), collectively, the "indemnified liabilities"),
PROVIDED, that the Borrower shall have no obligation hereunder to the Agent or
any Lender with respect to indemnified liabilities arising from (i) the gross
negligence or willful misconduct of the Agent or any Lender or (ii) legal
proceedings commenced against the Agent or any Lender by any security holder or
creditor thereof arising out of and based upon rights afforded any such security
holder or creditor solely in its capacity as such. The agreements in this
subsection shall survive repayment of the Notes and all other amounts payable
hereunder.
10.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS. (a)
This Agreement shall be binding upon and inure to the benefit of the Borrower,
the Lenders, the Agent, all future holders of the Notes and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of each Lender.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to any Lender
or, with the prior written consent of the Borrower (which shall not be
unreasonably withheld), to an additional bank or other entity (a "PARTICIPANT")
participating interests in any Loan owing to such Lender, any Note held by such
Lender, the Revolving Commitment of such Lender or any other interest of such
Lender hereunder and under the other Loan Documents. In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender's
obligations under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement and the other Loan Documents, and the Borrower
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents. The Borrower agrees
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that if amounts outstanding under this Agreement and the Notes are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of setoff in respect of its participating interest in amounts owing
under this Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or any Note, PROVIDED that, in purchasing such participating interest,
such Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in subsection 10.7(a) as fully as if it were a
Lender hereunder. The Borrower also agrees that each Participant shall be
entitled to the benefits of subsections 2.17, 2.18, 2.19 with respect to its
participation in the Revolving Commitment and the Loans outstanding from time to
time as if it was a Lender; PROVIDED that, in the case of subsection 2.18, such
Participant shall have complied with the requirements of said subsection and
PROVIDED, FURTHER, that no Participant shall be entitled to receive any greater
amount pursuant to any such subsection than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or, with the prior written consent of the Borrower,
the Agent and, in the case of any such assignment of such Lender's Revolving
Commitment, Chase (which in each case shall not be unreasonably withheld), to an
additional bank or financial institution ("an ASSIGNEE") all or any part of its
rights and obligations under this Agreement and the Notes pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit I, executed by
such Assignee, such assigning Lender (and, in the case of an Assignee that is
not then a Lender, by the Borrower, the Agent and, in the case of any such
assignment of such assigning Lender's Revolving Commitment, Chase) and delivered
to the Agent for its acceptance and recording in the Register, PROVIDED that,
after giving effect to any such assignment, each Lender shall retain Loans
and/or unused Commitments aggregating not less than $10,000,000. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Revolving Commitment as set forth therein, and (y) the assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto).
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(d) The Agent shall maintain at its address referred to in subsection
10.2 a copy of each Assignment and Acceptance delivered to it and a register
(the "REGISTER") for the recordation of the names and addresses of the Lenders
and the Revolving Commitment of, and principal amount of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender, by the Borrower, the Agent and, in the case of an assignment of
Revolving Commitments, Chase), together with payment to the Agent of a
registration and processing fee of $3,000, the Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Borrower.
On or prior to such effective date, the Borrower, at its own expense, shall
execute and deliver to the Agent (in exchange for the Revolving Credit Note or
Term Note of the assigning Lender) a new Revolving Credit Note or Term Note, as
the case may be, to the order of such Assignee in an amount equal to the
Revolving Commitment or Term Loan, as the case may be, assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Revolving Commitment or Term Loan hereunder, a new Revolving Credit Note or Term
Note, as the case may be, to the order of the assigning Lender in an amount
equal to the Revolving Commitment or Term Loan, as the case may be, retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Note replaced thereby.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "TRANSFEREE") and any prospective Transferee,
subject to the provisions of subsection 10.14, any and all financial information
in such Lender's possession concerning the Borrower and its Affiliates which has
been delivered to such Lender by or on behalf of the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of the
Borrower in connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Agreement.
(g) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law, PROVIDED that no such pledge or assignment shall release such Lender from
its obligations hereunder.
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10.7 ADJUSTMENTS; SET-OFF. (a) If any Lender (a "BENEFITTED
LENDER") shall at any time receive any payment of all or part of its Loans or
the Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(g), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans or
the Reimbursement Obligations owing to it, or interest thereon, such benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loans or the Reimbursement
Obligations owing to it, or shall provide such other Lenders with the benefits
of any such collateral, or the proceeds thereof, as shall be necessary to cause
such benefitted Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; PROVIDED, HOWEVER, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the Borrower, any
such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder, under the Applications or under the Notes (whether at the stated
maturity, by acceleration or otherwise) to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the
Borrower. Each Lender agrees promptly to notify the Borrower and the Agent
after any such set-off and application made by such Lender, PROVIDED that the
failure to give such notice shall not affect the validity of such set-off and
application.
10.8 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrower and the Agent.
10.9 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
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remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
10.10 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Agent and the Lenders with respect
to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
10.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail,
return receipt requested, to the Borrower at its address set forth in
subsection 10.2 or at such other address of which the Agent shall have been
notified pursuant thereto, and service so made shall be deemed completed on
the third Business Day after service is deposited in the mail; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
10.13 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS
<PAGE>
67
AGREEMENT OR THE NOTES OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.
10.14 CONFIDENTIALITY. Each Lender agrees to keep confidential any
written or oral information (a) provided to it by or on behalf of the Borrower
or any of its Subsidiaries or any Parent pursuant to or in connection with this
Agreement or (b) obtained by such Lender based on a review of the books and
records of the Borrower or any of its Subsidiaries; PROVIDED that nothing herein
shall prevent any Lender from disclosing any such information (i) to the Agent
or any other Lender, (ii) to any Transferee which agrees to comply with the
provisions of this subsection, (iii) to its employees, directors, agents,
attorneys, accountants and other professional advisors, (iv) upon the request or
demand of any Governmental Authority having jurisdiction over such Lender, (v)
in response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (vi) which has been
publicly disclosed other than in breach of this Agreement, or (vii) in
connection with the exercise of any remedy hereunder.
10.15 INTERCREDITOR MATTERS. (a) Each of the Persons signatory
hereto in its capacity as a creditor of the Borrower (in such capacity, each a
"CREDITOR") or as the Agent, the Issuer or the collateral agent under the
Security Documents (the "COLLATERAL AGENT") hereby agrees as follows:
(i) to comply with the intercreditor provisions provided for herein
and in the Security Documents including, without limitation, those relating
to the disposition of collateral and this subsection 10.15; and
(ii) the claims and rights of the Lenders against the Borrower under
this Agreement and the Notes shall rank at least PARI PASSU in all respects
with the claims and rights against the Borrower of any overdraft lender or
counterparty to an Interest Rate Protection Agreement that, in either case,
is or may become a beneficiary of the Security Documents.
(b) Each of the Persons signatory hereto in its capacity as a
Creditor agrees as follows:
(i) to share with all of the other Creditors, pro rata in accordance
with their respective Distributive Shares (as defined below), all proceeds
at any time received or recovered on or with respect to any of the
Collateral, whether such proceeds are in cash or securities or other
property of any form, and whether such proceeds result from any judicial or
nonjudicial foreclosure sale, or conveyance in lieu of foreclosure, or
distributions, income or other benefits with respect to any of the
Collateral or otherwise. In order to accomplish the sharing provided for
in this paragraph (i), each Person in its capacity as a Creditor
<PAGE>
68
hereby agrees that, notwithstanding anything to the contrary contained in
the Security Documents, any Interest Rate Protection Agreement, all
payments of proceeds of Collateral shall be made to the Collateral Agent
for the ratable benefit of the Creditors, to be held in trust by the
Collateral Agent for each Creditor until the payment in full of the
Obligations (as defined in the Security Agreement) and the termination of
the Revolving Commitments; and
(ii) each Creditor's distributive share of all proceeds realized upon
the Collateral (the "DISTRIBUTIVE SHARE") shall be determined by
multiplying the amount of such proceeds by a fraction, the denominator of
which shall be the aggregate amount of all Obligations outstanding at the
time of such determination, and the numerator of which shall be the
aggregate amount of Obligations owing to such Creditor outstanding at such
time;
(iii) in the event that it shall receive any proceeds of Collateral, it
shall promptly pay the same over to the Collateral Agent in the same form
as received (with such endorsements as may be necessary), and that until
such Creditor shall have made such payment it will hold such proceeds in
trust for the Creditors; and
(iv) if at any time the Collateral Agent shall be required to restore
or return to the Borrower or any other Person any proceeds of Collateral,
or any portion thereof, with respect to which the Collateral Agent shall
have made payment to the Creditors pursuant to paragraph (i) of this
subsection 10.15(b), whether by reason of the insolvency, bankruptcy,
reorganization or other similar event in respect of the Borrower or such
Person or otherwise, then each Creditor shall promptly return to the
Collateral Agent such Creditor's Distributive Share of the proceeds
required to be so returned.
(c) All Persons in their capacity as Creditors agree among themselves
that, with respect to all amounts received by a Creditor by exercise of its
right of set-off or banker's lien or other remedies available to it, equitable
adjustment will be made so that, in effect, all such amounts will be shared
among the Creditors in accordance with each Creditor's Distributive Share. A
Creditor receiving such amount through the exercise of its remedies shall
promptly pay the same over to the Collateral Agent for distribution to the
Creditors pursuant to subsection 10.15(b) hereof and until such Creditor shall
have made such payment to the Collateral Agent such Creditor shall hold such
amount in trust for the benefit of the other Creditors. Each Creditor hereby
agrees to exercise its rights and remedies in respect of the Collateral upon the
instruction of the Majority Creditors (as defined in the Security Agreement).
<PAGE>
69
(d) The Borrower hereby consents to and confirms the arrangements set
forth in this subsection 10.15.
<PAGE>
70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
CABLEVISION OF FRAMINGHAM, INC.
By:
------------------------------------------
Title:
THE CHASE MANHATTAN BANK, N.A.,
as Agent, Issuer and a Lender
By:
------------------------------------------
Title:
CIBC INC.,
as Co-Agent and a Lender
By:
------------------------------------------
Title:
<PAGE>
SCHEDULE I
THE BORROWER, THE AGENT AND THE ISSUER
The Borrower: Cablevision of Framingham, Inc.
c/o Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Attention: Frank Golden
Telecopy: 516-496-1780
The Agent: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, New York 10081
Attention: John Shearson
Telecopy: 212-552-0259
The Issuer: The Chase Manhattan Bank, N.A.
One Chase Plaza
New York, New York 10081
Attention: John Shearson
Telecopy: 212-552-0259
<PAGE>
SCHEDULE II
LENDERS AND COMMITMENT AMOUNTS
<TABLE>
<CAPTION>
REVOLVING TERM LOAN
LENDER ADDRESS COMMITMENT COMMITMENT
- - ------ ------- ---------- ----------
<S> <C> <C> <C>
The Chase Manhattan Bank, N.A. One Chase Manhattan Plaza $3,000,000.00 $10,000,000.00
New York, New York 10081
CIBC Inc. 425 Lexington Avenue $3,000,000.00 $10,000,000.00
6th Floor
New York, New York 10017
$6,000,000.00 $20,000,000.00
------------- --------------
------------- --------------
</TABLE>
<PAGE>
SCHEDULE III
ENVIRONMENTAL MATTERS
None.
<PAGE>
SCHEDULE IV
FRANCHISES
Framingham, Middlesex County, Massachusetts
Southborough, Worcester County, Massachusetts
<PAGE>
SCHEDULE V
LEGAL BARS
None.
<PAGE>
EXHIBIT A
[FORM OF] REVOLVING CREDIT NOTE
$ New York, New York
--------------- June , 1994
---
FOR VALUE RECEIVED, the undersigned, Cablevision of Framingham, Inc., a
Delaware corporation (the "BORROWER"), hereby unconditionally promises to pay to
the order of ________________ (the "LENDER") at the office of The Chase
Manhattan Bank, N.A. located at 1 Chase Manhattan Plaza, New York, New York
10081 ("Chase"), in lawful money of the United States of America and in
immediately available funds, on June 30, 2002 the principal amount of
(a) ________________ DOLLARS ($__________), or, if less, (b) the aggregate
unpaid principal amount of all Revolving Credit Loans made by the Lender to the
Borrower pursuant to subsection 2.1 of the Credit Agreement, as hereinafter
defined. The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time outstanding at
the rates and on the dates specified in subsection 2.12 of such Credit
Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made by the Lender pursuant to the Credit Agreement and
the date and amount of each payment or prepayment of principal thereof, each
continuation of all or a portion thereof as the same Type, each conversion of
all or a portion thereof to another Type and, in the case of Eurodollar Loans,
the length of each Interest Period with respect thereto. Each such endorsement
shall constitute PRIMA FACIE evidence of the accuracy of the information
endorsed. The failure to make any such endorsement shall not affect the
obligations of the Borrower in respect of such Revolving Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in the
Credit Agreement, dated as of June 15, 1994 (as amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among the
Borrower, the Lender, the other banks and financial institutions from time to
time parties thereto, Chase, as agent and CIBC Inc., as co-agent, (b) is subject
to the provisions of the Credit Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in the Credit Agreement.
This Note is secured as provided in the Loan Documents. Reference is hereby
made to the Loan Documents for a description of the properties and assets in
which a security interest has been granted, the terms and
<PAGE>
2
conditions upon which the security interests were granted and the rights of the
holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
CABLEVISION OF FRAMINGHAM, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
EXHIBIT B
[FORM OF] TERM NOTE
$ New York, New York
------------- June , 1994
---
FOR VALUE RECEIVED, the undersigned, Cablevision of Framingham, Inc., a
Delaware corporation (the "BORROWER"), hereby unconditionally promises to pay to
the order of __________________ (the "LENDER") at the office of The Chase
Manhattan Bank, N.A., 1 Chase Manhattan Plaza, New York, New York 10081
("Chase"), in lawful money of the United States of America and in immediately
available funds, the principal amount of _______________________ DOLLARS
($_________). Such principal amount shall be paid in the amounts and on the
dates specified in subsection 2.7 of such Credit Agreement. The Borrower
further agrees to pay interest in like money at such office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in subsection 2.12 of such Credit Agreement.
This Note (a) is one of the Term Notes referred to in the Credit Agreement,
dated as of June 15, 1994 (as amended, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among the Borrower, the Lender, the other
banks and financial institutions from time to time parties thereto, Chase as
agent and CIBC Inc., as co-agent, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is secured as provided in
the Loan Documents. Reference is hereby made to the Loan Documents for a
description of the properties and assets in which a security interest has been
granted, the terms and conditions upon which the security interests were granted
and the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default specified
in the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
<PAGE>
2
Unless otherwise defined herein, terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.
CABLEVISION OF FRAMINGHAM, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
<PAGE>
EXHIBIT C
FORM OF
SECURITY AGREEMENT
CABLEVISION OF FRAMINGHAM, INC.,
BORROWER
THE CHASE MANHATTAN BANK, N.A., AS COLLATERAL AGENT,
SECURED PARTY
DATED AS OF JUNE__, 1994
<PAGE>
Table of Contents
Page
----
1. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . 4
2. Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 5
3.1 Title; No Other Liens. . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Perfected First Priority Liens . . . . . . . . . . . . . . . . . . 5
3.3 Inventory and Equipment. . . . . . . . . . . . . . . . . . . . . . 6
3.4 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Farm Products. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . 6
4. Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Delivery of Instruments and Chattel Paper. . . . . . . . . . . . . 6
4.2 Marking of Records . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Maintenance of Perfected Security Interest;
Further Documentation . . . . . . . . . . . . . . . . . . . . 7
4.4 Changes in Locations, Name, etc. . . . . . . . . . . . . . . . . . 7
4.5 Further Identification of Collateral . . . . . . . . . . . . . . . 8
4.6 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7 Covenants Relating to Accounts Upon Default. . . . . . . . . . . . 8
4.8 Covenants Relating to Patents and Trademarks . . . . . . . . . . . 9
5. Provisions Relating to Accounts. . . . . . . . . . . . . . . . . . . . . 9
5.1 Borrower Remains Liable under Accounts . . . . . . . . . . . . . . 9
5.2 Analysis of Accounts . . . . . . . . . . . . . . . . . . . . . . . 10
5.3 Collections on Accounts. . . . . . . . . . . . . . . . . . . . . . 10
6. Remedies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Notice to Account Debtors and Contract Parties . . . . . . . . . . 11
6.2 Proceeds to be Turned Over To Collateral . . . . . . . . . . . . . 11
6.3 Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . 11
6.4 Code Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Deficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
- i -
<PAGE>
Page
----
7. Collateral Agent's Appointment as Attorney-in-Fact;
Collateral Agent's Performance of Borrower's
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.2 Performance by Collateral Agent of Borrower's
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Borrower's Reimbursement Obligation. . . . . . . . . . . . . . . . 15
7.4 Ratification; Power Coupled With An Interest . . . . . . . . . . . 15
8. Duty of Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . 15
9. Execution of Financing Statements. . . . . . . . . . . . . . . . . . . . 16
10. Collateral Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . 16
(c) Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . 17
(d) Reliance by Collateral Agent . . . . . . . . . . . . . . . . . . . 17
(e) Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . . 18
(f) Non-Reliance on Collateral Agent and Other
Secured Parties. . . . . . . . . . . . . . . . . . . . . . . . . 18
(g) Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 19
(h) Collateral Agent in Its Individual Capacity. . . . . . . . . . . . 19
(i) Successor Collateral Agent . . . . . . . . . . . . . . . . . . . . 19
(j) Authority Vis-a-Vis Borrower . . . . . . . . . . . . . . . . . . . 20
11. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
12. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13. Amendments in Writing; No Waiver; Cumulative
Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.1 Amendments in Writing . . . . . . . . . . . . . . . . . . . . . . 21
13.2 No Waiver by Course of Conduct. . . . . . . . . . . . . . . . . . 21
13.3 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 22
14. Section Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . 22
16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
17. Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 22
- ii -
<PAGE>
Schedules
Schedule 1 - Filings
Schedule 2 - Inventory and Equipment
Schedule 3 - Patents and Patent Licenses
Schedule 4 - Trademarks and Trademark Licenses
- iii -
<PAGE>
SECURITY AGREEMENT, dated as of June __, 1994, made by Cablevision of
Framingham, Inc., a Delaware corporation (the "BORROWER"), in favor of The Chase
Manhattan Bank, N.A. ("Chase"), as Collateral Agent (in such capacity, the
"COLLATERAL AGENT") for (i) the Lenders parties to the Credit Agreement, dated
as of June 15, 1994 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among the Borrower, Chase as Agent, CIBC Inc., as
co-agent, and such Lenders and (ii) the Swap Lenders (as defined below) parties
to any Interest Rate Protection Agreement which may be entered into by the
Borrower in the future (the Lenders and Swap Lenders collectively, the "SECURED
PARTIES").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder;
WHEREAS, in the future certain Lenders (the "SWAP LENDERS") may enter into
Interest Rate Protection Agreements with the Borrower, and net liabilities may
become payable under such Interest Rate Protection Agreements (such amounts
payable, the "NET LIABILITIES");
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans to the Borrower under the Credit Agreement that the
Borrower shall have executed and delivered this Security Agreement to the
Collateral Agent for the ratable benefit of the Lenders; and
WHEREAS, in order to induce the Swap Lenders to enter into their
respective Interest Rate Protection Agreements with the Borrower, the Borrower
wishes to execute and deliver this Security Agreement to the Collateral Agent
for the ratable benefit of the Swap Lenders.
NOW, THEREFORE, in consideration of the premises and to (i) induce the
Agent and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective Loans to the Borrower and (ii) induce the Swap
Lenders to enter into Interest Rate Protection Agreements with the Borrower, the
Borrower hereby agrees with the Collateral Agent, for the ratable benefit of the
Secured Parties, as follows:
<PAGE>
2
1. DEFINED TERMS.
1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are used
herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, General Intangibles, Instruments, Inventory and Proceeds.
(b) The following terms shall have the following meanings:
"ACTIONABLE DEFAULT": the occurrence of any Event of Default or any
default or other event or condition under the Credit Agreement or any Interest
Rate Protection Agreement which permits the relevant Obligations to be
accelerated.
"AGREEMENT": this Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"CODE": the Uniform Commercial Code as from time to time in effect in the
State of New York.
"COLLATERAL": as defined in Section 2 of this Agreement.
"COLLATERAL ACCOUNT": any collateral account established by the Collateral
Agent as provided in subsection 5.3 or subsection 6.2.
"CONTRACTS": (i) the Management Agreement, dated as of _________ __, 1994,
between the Borrower and Cablevision Systems Corporation; (ii) the Asset
Purchase Agreement, dated as of October 26, 1993, between Framingham Cablevision
Associates, Limited Partnership, and Cablevision MFR, Inc., as amended and
assigned to Cablevision of Framingham Holdings Inc., by Amendment No. 1 thereto,
dated as of April 6, 1994, and as further amended by Amendment No. 2 thereto,
dated as of June 3, 1991; and (iii) the Master Agreement, dated as of October
26, 1993, between Cablevision MFR, Inc., Monmouth Cablevision Associates,
Framingham Cablevision Associates Limited Partnership and Riverview Cablevision
Associates, L.P., as amended and assigned to Cablevision of Framingham Holdings
Inc., by Amendment No. 1 thereto, dated as of April 6, 1994, and as further
amended by Amendments No. 2 thereto, dated as of June 3, 1991; and (iv) the
Escrow Agreement, dated as of June __, 1994 by and among Framingham Cablevision
Associates, Limited Partnership, Cablevision of Framingham Holdings, Inc. and
The Bank of New York, as Escrow Agent (the "Escrow Agreement"), as each may be
amended, supplemented or otherwise modified from time to time, including,
without limitation, (a) all rights of the Borrower to receive moneys due and to
become due to it thereunder or in
<PAGE>
3
connection therewith, (b) all rights of the Borrower to damages arising out of
or for breach or default in respect thereof and (c) all rights of the Borrower
to exercise all remedies thereunder.
"MAJORITY SECURED PARTIES": either (a) Secured Parties holding in the
aggregate at least 66 2/3% of the aggregate Obligations or (b) Secured Parties
holding in the aggregate at least 51% of each of the following classes of
outstanding Obligations: (i) the Obligations under the Loan Documents, and (ii)
the Obligations under any Interest Rate Protection Agreements.
"OBLIGATIONS": the collective reference to (i) the unpaid principal of and
interest on the Notes and all other obligations and liabilities of the Borrower
to the Agent and the Lenders (including, without limitation, interest accruing
at the then applicable rate provided in the Credit Agreement after the maturity
of the Loans and the L/C Obligations and interest accruing at the then
applicable rate provided in the Credit Agreement, after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for post-
filing or post-petition interest is allowed in such proceeding), and (ii) net
liabilities and other amounts owing under any Interest Rate Protection
Agreement; whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, any Interest Rate Protection
Agreement, the Applications, this Agreement, the other Loan Documents or any
other document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Collateral Agent, to the Agent, to the
Lenders or to the Swap Lenders that are required to be paid by the Borrower
pursuant to the terms of the Credit Agreement, this Agreement, any Interest Rate
Protection Agreement or any other Loan Document).
"PATENTS": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof, including, without limitation,
any thereof referred to in Schedule 3 hereto, and (b) all applications for
letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without limitation,
any thereof referred to in Schedule 3 hereto.
"PATENT LICENSE": all agreements, whether written or oral, providing for
the grant by or to the Borrower of any right to manufacture, use or sell any
invention covered by a Patent,
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4
including, without limitation, any thereof referred to in Schedule 3 hereto.
"TRADEMARKS": (a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any thereof
referred to in Schedule 4 hereto, and (b) all renewals thereof.
"TRADEMARK LICENSE": means any agreement, written or oral, providing for
the grant by or to the Borrower of any right to use any Trademark, including,
without limitation, any thereof referred to in Schedule 4 hereto.
"UNMATURED DEFAULT": any default or other event or condition which, with
the giving of notice, the lapse of time, or both, would constitute an Actionable
Default.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and section references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, the Borrower hereby grants to the
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in all of the following property now owned or at any time hereafter
acquired by the Borrower or in which the Borrower now has or at any time in the
future may acquire any right, title or interest (collectively, the
"COLLATERAL"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
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5
(e) all General Intangibles, including the Contracts and, to the extent
not prohibited by applicable law, licenses, franchises and other
rights granted by the Federal Communications Commission or any state
or local governmental authority and any proceeds from the transfer
thereof;
(f) all Instruments;
(g) all Inventory;
(h) all Patents;
(i) all Patent Licenses;
(j) all Trademarks;
(k) all Trademark Licenses;
(l) all Franchises, to the extent permitted by any applicable Requirements
of Law;
(m) all books, records, ledgercards, files, correspondence, computer
programs, tapes, disks, and related data processing software (owned by
the Borrower or in which it has an interest) that at any time evidence
or contain information relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or realization
thereupon; and
(n) to the extent not otherwise included, all Proceeds and products of any
and all of the foregoing.
3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants that:
3.1 TITLE; NO OTHER LIENS. Except for the security interest granted to
the Collateral Agent for the ratable benefit of the Secured Parties pursuant to
this Agreement and the other Liens permitted to exist on the Collateral pursuant
to the Credit Agreement, the Borrower owns each item of the Collateral free and
clear of any and all Liens or claims of others. No security agreement,
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as have
been filed in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, pursuant to this Agreement or as are permitted pursuant to the
Credit Agreement.
3.2 PERFECTED FIRST PRIORITY LIENS. The security interests granted
pursuant to this Agreement (a) upon completion of the filings specified on
SCHEDULE 1 attached hereto will constitute
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6
perfected security interests in the Collateral in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, (b) are prior to all other Liens
on the Collateral in existence on the date hereof except for Liens permitted to
exist pursuant to the Credit Agreement and (c) are enforceable as such against
(1) all creditors of and purchasers from the Borrower (except purchasers of
Inventory in the ordinary course of business) and (2) any Person having any
interest in the real property where any of the Equipment is located.
3.3 INVENTORY AND EQUIPMENT. The Inventory and the Equipment of the
Borrower and its Subsidiaries are kept at the locations listed on SCHEDULE 2
hereto.
3.4 CHIEF EXECUTIVE OFFICE. The Borrower's chief executive office and
chief place of business, and the place where it keeps its books and records, is
located at c/o Cablevision Systems Corporation, One Media Crossways, Woodbury,
New York 11797.
3.5 FARM PRODUCTS. None of the Collateral constitutes, or is the Proceeds
of, Farm Products.
3.6 PATENTS AND TRADEMARKS. (a) Schedule 3 hereto includes all Patents and
Patent Licenses owned by the Borrower in its own name as of the date hereof.
Schedule 4 hereto includes all Trademarks and Trademark Licenses owned by the
Borrower in its own name as of the date hereof.
(b) To the best of the Borrower's knowledge, each Patent and Trademark
is valid, subsisting, unexpired, enforceable and has not been abandoned.
(c) Except as set forth in either Schedule 3 or Schedule 4, none of
such Patents and Trademarks is the subject of any licensing or franchise
agreement.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of any
Patent or Trademark.
(e) No action or proceeding is pending seeking to limit, cancel or
question the validity of any Patent or Trademark, or which, if adversely
determined, would have a material adverse effect on the value of any Patent or
Trademark.
4. COVENANTS. The Borrower covenants and agrees with the Collateral Agent
and the Secured Parties that, from and after the date of this Agreement until
this Agreement is terminated and the security interests created hereby are
released:
4.1 DELIVERY OF INSTRUMENTS AND CHATTEL PAPER. If any amount payable
under or in connection with any of the Collateral
<PAGE>
7
shall be or become evidenced by any Instrument or Chattel Paper, such Instrument
or Chattel Paper shall be immediately delivered to the Collateral Agent, duly
indorsed in a manner satisfactory to the Collateral Agent, to be held as
Collateral pursuant to this Agreement.
4.2 MARKING OF RECORDS. The Borrower will mark its books and records
pertaining to the Collateral to evidence this Agreement and the security
interests created hereby.
4.3 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER DOCUMENTATION.
(a) The Borrower shall maintain the security interest created by this Agreement
as a perfected security interest subject only to the Liens permitted to exist
pursuant to the Credit Agreement and shall defend such security interest against
claims and demands of all Persons whomsoever.
(b) At any time and from time to time, upon the written request of the
Collateral Agent, and at the sole expense of the Borrower, the Borrower will
promptly and duly execute and deliver such further instruments and documents and
take such further action (including without limitation all actions required
under the Federal Assignment of Claims Act or any similar state statute) as the
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the security interests created hereby.
4.4 CHANGES IN LOCATIONS, NAME, ETC. The Borrower will not:
(a) permit any of the Inventory or Equipment to be kept at a location other
than those listed on SCHEDULE 2 hereto, unless it shall have given the
Collateral Agent and the Secured Parties at least 30 days' prior written notice
of such change;
(b) change the location of its chief executive office and chief place of
business or the location at which it maintains its books and records from that
specified in subsection 3.4, unless it shall have given the Collateral Agent and
the Secured Parties at least 30 days' prior written notice of such change; or
(c) change its name, identity or corporate structure to such an extent that
any financing statement filed by the Collateral Agent in connection with this
Agreement would become seriously misleading, unless it shall have given the
Collateral Agent and the Secured Parties at least 30 days' prior written notice
of such change.
<PAGE>
8
4.5 FURTHER IDENTIFICATION OF COLLATERAL. The Borrower will furnish to
the Collateral Agent and the Secured Parties from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.
4.6 INDEMNIFICATION. The Borrower agrees to pay, and to save the
Collateral Agent and the Secured Parties harmless from, any and all liabilities,
costs and expenses (including, without limitation, reasonable legal fees and
expenses) (1) with respect to, or resulting from any delay in paying, any and
all excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral, (2) with respect to, or resulting
from, any delay in complying with any Requirement of Law applicable to any of
the Collateral and (3) in connection with any of the transactions contemplated
by this Agreement. In any suit, proceeding or action brought by the Collateral
Agent or any Secured Party under any Account for any sum owing thereunder, the
Borrower will save, indemnify and keep the Collateral Agent and such Secured
Party harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction or liability
whatsoever of the account debtor thereunder, arising out of a breach by the
Borrower of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such account
debtor or its successors from the Borrower.
4.7 COVENANTS RELATING TO ACCOUNTS UPON DEFAULT. At any time after the
occurrence and during the continuation of an Unmatured Default or an Actionable
Default:
(i) the amount represented by the Borrower to the Secured Parties
from time to time as owing by each account debtor or by all account debtors
in respect of the Accounts will at such time be the correct amount actually
owing by such account debtor or debtors thereunder;
(ii) the Borrower will not amend, modify, terminate or waive any
agreement giving rise to an Account in any manner which could reasonably be
expected to materially adversely affect the value of such Account as
Collateral;
(iii) the Borrower will not fail to exercise promptly and diligently
each and every material right which it may have under each agreement giving
rise to an Account (other than any right of termination);
(iv) the Borrower will not fail to deliver to the Collateral Agent a
copy of each material demand, notice or
<PAGE>
9
document received by it relating in any way to any agreement giving rise to
an Account; and
(v) other than in the ordinary course of business as generally
conducted by the Borrower, the Borrower will not grant any extension of the
time of payment of any of the Accounts, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partially,
any Person liable for the payment thereof, or allow any credit or discount
whatsoever thereon.
4.8 COVENANTS RELATING TO PATENTS AND TRADEMARKS. (a) The Borrower will
not, except with respect to any Patents or Trademarks that the Borrower shall
reasonably determine are not, either singularly or in the aggregate, of material
economic value to it, do any act, or omit to do any act, whereby any such
Patents may become abandoned or dedicated or any such Trademarks may become
invalidated.
(b) The Borrower will take all reasonable and necessary steps, including,
without limitation, in any proceeding before the United States Patent and
Trademark Office, or any similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue each material application
(and to obtain the relevant material registration) and to maintain each material
registration of the Patents and Trademarks, including, without limitation,
filing of applications for renewal, affidavits of use and affidavits of
incontestability.
(c) In the event that any Patent or Trademark included in the Collateral is
infringed, misappropriated or diluted by a third party, the Borrower shall
promptly notify the Collateral Agent and the Secured Parties after it learns
thereof and shall, unless the Borrower shall reasonably determine that such
Patent or Trademark is of negligible economic value to the Borrower which
determination the Borrower shall promptly report to the Collateral Agent and the
Secured Parties, promptly sue for infringement, misappropriation or dilution, to
seek injunctive relief where appropriate and to recover any and all damages for
such infringement, misappropriation or dilution, or take such other actions as
the Borrower shall reasonably deem appropriate under the circumstances to
protect such Patent or Trademark.
5. PROVISIONS RELATING TO ACCOUNTS.
5.1 BORROWER REMAINS LIABLE UNDER ACCOUNTS. Anything herein to the
contrary notwithstanding, the Borrower shall remain liable under each of the
Accounts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. Neither the Collateral Agent
<PAGE>
10
nor any Secured Party shall have any obligation or liability under any Account
(or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any Secured Party of any
payment relating to such Account pursuant hereto, nor shall the Collateral Agent
or any Secured Party be obligated in any manner to perform any of the
obligations of the Borrower under or pursuant to any Account (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
5.2 ANALYSIS OF ACCOUNTS. The Collateral Agent shall have the right to
make test verifications of the Accounts in any manner and through any medium
that it reasonably considers advisable, and the Borrower shall furnish all such
assistance and information as the Collateral Agent may require in connection
with such test verifications. At any time and from time to time, upon the
Collateral Agent's request and at the expense of the Borrower, the Borrower
shall cause independent public accountants or others satisfactory to the
Collateral Agent to furnish to the Collateral Agent reports showing
reconciliations, aging and test verifications of, and trial balances for, the
Accounts. The Collateral Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to the
Collateral Agent's satisfaction the existence, amount and terms of any Accounts.
5.3 COLLECTIONS ON ACCOUNTS. (a) The Collateral Agent hereby authorizes
the Borrower to collect the Accounts, subject to the Collateral Agent's
direction and control, and the Collateral Agent may curtail or terminate said
authority at any time after the occurrence and during the continuance of an
Actionable Default. If required by the Collateral Agent at any time after the
occurrence and during the continuance of an Actionable Default, any payments of
Accounts, when collected by the Borrower, (1) shall be forthwith (and, in any
event, within two Business Days) deposited by the Borrower in the exact form
received, duly indorsed by the Borrower to the Collateral Agent if required, in
a Collateral Account maintained under the sole dominion and control of the
Collateral Agent, subject to withdrawal by the Collateral Agent for the account
of the Secured Parties only as provided in subsection 6.3, and (2) until so
turned over, shall be held by the Borrower in trust for the Collateral Agent and
the Secured Parties, segregated from other funds of the Borrower.
<PAGE>
11
(b) Each such deposit of Proceeds of Accounts shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.
(c) At the Collateral Agent's request after the occurrence and during the
continuance of an Actionable Default, the Borrower shall deliver to the
Collateral Agent all original and other documents evidencing, and relating to,
the agreements and transactions which gave rise to the Accounts, including,
without limitation, all original orders, invoices and shipping receipts.
6. REMEDIES.
6.1 NOTICE TO ACCOUNT DEBTORS AND CONTRACT PARTIES. Upon the request of
the Collateral Agent at any time after the occurrence and during the continuance
of an Actionable Default, the Borrower shall notify account debtors on the
Accounts and parties to the Contracts that the Accounts and the Contracts have
been assigned to the Collateral Agent for the ratable benefit of the Secured
Parties and that payments in respect thereof shall be made directly to the
Collateral Agent.
6.2 PROCEEDS TO BE TURNED OVER TO COLLATERAL AGENT. In addition to the
rights of the Collateral Agent and the Secured Parties specified in subsection
5.3 with respect to payments of Accounts, if an Actionable Default shall occur
and be continuing all Proceeds received by the Borrower consisting of cash,
checks and other near-cash items shall be held by the Borrower in trust for the
Collateral Agent and the Secured Parties, segregated from other funds of the
Borrower, and shall, forthwith upon receipt by the Borrower, be turned over to
the Collateral Agent in the exact form received by the Borrower (duly indorsed
by the Borrower to the Collateral Agent, if required) and held by the Collateral
Agent in a Collateral Account maintained under the sole dominion and control of
the Collateral Agent. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by the Borrower in trust for the Collateral Agent and the
Secured Parties) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in subsection 6.3.
6.3 APPLICATION OF PROCEEDS. At such intervals as may be agreed upon by
the Borrower and the Collateral Agent, or, if an Actionable Default shall have
occurred and be continuing, at any time at the direction of the Majority Secured
Parties, the Collateral Agent shall apply all or any part of Proceeds held in
any Collateral Account as follows:
FIRST: To the payment of all costs, expenses, liabilities and
advances made or incurred by the Collateral Agent in connection with the
collection and enforcement of
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12
the Obligations and the sale or other realization upon the Collateral;
SECOND: To each Secured Party in an amount equal to such Secured
Party's pro rata share of unpaid Obligations, to pay the Obligations which
are then due and payable; if such monies shall be insufficient to pay in
full such amounts, then to the payment thereof ratably (without priority of
any one over any other) in proportion to the unpaid amounts thereof; and
THIRD: Any surplus remaining after the termination of this Agreement
shall be paid to the Borrower or its successors or assigns, or to whomever
may be lawfully entitled to receive the same, or as a court of competent
jurisdiction may direct.
6.4 CODE REMEDIES. If an Actionable Default shall occur and be
continuing, the Collateral Agent, on behalf of the Secured Parties may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Collateral Agent, without demand
of performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker's board or office of
the Collateral Agent or any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent or any Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral Agent so
sold, free of any right or equity of redemption in the Borrower, which right or
equity is hereby waived or released. The Borrower further agrees, at the
Collateral Agent's request, to assemble the Collateral and make it available to
the Collateral Agent at places which the Collateral Agent shall reasonably
select, whether at the Borrower's premises or elsewhere. The Collateral Agent
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind
<PAGE>
13
incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Collateral Agent and the Secured Parties hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Collateral Agent may
elect, and only after such application and after the payment by the Collateral
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Collateral Agent account
for the surplus, if any, to the Borrower. To the extent permitted by applicable
law, the Borrower waives all claims, damages and demands it may acquire against
the Collateral Agent or any Secured Party arising out of the exercise by them of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if received by the Borrower at least 10 days before such sale or other
disposition.
6.5 DEFICIENCY. The Borrower shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay the Obligations and the fees and disbursements of any attorneys employed
by the Collateral or any Secured Party to collect such deficiency.
7. COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT; COLLATERAL AGENT'S
PERFORMANCE OF BORROWER'S OBLIGATIONS.
7.1 POWERS. The Borrower hereby irrevocably constitutes and appoints the
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name of
the Borrower or in its own name, from time to time in the Collateral Agent's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, the
Borrower hereby gives the Collateral Agent the power and right, on behalf of the
Borrower, without notice to or assent by the Borrower, to do the following:
(a) in the case of any Account, at any time when the authority of the
Borrower to collect the Accounts has been curtailed or terminated pursuant
to Section 5.3(a), or in the case of any other Collateral, at any time when
any Actionable Default shall have occurred and is continuing, in the name
of the Borrower or its own name, or otherwise, to take possession of and
indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Account, Instrument, or
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14
General Intangible or with respect to any other Collateral and to file any
claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Collateral Agent for the
purpose of collecting any and all such moneys due under any Account,
Instrument or General Intangible or with respect to any other Collateral
whenever payable;
(b) in the case of any Patents or Trademarks, at any time when any
Actionable Default has occurred and is continuing, to execute and deliver
any and all agreements, instruments, documents, and papers as the
Collateral Agent may request to evidence the Collateral Agent's and the
Secured Parties' security interest in any Patent or Trademark and the
goodwill and general intangibles of the Borrower relating thereto or
represented thereby;
(c) at any time when any Actionable Default has occurred and is
continuing, to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Agreement and to pay all or any part of the
premiums therefor and the costs thereof;
(d) to execute, in connection with the sale provided for in Section
6.4 hereof, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(e) upon the occurrence and during the continuance of any Actionable
Default, (1) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Collateral Agent or as the Collateral Agent
shall direct; (2) to ask or demand for, collect, receive payment of and
receipt for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (3) to sign
and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) to commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (5) to defend any suit, action or proceeding brought against
the Borrower with respect to any Collateral; (6) to settle, compromise or
adjust any such suit, action or proceeding and, in connection therewith, to
give such discharges or releases as the Collateral Agent may deem
appropriate; (7) to assign any Patent or Trademark (along with the goodwill
of the business to which any such Patent
<PAGE>
15
or Trademark pertains), throughout the world for such term or terms, on
such conditions, and in such manner, as the Collateral Agent shall in its
sole discretion determine; and (8) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the
Collateral as fully and completely as though the Collateral Agent were the
absolute owner thereof for all purposes, and to do, at the Collateral
Agent's option and the Borrower's expense, at any time, or from time to
time, all acts and things which the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent's
and the Secured Parties' security interests therein and to effect the
intent of this Agreement, all as fully and effectively as the Borrower
might do.
The Collateral Agent agrees that, except upon the occurrence and during the
continuation of an Actionable Default, it will forbear from exercising the power
of attorney or any rights granted to the Collateral Agent pursuant to this
Section 7.1.
7.2 PERFORMANCE BY COLLATERAL AGENT OF BORROWER'S OBLIGATIONS. If the
Borrower fails to perform or comply with any of its agreements contained herein,
the Collateral Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
7.3 BORROWER'S REIMBURSEMENT OBLIGATION. The expenses of the Collateral
Agent incurred in connection with actions undertaken as provided in this
Section, together with interest thereon at a rate per annum equal to 3% above
the Chase Alternate Base Rate, from the date of payment by the Collateral Agent
to the date reimbursed by the Borrower, shall be payable by the Borrower to the
Collateral Agent on demand.
7.4 RATIFICATION; POWER COUPLED WITH AN INTEREST. The Borrower hereby
ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof. All powers, authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement is terminated
and the security interests created hereby are released.
8. DUTY OF COLLATERAL AGENT. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
property for its own account. Neither the Collateral Agent, any Secured Party
nor any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or
<PAGE>
16
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Borrower or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Collateral Agent and the Secured Parties hereunder are solely
to protect the Collateral Agent's and the Secured Parties' interests in the
Collateral and shall not impose any duty upon the Collateral Agent or any
Secured Party to exercise any such powers. The Collateral Agent and the Secured
Parties shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any of their
officers, directors, employees or agents shall be responsible to the Borrower
for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct.
9. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of the
Code, the Borrower authorizes the Collateral Agent to file financing statements
with respect to the Collateral without the signature of the Borrower in such
form and in such filing offices as the Collateral Agent reasonably determines
appropriate to perfect the security interests of the Collateral Agent under this
Agreement. A carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement for filing in any jurisdiction.
10. COLLATERAL AGENT. (a) APPOINTMENT. Each Secured Party by its
acceptance of the benefits hereof hereby irrevocably designates and appoints
Chase as the Collateral Agent of such Secured Party under this Agreement, the
Subordination Agreement and the other Security Documents, and each such Secured
Party irrevocably authorizes Chase, as the Collateral Agent for such Secured
Party, to take such action on its behalf under the provisions of this Agreement,
the Subordination Agreement and the other Security Documents and to exercise
such powers and perform such duties as are expressly delegated to the Agent by
the terms of this Agreement, the Subordination Agreement and the other Security
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Subordination Agreement or any other Security Document, the Collateral Agent
shall not have any duties or responsibilities except those expressly set forth
herein or therein, or any fiduciary relationship with any Secured Party, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement, the Subordination Agreement or
any other Security Document or otherwise exist against the Collateral Agent.
(b) DELEGATION OF DUTIES. The Collateral Agent may execute any of
its duties under this Agreement, the Subordination
<PAGE>
17
Agreement or any other Security Document by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
(c) EXCULPATORY PROVISIONS. Neither the Collateral Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement, the Subordination
Agreement or any other Security Document (except for its or such Person's own
gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Secured Parties for any recitals, statements, representations or
warranties made by the Borrower or any officer thereof contained in this
Agreement, any Interest Rate Protection Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Collateral Agent under or in connection with, any
such documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of any such documents or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Collateral
Agent shall not be under any obligation to any Secured Party to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement, any Interest Rate Protection Agreement or
any other Loan Document, or to inspect the properties, books or records of the
Borrower.
(d) RELIANCE BY COLLATERAL AGENT. The Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Collateral Agent. The Collateral
Agent may deem and treat the payee of any note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Collateral Agent. The Collateral Agent shall be
fully justified in failing or refusing to take any action under this Agreement,
any Interest Rate Protection Agreement, the Subordination Agreement or any other
Security Document unless it shall first receive such advice or concurrence of
the Majority Secured Parties as it deems appropriate or it shall first be
indemnified to its satisfaction by the Secured Parties against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to
<PAGE>
18
take any such action. The Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement, any
Interest Rate Protection Agreement or any other Loan Document in accordance with
a request of the Majority Secured Parties, and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Secured
Parties.
(e) NOTICE OF DEFAULT. The Collateral Agent shall not be deemed to
have knowledge or notice of the occurrence of any Unmatured Default or
Actionable Default under the Credit Agreement or any Interest Rate Protection
Agreement unless the Collateral Agent has received notice from a Secured Party
or the Borrower referring to the relevant agreement, describing such Unmatured
Default or Actionable Default and stating that such notice is a "Notice of
Unmatured default" or "Notice of Actionable Default", as the case may be. In
the event that the Collateral Agent receives such a notice, the Collateral Agent
shall give notice thereof to the Secured Parties. The Collateral Agent shall
take such action with respect to such Unmatured Default or Actionable Default as
shall be reasonably directed by the Majority Secured Parties; PROVIDED that
unless and until the Collateral Agent shall have received such directions, the
Collateral Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Unmatured Default or
Actionable Default as it shall deem advisable in the best interests of the
Secured Parties.
(f) NON-RELIANCE ON COLLATERAL AGENT AND OTHER SECURED PARTIES. Each
Secured Party expressly acknowledges that neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Collateral Agent hereafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Collateral Agent to any Secured Party. Each Secured Party represents to the
Collateral Agent that it has, independently and without reliance upon the
Collateral Agent or any other Secured Party, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its extensions of credit to the Borrower. Each Secured Party also represents
that it will, independently and without reliance upon the Collateral Agent or
any other Secured Party, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
any Interest Rate Protection Agreements and any other Loan Documents, and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition
<PAGE>
19
and creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Secured Parties by the
Collateral Agent hereunder, the Collateral Agent shall not have any duty or
responsibility to provide any Secured Party with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Collateral Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
(g) INDEMNIFICATION. The Secured Parties agree to indemnify the
Collateral Agent in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably
according to their respective pro rata shares of the Obligations in effect on
the date on which indemnification is sought under this subsection, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against the Collateral Agent in any way relating to or arising out of this
Agreement, any Interest Rate Protection Agreements or any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Collateral Agent under or in connection with any of the foregoing;
PROVIDED that no Secured Party shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the Collateral
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Obligations.
(h) COLLATERAL AGENT IN ITS INDIVIDUAL CAPACITY. The Collateral
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Borrower as though the Collateral Agent
were not the Collateral Agent hereunder and under the Subordination Agreement
and the other Security Documents. With respect to the extensions of credit made
by it, the Collateral Agent shall have the same rights and powers under this
Agreement, any Interest Rate Protection Agreements and the other Loan Documents
as any Secured Party and may exercise the same as though it were not the
Collateral Agent, and the terms "Secured Party" and "Secured Parties" shall
include the Collateral Agent in its individual capacity.
(i) SUCCESSOR COLLATERAL AGENT. The Collateral Agent may resign as
Collateral Agent upon 10 days' notice to the Secured Parties. If the Collateral
Agent shall resign as
<PAGE>
20
Collateral Agent under this Agreement, the Subordination Agreement or any other
Security Document, then the Majority Secured Parties shall appoint from among
the Secured Parties a successor agent for the Secured Parties, which successor
agent must be approved by the Borrower, whereupon such successor agent shall
succeed to the rights, powers and duties of the Collateral Agent, and the term
"Collateral Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Collateral Agent's rights, powers and
duties as Collateral Agent shall be terminated, without any other or further act
or deed on the part of such former Collateral Agent or any of the parties to the
Credit Agreement, any Interest Rate Protection Agreements or any other Loan
documents. After any retiring Collateral Agent's resignation as Collateral
Agent, the provisions of this subsection shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Collateral Agent.
(j) AUTHORITY VIS-A-VIS BORROWER. The Borrower acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or non-
exercise by the Collateral Agent of any option, voting right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Collateral Agent and the Secured Parties, be
governed by the above provisions of this Section 10 and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and the Borrower, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Secured Parties with full
and valid authority so to act or refrain from acting, and the Borrower shall be
under no obligation, or entitlement, to make any inquiry respecting such
authority.
11. NOTICES. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand, or 3 days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as provided in subsection 10.2 of the Credit Agreement.
12. 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.
<PAGE>
21
13. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES.
13.1 AMENDMENTS IN WRITING. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except by a
written instrument executed by the Borrower and the Collateral Agent; PROVIDED
that any provision of this Agreement may be waived by the Collateral Agent in a
letter or agreement executed by the Collateral Agent or by telex or facsimile
transmission from the Collateral Agent; and PROVIDED, further, that no such
letter, agreement or instrument shall:
(i) amend, modify or waive any provision of this Section 13.1 without
the written consent of each Secured Party;
(ii) amend or modify the definition of Majority Secured Parties
without the written consent of each Secured Party;
(iii) release any material portion of Collateral without the written
consent of each Secured Party;
(iv) amend, modify or waive any provision of Section 7.3 or the
definition of the term "Obligations" without the written consent of each
Secured Party whose rights would be adversely affected thereby; or
(v) amend, modify or waive any provision of this Agreement so as to
adversely affect any of the Collateral Agent's rights, immunities or
indemnities hereunder or enlarge its duties hereunder, without the written
consent of the Collateral Agent.
13.2 NO WAIVER BY COURSE OF CONDUCT. Neither the Collateral Agent nor any
Secured Party shall by any act (except by a written instrument pursuant to
subsection 13.1 hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Unmatured
Default or Actionable Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Collateral Agent or any Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Collateral Agent or any Secured Party of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Collateral Agent or such Secured Party would otherwise have on
any future occasion.
<PAGE>
22
13.3 REMEDIES CUMULATIVE. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
14. SECTION HEADINGS. The section and subsection headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Borrower and shall inure to the benefit of the
Collateral Agent and the Secured Parties and their successors and assigns.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
17. REGULATORY APPROVALS. (a) Any provision contained herein to the
contrary notwithstanding, no action shall be taken hereunder by the Collateral
Agent with respect to any item of the Collateral unless and until all applicable
requirements (if any) of the Federal Communications Commission under the Federal
Communications Act of 1934, as amended, the Communication Antenna Television
Commission, and the respective rules and regulations thereunder and thereof, as
well as any other federal or state laws, rules and regulations of other
operating municipality regulatory or governmental bodies applicable to or having
jurisdiction over the Borrower, have been satisfied with respect to such action
and there have been obtained such consents, approvals and authorizations (if
any) as may be required to be obtained from the Federal Communications
Commission, the Communication Antenna Television Commission, any operating
municipality and any other governmental authority under the terms of any
franchise, license or similar operating right held by the Borrower and included
in the Collateral. It is the intention of the parties hereto that the Liens in
favor of the Collateral Agent on the Collateral shall in all relevant aspects be
subject to and governed by said statutes, rules and regulations and that nothing
in this Agreement shall be construed to diminish the control exercised by the
Borrower except in accordance with the provisions of such statutory requirements
and rules and regulations. The Borrower agrees that upon request from time to
time by the Collateral Agent it will use its reasonable efforts to obtain any
governmental, regulatory or third party consents, approvals or authorizations
referred to in this Section 17.
(b) THIRD PARTY APPROVALS. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the parties hereto acknowledge
that the exercise of certain remedies by the Collateral Agent with respect to
Collateral of
<PAGE>
23
the type described in paragraphs (c) and (m) of Section 2 may be subject to
limitations on transferability of the Borrower's rights therein contained. The
Borrower agrees that upon request from time to time by the Collateral Agent it
will use its reasonable efforts to obtain any consents necessary to permit such
transfer.
IN WITNESS WHEREOF, the undersigned has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
CABLEVISION OF FRAMINGHAM, INC.
By:_______________________________
Name:
Title:
Acknowledged and Agreed:
THE CHASE MANHATTAN BANK, N.A.,
as Collateral Agent
By:____________________________
Name:
Title:
<PAGE>
SCHEDULE 1
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
Secretary of State's Office, Delaware
Secretary of State's Office, New York
Nassau County, New York
Secretary of State's Office, Massachusetts
Middlesex County, Massachusetts
Worcester County, Massachusetts
(Town of) Framingham, Massachusetts
(Town of) Southborough, Massachusetts
[other locations to be added by closing if necessary]
<PAGE>
SCHEDULE 2
INVENTORY AND EQUIPMENT
Location
--------
Middlesex County, Massachusetts
Worcester County, Massachusetts
(Town of) Framingham, Massachusetts
(Town of) Southborough, Massachusetts
[other locations to be added by closing if necessary]
<PAGE>
SCHEDULE 3
PATENTS AND PATENT LICENSES
Trademarks, service marks, service names, etc., owned by Programmers
that the Borrower has rights to use under contracts pursuant to which the
Borrower purchases programming for use in the System.
<PAGE>
SCHEDULE 4
TRADEMARKS AND TRADEMARK LICENSES
Trademarks, service marks, service names, etc., owned by Programmers
that the Borrower has rights to use under contracts pursuant to which the
Borrower purchases programming for use in the System.
<PAGE>
EXHIBIT D
[FORM OF] BORROWING REQUEST
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Attention: [Name]
[Title]
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to subsection [2.3]
[2.8] of the Credit Agreement, dated as of June 15, 1994 (as amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"),
among Cablevision of Framingham, Inc. (the "BORROWER"), the several lenders from
time to time parties thereto, The Chase Manhattan Bank, N.A., as Agent (the
"AGENT") and CIBC Inc., as co-agent. Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.
The Borrower hereby requests that a [Revolving Credit] [Term] Loan be made
in the aggregate principal amount of $ ___________ on ___________, 19__ as
[Eurodollar Loans having an Interest Period of ___________ months] [and
$________ as] [Chase Alternate Base Rate Loans].
The Borrower hereby acknowledges that, pursuant to subsection 5.2 of the
Credit Agreement, the acceptance by the Borrower of the proceeds of the
[Revolving Credit] [Term]
<PAGE>
The Chase Manhattan Bank, N.A. -2-
Loans requested hereby constitutes a representation and warranty by the Borrower
that, as of the date of such [Revolving Credit] [Term] Loans, each of the
conditions contained in subsection 5.2 of the Credit Agreement has been
satisfied.
Please wire transfer the proceeds of the borrowing requested hereby to the
accounts of the following persons at the financial institutions indicated
respectively:
PERSON TO BE PAID
<TABLE>
<CAPTION>
NAME, ADDRESS, ETC.
AMOUNT TO BE OF TRANSFEREE
TRANSFERRED NAME ACCOUNT NO. LENDER
- - ----------- ---- ----------- -------------
<S> <C> <C> <C>
$__________ ________________ _____________________ ____________________
____________________
Attention:__________
$__________ ________________ _____________________ ____________________
____________________
Attention:__________
Balance of The Borrower _____________________ ____________________
such ____________________
proceeds Attention:__________
</TABLE>
<PAGE>
The Chase Manhattan Bank, N.A. -3-
The Borrower has caused this Borrowing Request to be executed and
delivered, and the representations and warranties contained herein to be made,
on its behalf by a duly authorized Responsible Officer this ____ day of _______,
19___.
CABLEVISION OF FRAMINGHAM, INC.
By: ____________________________
Name:
Title:
<PAGE>
EXHIBIT E
[FORM OF] CONTINUATION/CONVERSION NOTICE
The Chase Manhattan Bank, N.A.
1 Chase Manhattan Plaza
New York, New York 10081
Attention:[Name]
[Title]
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to
subsection 2.10 of the Credit Agreement, dated as of June 15, 1994 (as amended,
supplemented or otherwise modified from time to time made thereto, the "CREDIT
AGREEMENT"), among Cablevision of Framingham, Inc. (the "BORROWER"), the several
lenders from time to time parties thereto, The Chase Manhattan Bank, N.A., as
Agent (the "AGENT") and CIBC Inc., as co-agent. Unless otherwise defined herein
or the context otherwise requires, terms used herein have the meanings provided
in the Credit Agreement.
The Borrower hereby requests that on ___________________, 19__,
[$__________ in principal amount of presently outstanding [Term/Revolving
Credit] Loans which accrue interest based on the Chase Alternate Base Rate be
converted to Eurodollar Loans. The Interest Period for such Eurodollar Loans is
requested to be a ______-month period.] [$______________ in principal amount of
presently outstanding [Term/Revolving Credit] Loans which accrue interest based
on the Eurodollar Rate with an Interest Period ending on ___________________,
19__ be continued as Eurodollar Loans. The Interest Period for such Eurodollar
Loans commencing on the last day of the Interest Period referenced above is
requested to be a ______-month period.] [$____________ in principal amount of
presently outstanding [Term/Revolving Credit] Loans which accrue interest based
on the Eurodollar Rate with an Interest Period ending on ___________________,
19__ be converted to Chase Alternate Base Rate Loans at the end of such Interest
Period.]
[In the case of a conversion to or continuation as a Eurodollar Loan, the
Borrower hereby represents and warrants that no Event of Default has occurred
and is continuing.]
<PAGE>
2
The Borrower has caused this Continuation/Conversion Notice to be
executed and delivered[, and the representations and warranties contained herein
to be made,] on its behalf by a duly authorized Responsible Officer this ___ day
of ________________, 19__.
CABLEVISION OF FRAMINGHAM, N.A.
By:_____________________________
Title:
<PAGE>
EXHIBIT F
[FORM OF] SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT, dated as of __________ __, 1994, among
Cablevision of Framingham, Inc. (the "BORROWER"), Cablevision of Framingham
Holdings, Inc. (the "CSC PARENT"), Warburg, Pincus Investors, L.P. (the "WP
PARENT"), Cablevision Systems Corporation (the "MANAGER") and The Chase
Manhattan Bank, N.A., as agent (the "COLLATERAL AGENT").
W I T N E S S E T H:
WHEREAS, certain banks and other financial institutions (the
"LENDERS") have agreed to extend credit to the Borrower in accordance with and
subject to the terms of the Credit Agreement, dated as of June 15, 1994, among
the Borrower, the Collateral Agent, CIBC Inc., as co-agent and the Lenders (as
the same may be amended, supplemented or otherwise modified from time to time,
the "CREDIT AGREEMENT"; terms defined therein being used herein as therein
defined);
WHEREAS, in the future certain Lenders (the "SWAP LENDERS") may enter
into Interest Rate Protection Agreements with the Borrower, and net liabilities
may become payable under such Interest Note Protection Agreements (such amounts
payable, the "NET LIABILITIES");
WHEREAS, the Borrower has secured its obligations (i) to the
Collateral Agent and the Lenders under the Credit Agreement and (ii) to the Swap
Lenders under any Interest Rate Protection Agreement which may be entered into
in the future by granting to the Collateral Agent, the Lenders and the Swap
Lenders a first priority security interest in substantially all of its assets
under the Security Agreement, dated as of June __, 1994 (as the same may be
amended, supplemented or otherwise modified from time to time, the "SECURITY
AGREEMENT");
WHEREAS, pursuant to the Management Agreement, the Manager has agreed
to render management, supervisory and other services to the Borrower, and the
Borrower has agreed to pay monthly management fees to the Manager and to
reimburse the Manager and the CSC Parent for certain salaries paid and expenses
incurred by the Manager or its affiliates, as the case may be, in rendering such
services;
WHEREAS, the CSC Parent and the WP Parent have made the Parent's Loans
to the Borrower; and
WHEREAS, the Manager has agreed to subordinate its rights to receive
payment of Management Fees under the Management
<PAGE>
2
Agreement and the CSC Parent and the WP Parent have agreed to subordinate their
rights to receive principal, interest and other amounts in respect of the
Parent's Loans, as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto acknowledge and agree as follows:
ARTICLE I
SUBORDINATION
Section 1.1 SUBORDINATION OF DEBT. (a) TERMS. "SENIOR DEBT"
shall mean and include (i) the principal of and interest, including, without
limitation, any interest accruing after the commencement of any case, proceeding
or other action relating to the bankruptcy, insolvency or reorganization of the
Borrower, whether or not a claim for such interest is allowed in any such
action, on the Loans, (ii) net liabilities payable to the Swap Lenders under
Interest Rate Protection Agreements and (iii) all other liabilities of the
Borrower to the Collateral Agent, the Lenders and the Swap Lenders (collectively
the "SENIOR CREDITORS") under the Loan Documents and any Interest Rate
Protection Agreements. "SUBORDINATED DEBT" shall mean (i) the obligation of the
Borrower to pay Management Fees to the Manager under the Management Agreement
and (ii) the obligation of the Borrower to pay the principal of, interest on and
other amounts payable in respect of the Parent's Loans. "MAJORITY SENIOR
CREDITORS" shall have the meaning ascribed to the term "Majority Secured
Parties" in the Security Agreement.
(b) RIGHT TO PAYMENT. The payment of any and all Subordinated Debt
shall be junior and subordinate and subject in right of payment to the prior
payment in full of all Senior Debt.
Section 1.2 PAYMENT IN FULL. For all purposes of this Agreement,
the Senior Debt shall not be deemed to have been paid in full unless (i) the
holders thereof (or their duly authorized representatives) shall have
irrevocably received cash equal to the amount of the Senior Debt at the time
outstanding and (ii) the Revolving Commitments shall have been terminated.
Section 1.3 DEFERRAL OF SUBORDINATED DEBT. The Manager, the WP
Parent and the CSC Parent, as applicable, each agree to permit the deferral of
sums to be paid by the Borrower under the Management Agreement or the Parent's
Loans to the extent necessary to enable the Borrower to comply with the terms of
the Credit Agreement.
Section 1.4 MARKING BOOKS, FINANCIAL STATEMENTS. The Borrower and
the holders of the Subordinated Debt will mark their respective books of account
to show that the Subordinated
<PAGE>
3
Debt is subordinated to the Senior Debt in the manner and to the extent set
forth herein, and will cause their respective financial statements prepared for
delivery to any person to make specific reference to the provisions hereof.
Section 1.5 PAYMENTS ON ACCOUNT OF SUBORDINATED DEBT; COMMENCEMENT
OF PROCEEDINGS. Unless and until all the Senior Debt shall have been paid in
full, the Borrower will not make, and the holders of the Subordinated Debt will
not demand, accept or receive, any direct or indirect payment (in cash,
property, by setoff or otherwise) of or on account of the Subordinated Debt, and
no such payment shall be due, in each case other than payments specifically
permitted by the Credit Agreement and this Subordination Agreement. Unless and
until all the Senior Debt shall have been paid in full, the holders of the
Subordinated Debt will not commence any proceeding against the Borrower or join
with any creditor in any such proceeding, under any bankruptcy, reorganization,
readjustment of debt, arrangement of debt, receivership, liquidation or
insolvency law or statute of the Federal or any state government, unless the
holders of the Senior Debt shall also join in bringing such proceeding.
Section 1.6 PAYMENTS AND DISTRIBUTIONS RECEIVED. If any payment or
distribution of any character (whether in cash, securities or other property) or
any security shall be received by the holders of the Subordinated Debt in
contravention of any of the terms hereof and before all the Senior Debt shall
have been paid in full, such payment or distribution or security shall be held
in trust for the benefit of, and shall be paid over or delivered and transferred
to, the holders of the Senior Debt (or their representatives) for application to
the payment of all the Senior Debt remaining unpaid, to the extent necessary to
pay all such Senior Debt in full. In the event of the failure of the holders of
the Subordinated Debt to endorse or assign any such payment, distribution or
security, the holders of the Senior Debt and such holders' representatives are
hereby irrevocably authorized to endorse or assign the same.
Section 1.7 INSOLVENCY, ETC. In the event of (a) any insolvency or
bankruptcy proceeding, or any receivership, liquidation, reorganization or other
similar proceeding in connection therewith, relative to the Borrower or its
property, or (b) any proceeding for voluntary liquidation, dissolution or other
winding-up of the Borrower, and whether or not involving insolvency or
bankruptcy, or (c) any assignment or receivership for the benefit of creditors,
or (d) any distribution, division, marshalling or application of any of the
properties or assets of the Borrower or the proceeds thereon to creditors,
voluntary or involuntary, and whether or not involving legal proceedings, then
and in any such event:
(i) the Senior Debt shall first be paid in full before any
payment or distribution of any character, whether
<PAGE>
4
in cash, securities or other property, shall be made in respect of the
Subordinated Debt;
(ii) all principal of, premium, if any, and interest on the
Parent's Loans shall forthwith (notwithstanding the terms of Section 1.5
and 1.11) become due and payable, and all accrued Management Fees shall
forthwith (notwithstanding the terms of Section 1.5) become due and
payable, and any payment or distribution of any character, whether in cash,
securities or other property, which would otherwise (but for the terms
hereof) be payable or deliverable by the Borrower in respect of the
Subordinated Debt shall be paid or delivered directly to the holders of the
Senior Debt (or their representatives) ratably according to the respective
aggregate amounts remaining unpaid thereon, until all the Senior Debt shall
have been paid in full, and the holders of the Subordinated Debt at the
time outstanding irrevocably authorize, empower and direct all receivers,
trustees, liquidators, conservators and others having authority in the
premises to effect all such payments and deliveries;
(iii) the holders of the Subordinated Debt at the time outstanding
irrevocably authorize and empower (without imposing any obligation on) each
holder of the Senior Debt at the time outstanding and such holder's
representatives to demand, sue for, collect and receive all such payments
and distributions in respect of the Subordinated Debt and to receipt
therefor, and to file and prove all claims therefor and take all such other
action (including the right to vote the interests of the holders of such
Subordinated Debt) in the name of the holders of the Subordinated Debt or
otherwise, as such Senior Debt holder or such holder's representatives may
determine to be necessary or appropriate for the enforcement of this
Section 1.7;
(iv) the holders of the Subordinated Debt shall execute and
deliver to each holder of the Senior Debt and such holder's representatives
all such further instruments confirming the above authorization, and all
such powers of attorney, proofs of claim, assignments of claim and other
instruments, and shall take all such other action as may be reasonably
requested by such holder or such holder's representatives, in order to
enable such holders to enforce all claims upon or in respect of the
Subordinated Debt; and
(v) payments and distributions received by the holders of the
Senior Debt by reason of the provisions hereof which otherwise would be
paid or distributed to the holders of the Subordinated Debt, shall, as
between the Borrower and its creditors (except the holders of the Senior
Debt), on the one hand, and the holders of the Subordinated Debt, on the
other hand, be deemed to be a payment by the Borrower on account of the
Subordinated Debt.
<PAGE>
5
Section 1.8 EXCESS SENIOR DEBT PAYMENT, SUBROGATION, ETC. If cash,
securities or other property otherwise payable or deliverable to the holders of
the Subordinated Debt shall have been applied, pursuant to Section 1.6 or 1.7,
to the payment of the Senior Debt in full, then and in such case, the holders of
the Subordinated Debt (a) shall be entitled to receive from the holders of the
Senior Debt any payments or distributions received by such Senior Debt holders
in excess of the amount sufficient to pay all Senior Debt in full and (b) shall
be subrogated to any rights of the holders of the Senior Debt to receive all
further payments or distributions applicable to the Senior Debt until all
principal of, premium, if any, and interest on, and all other amounts payable in
respect of, the Subordinated Debt shall have been paid in full. The holders of
the Subordinated Debt shall not exercise any rights of subrogation which they
may have with respect to the Senior Debt, whether pursuant to this Agreement, at
common law or otherwise, until the Senior Debt has been paid in full.
Section 1.9 OBLIGATIONS NOT IMPAIRED. Nothing contained in this
Agreement shall impair, as between the Borrower and the holders of the
Subordinated Debt, the obligation of the Borrower, which is absolute and
unconditional, to pay to the holders thereof the principal thereof, the premium,
if any, and interest and other amounts payable thereon as and when the same
shall become due and payable in accordance with the terms thereof, or shall
prevent the holders of the Subordinated Debt, upon default with respect to the
Subordinated Debt, from exercising all rights, powers and remedies otherwise
provided therein or by applicable law, all subject to the rights, if any, of the
holders of the Senior Debt hereunder to receive cash, securities or other
property otherwise payable or deliverable to the holders of the Subordinated
Debt.
Section 1.10 SUBORDINATION NOT AFFECTED, ETC. The terms of this
Agreement, the subordination effected hereby, and the rights of the holders of
the Senior Debt shall be effective notwithstanding (a) any amendment of or
addition or supplement to the Credit Agreement, the other Loan Documents or the
Interest Rate Protection Agreements relating to the Senior Debt owing to the
Collateral Agent, the Lenders or the Swap Lenders or any instrument or agreement
relating thereto, (b) any exercise or non-exercise of any right, power or remedy
under or in respect of the Senior Debt or any instrument or agreement relating
thereto, (c) any sale, exchange, release or other transaction affecting all or
any part of any property at any time pledged or mortgaged to secure, or however
securing, the Senior Debt or (d) any waiver, consent, release, indulgence,
extension, renewal, modification, delay or other action, inaction or omission,
in respect of any Senior Debt or any instrument or agreement relating thereto
and in any of the cases described in (a) through (d), whether or not the holders
of the Subordinated Debt shall have had notice or knowledge of any of the
foregoing.
<PAGE>
6
Section 1.11 NO ACCELERATION OF PARENT'S LOANS. The Parent's Loans
shall not be accelerated unless (i) the holders of the Senior Debt (or their
duly authorized representatives) shall have irrevocably received cash equal to
the amount of the Senior Debt outstanding and (ii) the Revolving Commitments
have been terminated.
ARTICLE II
MISCELLANEOUS
Section 2.1 RELATIVE RIGHTS; CONFLICT. It is intended that this
Agreement shall not reduce or affect in any manner adverse to the Collateral
Agent, the Lenders or the Swap Lenders the rights granted to them under the Loan
Documents or any other instruments or agreement relating to the Loans or the
Letters of Credit or the Interest Rate Protection Agreements.
Section 2.2 CONSENT TO ASSIGNMENT OF MANAGEMENT AGREEMENT. The
Manager hereby consents to the collateral assignment of the Borrower's rights
and duties under Section 4(f) of the Management Agreement to the Collateral
Agent pursuant to the terms of the Security Agreement.
Section 2.3 NEGATIVE PLEDGE BY PARENTS. Each of the CSC Parent and
the WP Parent hereby covenants that, so long as the Revolving Commitments remain
in effect, any Letter of Credit remains outstanding or any other Senior Debt is
owing to any Senior Creditor, such parent shall not, directly or indirectly,
create, incur, assume or suffer to exist any Lien upon its Capital Stock in the
Borrower.
Section 2.4 AMENDMENTS AND WAIVERS. This Agreement may not be
amended, supplemented, modified or waived except with the prior written consent
of the Borrower, the Manager, the WP Parent, the CSC Parent and the Majority
Senior Creditors, PROVIDED that no such amendment, supplement, modification or
consent shall:
(i) amend, modify or waive any provision of this Section 2.4 without
the written consent of each Senior Creditor;
(ii) amend or modify the definition of Majority Senior Creditors
without the written consent of each Senior Creditor;
(iii) amend, modify or waive the term "Senior Debt" without the written
consent of each Senior Creditor whose rights would be adversely affected
thereby; or
(iv) amend, modify or waive any provision of this Agreement so as to
adversely affect any of the Collateral
<PAGE>
7
Agent's rights, immunities or indemnities hereunder or enlarge its duties
hereunder, without the written consent of the Collateral Agent.
In addition, neither the Management Agreement nor any other document evidencing
any Subordinated Debt may be amended, supplemented, modified, waived or canceled
in any manner without the prior written consent of the Majority Senior
Creditors, unless otherwise expressly permitted by the Credit Agreement.
Section 2.5 AMENDMENT OF AGREEMENTS. The Credit Agreement, the
Interest Rate Protection Agreements and any other Loan Document may be amended
from time to time by the Lenders or the Swap Lenders, as the case may be, and
the Borrower in accordance with the terms thereof without the consent of the
holders of the Subordinated Debt.
Section 2.6 ASSIGNMENT. This Agreement may be assigned by any
Senior Creditor upon any assignment or transfer of the obligation owing to it
which is not otherwise prohibited. The rights and obligations of the Manager
under this Agreement shall be assigned by the Manager upon any assignment or
transfer of its rights and obligations under the Management Agreement which is
permitted under the Credit Agreement.
SECTION 2.7 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
Section 2.8 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 in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
Section 2.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
such separate counterparts shall together constitute but one and the same
instrument.
Section 2.10 CAPTIONS. Captions to Sections and Articles are
provided for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
Section 2.11 ACKNOWLEDGEMENT. The parties hereto hereby acknowledge
that this Agreement is intended to effect the subordination of (i) the Manager's
rights and interests in the Management Agreement and (ii) the CSC Parent's and
WP Parent's rights and interests in the Parent's Loans to the rights and
interests of the Collateral Agent, the Lenders and the Swap Lenders in the
Senior Debt.
<PAGE>
8
IN WITNESS WHEREOF, the parties hereto have executed this
Subordination Agreement as of the day first written above.
CABLEVISION OF FRAMINGHAM, INC.
By ____________________________
Name:
Title:
CABLEVISION SYSTEMS CORPORATION
By _______________________________
Name:
Title:
CABLEVISION OF FRAMINGHAM HOLDINGS, INC.
By _______________________________
Name:
Title:
WARBURG, PINCUS INVESTORS, L.P.
By WARBURG, PINCUS & CO.,
the general partner
By _________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, N.A.,
as Collateral Agent
By _______________________________
Name:
Title:
<PAGE>
EXHIBIT G
CABLEVISION OF FRAMINGHAM, INC.
SUBSCRIBERS CERTIFICATE
_____________, 199_
<TABLE>
<CAPTION>
CURRENT QUARTER | | YEAR TO DATE
| |
FAV. | | FAV.
(UNFAV) | | (UNFAV)
BUDGET ACTUAL VARIANCE | | BUDGET ACTUAL VARIANCE
------ ------ -------- | | ------ ------ --------
| |
P & L | |
<S> <C> <C> <C> | | <C> <C> <C>
RECURRING REVENUE 0 | | 0
OTHER REVENUE 0 | | 0
-------- -------- -------- | | -------- -------- -------
TOTAL REVENUE 0 | | 0
-------- -------- -------- | | -------- -------- -------
| |
GROSS EXPENSES 0 | | 0
CAPITALIZED EXPENSES 0 | | 0
-------- -------- -------- | | -------- -------- -------
NET EXPENSES 0 | | 0
-------- -------- -------- | | -------- -------- -------
________ ________ ________ | | ________ ________ _______
OPERATING INCOME 0 | | 0 0 0
-------- -------- -------- | | -------- -------- -------
| |
MANAGEMENT FEE 0 0 0 | | 0 0 0
| |
-------- -------- -------- | | -------- -------- -------
BANK CASH FLOW 0 | | 0
-------- -------- -------- | | -------- -------- -------
| |
| |
HOMES PASSED 0 | | 0
| |
INSTALLED BASIC SUBSCRIBERS | |
| |
BASIC PENETRATION (1) 0.00% | | 0.00%
| |
PAY UNITS 0 | | 0
PAY TO BASIC RATIO 0.00 | | 0.00
| |
RECURRING REVENUE PER AVERAGE | |
INSTALLED SUBSCRIBER 0.00 | | 0.00
<FN>
| |
(1) INSTALLED BASIC SUBSCRIBERS/HOMES PASSED
</TABLE>
<PAGE>
EXHIBIT I
[FORM OF] ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of June 15, 1994 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among Cablevision of Framingham, Inc., a Delaware corporation (the
"BORROWER"), the several Lenders from time to time parties thereto, The Chase
Manhattan Bank, N.A., as agent (in such capacity, the "AGENT") and CIBC Inc., as
co-agent. Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
_________________________(the "ASSIGNOR") and____________________________
(the "ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), a ___% interest (the "ASSIGNED INTEREST") in
and to the Assignor's rights and obligations under the Credit Agreement with
respect to those credit facilities contained in the Credit Agreement as are set
forth on SCHEDULE 1 (individually, an "ASSIGNED FACILITY"; collectively, the
"ASSIGNED FACILITIES"), in a principal amount for each Assigned Facility as set
forth on SCHEDULE 1.
2. The Assignor (a) 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 or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any other Loan Document or any other instrument or document furnished
pursuant thereto, other than that it has not created any adverse claim upon the
interest being assigned by it hereunder and that such interest is free and clear
of any such adverse claim; (b) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower, any
of its Subsidiaries or any other obligor or the performance or observance by the
Borrower, any of its Subsidiaries or any other obligor of any of their
respective obligations under the Credit Agreement or any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto; and (c)
attaches the Note(s) held by it evidencing the Assigned Facilities and requests
that the Agent exchange such Note(s) for a new Note or Notes payable to the
Assignee and (if the Assignor has retained any interest in the Assigned
Facility) a new Note or Notes payable to the Assignor in the respective amounts
which reflect the assignment being made hereby (and after giving effect to any
other assignments which have become effective on the Effective Date).
<PAGE>
2
3. The Assignee (a) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (b) confirms that it has received
a copy of the Credit Agreement and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (c) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (d) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Agent by the terms thereof, together with such powers as are incidental
thereto; and (e) agrees that it will be bound by the provisions of the Credit
Agreement and will perform in accordance with its terms all the obligations
which by the terms of the Credit Agreement are required to be performed by it as
a Lender including, if it is organized under the laws of a jurisdiction outside
the United States, its obligation pursuant to paragraph 2.18 of the Credit
Agreement.
4. The effective date of this Assignment and Acceptance shall be__________
________ ____, 19_____(the "EFFECTIVE DATE"). Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
it and recording by the Agent pursuant to subsection 10.6 of the Credit
Agreement, effective as of the Effective Date (which shall not, unless otherwise
agreed to by the Agent, be earlier than five Business Days after the date of
such acceptance and recording by the Agent).
5. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignee whether
such amounts have accrued prior to the Effective Date or accrue subsequent to
the Effective Date. The Assignor and the Assignee shall make all appropriate
adjustments in payments by the Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
6. From and after the Effective Date, (a) the 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 and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
<PAGE>
Schedule 1
To Assignment And Acceptance
Relating To The Credit Agreement, Dated As Of June 15, 1994,
Among
Cablevision Of Framingham, Inc.
The Lenders Named Therein,
The Chase Manhattan Bank, N.A., As Agent
For The Lenders (In Such Capacity, The "Agent")
And
Canadian Imperial Bank Of Commerce,
As Co-agent For The Lenders
- - ------------------------------------------------------------------------------
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Revolving Commitment
Credit Principal or Term Loan
Facility Assigned Amount Assigned Percentage Assigned (1)
------------------- ---------------- -------------------------
[Specify Revolving $_________________ _____.__________________%
Credit Facility or
Term Loan
Facility]
[Name of Assignee] [Name of Assignor]
By________________________ By___________________________
Name: Name:
Title: Title:
___________________________
(1) Calculate the percentage that is assigned to at least 15 decimal places and
show as a percentage of the aggregate revolving commitments or term loans of
all Lenders.
<PAGE>
2
Accepted for Recording in the [Consented (2) To:
Register:
The Chase Manhattan Bank, Cablevision of Framingham,
N.A., as Agent Inc.
By _______________________ By _______________________
Name: Name:
Title: Title:
The Chase Manhattan Bank, N.A.
as Agent
By _______________________
Name:
Title: ]
[Name of each L/C Issuer] (3)
By ______________________
Name:
Title:
_______________________
(2) Consents required if Assignee is not a Lender.
(3) Consent of L/C Issuer(s) required only if an assignment of
revolving commitments.
<PAGE>
EXHIBIT J
FORM OF
STOCK PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of June __, 1994, made by Cablevision of
Framingham Holdings, Inc., a Delaware corporation (the "PLEDGOR") in favor of
The Chase Manhattan Bank, N.A. ("CHASE") as collateral agent (in such capacity,
the "COLLATERAL AGENT") for the Lenders parties to the Credit Agreement, dated
as of June 15, 1994 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among Cablevision of Framingham, Inc., a Delaware
corporation (the "BORROWER"), The Chase Manhattan Bank, N.A., as agent (in such
capacity, the "Agent") and CIBC Inc., as co-agent (in such capacity, the "Co-
Agent") and such Lenders, and (ii) the Swap Lenders (as defined below) parties
to any Interest Rate Protection Agreement which may be entered into by the
Borrower in the future (the Lenders and Swap Lenders collectively, the "SECURED
PARTIES").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower under the Credit Agreement;
WHEREAS, it is a condition precedent to the obligation of the Lenders to
make their respective Loans to the Borrower under the Credit Agreement that the
Pledgor shall have executed and delivered this Pledge Agreement to the
Collateral Agent for the ratable benefit of the Lenders;
WHEREAS, the Pledgor is the parent of the Borrower, and it is to the
advantage of the Pledgor that the Lenders make the Loans to the Borrower; and
WHEREAS, in order to induce the Swap Lenders to enter into their
respective Interest Rate Protection Agreements with the Borrower, the Borrower
wishes to execute and deliver this Pledge Agreement to the Collateral Agent for
the ratable benefit of the Swap Lenders.
WHEREAS, the Pledgor is the legal and beneficial owners of the shares of
Pledged Stock (as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and to (i) induce the
Collateral Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their
<PAGE>
2
respective Loans to the Borrower and (ii) induce the Swap Lenders to enter into
Interest Rate Protection Agreements with the Borrower, the Pledgor hereby agrees
with the Agent, for the ratable benefit of the Secured Parties, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement.
(b) The following terms shall have the following meanings:
"ACTIONABLE DEFAULT": the occurrence of any Event of Default or any
default or other event or condition under the Credit Agreement or any Interest
Rate Protection Agreement which permits the relevant Obligations to be
accelerated.
"AGREEMENT": this Pledge Agreement, as the same may be amended, modified or
otherwise supplemented from time to time.
"CODE": the Uniform Commercial Code from time to time in effect in the
State of New York.
"COLLATERAL": the Pledged Stock and all Proceeds.
"COLLATERAL ACCOUNT": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Collateral Agent, subject
to withdrawal by the Collateral Agent for the account of the Secured Parties
only as provided in Section 9(a).
"MAJORITY SECURED PARTIES": either (a) Secured Parties holding in the
aggregate at least 66 2/3% of the aggregate Obligations or (b) Secured Parties
holding in the aggregate at least 51% of each of the following classes of
outstanding Obligations: (i) the Obligations under the Loan Documents and (ii)
the Obligations under any Interest Rate Protection Agreements.
"OBLIGATIONS": as defined in the Security Agreement.
"PLEDGED STOCK": the shares of capital stock listed on SCHEDULE 1 hereto,
together with all stock certificates, options or rights of any nature whatsoever
that may be issued or granted by the Borrower to the Pledgor while this
Agreement is in effect.
"PROCEEDS": all "proceeds" as such term is defined in Section 9-306(1) of
the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, shall include, without limitation, all dividends or
other income from the Pledged Stock, collections thereon or distributions with
respect thereto.
<PAGE>
3
"SECURITIES ACT": the Securities Act of 1933, as amended.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section references are to
this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. GUARANTEE. (a) Subject to the provisions of Sections 2(b) and 2(c)
below, the Pledgor hereby unconditionally and irrevocably guarantees to the
Collateral Agent, for the ratable benefit of the Secured Parties and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.
(b) The Pledgor shall have no personal liability for payment of the
Obligations, and in any action or suit to collect the Obligations, the
Collateral Agent and the Secured Parties shall not seek any IN PERSONAM judgment
against the Pledgor or any judgment for a deficiency but shall look solely to
the security interests hereunder and under the other Security Documents and the
collateral described herein and therein for payment of the Obligations. Nothing
contained in this Section shall be construed to impair the validity of the
Obligations or any of the Security Documents or affect or impair in any way the
right of the Collateral Agent and the Secured Parties to exercise their rights
and remedies under the Credit Agreement, the Notes, this Agreement, any Interest
Rate Protection Agreement and any other Loan Documents in accordance with their
terms.
(c) The maximum liability of the Pledgor hereunder shall in no event
exceed the amount which can be guaranteed by the Pledgor under applicable
federal and state laws relating to the insolvency of debtors.
3. PLEDGE; GRANT OF SECURITY INTEREST. The Pledgor hereby delivers to the
Collateral Agent, for the ratable benefit of the Secured Parties, all the
Pledged Stock owned by the Pledgor and hereby grants to Collateral Agent, for
the ratable benefit of the Secured Parties, a first security interest in the
Collateral, as collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations.
4. STOCK POWERS. Concurrently with the delivery to the Collateral Agent
of each certificate representing one or more
<PAGE>
4
shares of Pledged Stock to the Collateral Agent, the Pledgor shall deliver an
undated stock power covering such certificate, duly executed in blank by the
Pledgor with, if the Collateral Agent so requests, signature guaranteed.
5. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
that:
(a) the Pledgor has the corporate power and authority and the legal right
to execute and deliver, to perform its obligations under, and to grant the
security interest in the Collateral pursuant to, this Agreement and has taken
all necessary corporate action to authorize its execution, delivery and
performance of, and grant of the security interest in the Collateral pursuant
to, this Agreement.
(b) This Agreement constitutes a legal, valid and binding obligation of
the Pledgor, enforceable in accordance with its terms, and upon delivery to the
Collateral Agent of the stock certificates evidencing the Pledged Stock owned by
the Pledgor, the security interest created pursuant to this Agreement will
constitute a valid, perfected first priority security interest in the
Collateral, enforceable in accordance with its terms against all creditors of
the Pledgor and any Persons purporting to purchase any Collateral from the
Pledgor, except in each case as enforceability may be affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(c) The execution, delivery and performance of this Agreement will not
violate any provision of any Requirement of Law or Contractual Obligation of the
Pledgor and will not result in the creation or imposition of any Lien on any of
the properties or revenues of the Pledgor pursuant to any Requirement of Law or
Contractual Obligation of the Pledgor, except the security interest created by
this Agreement.
(d) No consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder or creditor of the
Pledgor), is required in connection with the execution, delivery, performance,
validity or enforceability of this Agreement.
(e) No litigation, investigation or proceeding of or before any arbitrator
or Governmental Authority is pending or, to the knowledge of the Pledgor,
threatened by or against the Pledgor or against any of its properties or
revenues with respect to this Agreement or any of the transactions contemplated
hereby.
<PAGE>
5
(f) The shares of Pledged Stock listed on Schedule I constitute all the
issued and outstanding shares of all classes of the capital stock of the
Borrower.
(g) All the shares of the Pledged Stock have been duly and validly issued
and are fully paid and nonassessable.
(h) The Pledgor is the record and beneficial owner of, and has good and
marketable title to, the Pledged Stock, free of any and all Liens or options in
favor of, or claims of, any other Person, except the security interest created
by this Agreement.
6. COVENANTS. The Pledgor covenants and agrees with the Collateral Agent
and the Secured Parties that, from and after the date of this Agreement until
this Agreement is terminated and the security interests created hereby are
released:
(a) If the Pledgor shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof,
the Pledgor shall accept the same as the agent of the Collateral Agent and the
Secured Parties, hold the same in trust for the Collateral Agent and the Secured
Parties and deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by the Pledgor to the Collateral Agent, if required,
together with an undated stock power covering such certificate duly executed in
blank by the Pledgor and with, if the Collateral Agent so requests, signature
guaranteed, to be held by the Collateral Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid upon or in
respect of the Pledged Stock upon the liquidation or dissolution of the Borrower
shall be paid over to the Collateral Agent to be held by it hereunder as
additional collateral security for the Obligations and in case any distribution
of capital shall be made on or in respect of the Pledged Stock or any property
shall be distributed upon or with respect to the Pledged Stock pursuant to the
recapitalization or reclassification of the capital of the Borrower or pursuant
to the reorganization thereof, the property so distributed shall be delivered to
the Collateral Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged Stock shall be received by the Pledgor,
the Pledgor shall, until such money or property is paid or delivered to the
Collateral Agent, hold such money or property in trust for the
<PAGE>
6
Secured Parties, segregated from other funds of the Pledgor, as additional
collateral security for the Obligations.
(b) Without the prior written consent of the Collateral Agent, the Pledgor
will not (1) vote to enable, or take any other action to permit, the Borrower to
issue any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of the Borrower, (2) sell,
assign, transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, (3) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Collateral, or any interest therein, except for the security interest created by
this Agreement or (4) enter into any agreement or undertaking restricting the
right or ability of the Pledgor or the Collateral Agent to sell, assign or
transfer any of the Collateral.
(c) The Pledgor shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such security
interest against claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of the Collateral Agent, and at the
sole expense of the Pledgor, the Pledgor will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
the Collateral Agent may reasonably request for the purposes of obtaining or
preserving the full benefits of this Agreement and of the rights and powers
herein granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other instrument
or chattel paper, such note, instrument or chattel paper shall be immediately
delivered to the Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent, to be held as Collateral pursuant to this Agreement.
(d) The Pledgor shall pay, and save the Collateral Agent and the Secured
Parties harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other taxes which
may be payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Agreement.
7. CASH DIVIDENDS; VOTING RIGHTS. Unless an Actionable Default shall have
occurred and be continuing and the Collateral Agent shall have given notice to
the Pledgor of the Collateral Agent's intent to exercise its corresponding
rights pursuant to Section 8 below, the Pledgor shall be permitted to receive
all cash dividends paid in the normal course of business of the Borrower and
consistent with past practice in respect of the
<PAGE>
7
Pledged Stock owned by the Pledgor and to exercise all voting and corporate
rights with respect to such Pledged Stock; PROVIDED, HOWEVER, that no vote shall
be cast or corporate right exercised or other action taken which, in the
Collateral Agent's reasonable judgment, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, the Notes, this Agreement, any Interest Rate Protection
Agreement or any other Loan Document.
8. RIGHTS OF THE SECURED PARTIES AND THE COLLATERAL AGENT. (a) All money
Proceeds received by the Collateral Agent hereunder shall be held by the
Collateral Agent for the benefit of the Secured Parties in a Collateral Account.
All Proceeds while held by the Collateral Agent in a Collateral Account (or by
the Pledgor in trust for the Collateral Agent and the Secured Parties) shall
continue to be held as collateral security for all the Obligations and shall not
constitute payment thereof until applied as provided in Section 9(a).
(b) If an Actionable Default shall occur and be continuing and the
Collateral Agent shall give notice of its intent to exercise such rights to the
Pledgor, (a) the Collateral Agent shall have the right to receive any and all
cash dividends paid in respect of the Pledged Stock and make application thereof
to the Obligations in such order as the Collateral Agent may determine, and (b)
all shares of the Pledged Stock shall be registered in the name of the
Collateral Agent or its nominee, and the Collateral Agent or its nominee may
thereafter exercise (1) all voting, corporate and other rights pertaining to
such shares of the Pledged Stock at any meeting of shareholders of the Borrower
or otherwise and (2) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to such shares of the
Pledged Stock as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Stock upon the merger, consolidation, reorganization, recapitalization or other
fundamental change in the corporate structure of the Borrower, or upon the
exercise by the Pledgor or the Collateral Agent of any right, privilege or
option pertaining to such shares of the Pledged Stock, and in connection
therewith, the right to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as the Collateral Agent may determine),
all without liability except to account for property actually received by it,
but the Collateral Agent shall have no duty to the Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
9. REMEDIES. (a) If an Actionable Default shall have occurred and be
continuing, at any time at the Collateral Agent's election, the Collateral Agent
may apply all or any part of
<PAGE>
8
Proceeds held in any Collateral Account in payment of the Obligations in such
order as the Collateral Agent may elect.
(b) If an Actionable Default shall occur and be continuing, the Collateral
Agent, on behalf of the Secured Parties, may exercise, in addition to all other
rights and remedies granted in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, the Collateral Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Pledgor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker's board or office of the
Collateral Agent or any Secured Party or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
The Collateral Agent or any Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Pledgor, which right or equity is
hereby waived or released. The Collateral Agent shall apply any Proceeds from
time to time held by it and the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred in respect thereof or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Collateral Agent and the Secured Parties
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Collateral Agent, to the payment in whole or in
part of the Obligations, in such order as the Collateral Agent may elect, and
only after such application and after the payment by the Collateral Agent of any
other amount required by any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code, need the Collateral Agent account for the
surplus, if any, to the Pledgor. To the extent permitted by applicable law, the
Pledgor waives all claims, damages and demands they may acquire against the
Collateral Agent or any Secured Party arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days
<PAGE>
9
before such sale or other disposition. The Pledgor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
Code.
10. REGISTRATION RIGHTS; PRIVATE SALES. (a) If the Collateral Agent
shall determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 9 hereof, and if in the opinion of the Collateral Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the Pledgor will
cause the Borrower to (1) execute and deliver, and cause the directors and
officers of the Borrower to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as may be, in the
opinion of the Collateral Agent, necessary or advisable to register the Pledged
Stock, or that portion thereof to be sold, under the provisions of the
Securities Act, (2) to use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or that
portion thereof to be sold, and (3) to make all amendments thereto and/or to the
related prospectus which, in the opinion of the Collateral Agent, are necessary
or advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto. The Pledgor agrees to cause the Borrower to comply with the provisions
of the securities or "Blue Sky" laws of any and all jurisdictions which the
Collateral Agent shall designate and to make available to their security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
(b) The Pledgor recognizes that the Collateral Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Collateral
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Borrower to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if the Borrower would agree to do so.
<PAGE>
10
(c) The Pledgor further agrees to use their best efforts to do or cause to
be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this Section valid and
binding and in compliance with any and all other applicable Requirements of Law.
The Pledgor further agrees that a breach of any of the covenants contained in
this Section will cause irreparable injury to the Collateral Agent and the
Secured Parties, that the Collateral Agent and the Secured Parties have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section shall be specifically
enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Actionable Default has occurred.
11. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO BORROWER. The Pledgor
hereby authorizes and instructs the Borrower to comply with any instruction
received by it from the Collateral Agent in writing that (a) states that an
Actionable Default has occurred and (b) is otherwise in accordance with the
terms of this Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Borrower shall be fully protected in so
complying.
12. NO SUBROGATION.
Notwithstanding anything to the contrary in this Agreement, the Pledgor
hereby irrevocably waives all rights which may have risen in connection with
this Agreement to be subrogated to any of the rights (whether contractual, under
the Bankruptcy Code, including Section 509 thereof, under common law or
otherwise) of the Collateral Agent or the Secured Parties against the Borrower
or against any collateral security or guarantee or right of offset held by the
Collateral Agent or the Secured Parties for the payment of the Obligations. The
Pledgor hereby further irrevocably waives all contractual, common law, statutory
or other rights of reimbursement, contribution, exoneration or indemnity (or any
similar right) from or against the Borrower or any other Person which may have
arisen in connection with this Agreement. So long as the Obligations remain
outstanding, if any amount shall be paid or on behalf of the Borrower to the
Pledgor on account of any of the rights waived in this Section, such amount
shall be held by the Pledgor in trust, segregated from other funds of the
Pledgor, and shall, forthwith upon receipt by the Pledgor, be turned over to the
Collateral Agent for the ratable benefit of the Secured Parties in the exact
form received by the Pledgor (duly indorsed by the Pledgor to the Collateral
Agent, if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Collateral Agent may determine. The provisions
of this Section shall survive the term of this Agreement and the payment in full
of the
<PAGE>
11
Obligations and the termination of the Term Loan Commitment and Revolving
Commitments.
13. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF RIGHTS.
(a) The Pledgor shall remain obligated hereunder, and the Collateral shall
remain subject to the security interests granted hereby, notwithstanding that,
without any reservation of rights against the Pledgor, and without notice to or
further assent by the Pledgor, any demand for payment of any of the Obligations
made by the Collateral Agent or any Secured Party may be rescinded by the
Collateral Agent or such Secured Party, and any of the Obligations continued,
and the Obligations, or the liability of the Borrower or any other Person upon
or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered, or released by the Collateral Agent or any Secured Party, and the
Credit Agreement, the Notes, any Interest Rate Protection Agreement, the other
Loan Documents and any other documents executed and delivered in connection
therewith may be amended, modified, supplemented or terminated, in whole or
part, as the Secured Parties may deem advisable from time to time, and any
guarantee, right of offset or other collateral security at any time held by the
Collateral Agent or any Secured Party for the payment of the Obligations may be
sold, exchanged, waived, surrendered or released. Neither the Collateral Agent
nor any Secured Party shall have any obligation to protect, secure, perfect or
insure any other Lien at any time held by it as security for the Obligations or
any property subject thereto. The Pledgor waives any and all notice of the
creation, renewal, extension or accrual of any of the Obligations and notice of
or proof of reliance by the Collateral Agent or any Secured Party upon this
Agreement; the Obligations, and any of them, shall be deemed conclusively to
have been created, contracted or incurred in reliance upon this Agreement; and
all dealings between the Borrower and the Pledgor, on the one hand, and the
Collateral Agent and the Secured Parties, on the other, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Agreement. The Pledgor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Borrower or the
Pledgor with respect to the Obligations. When pursuing its rights and remedies
hereunder against the Pledgor, the Collateral Agent and any Secured Party may,
but shall be under no obligation to, pursue such rights and remedies as it may
have against the Borrower or any other Person or against any collateral security
or guarantee for the Obligations or any right of offset with respect thereto,
and any failure by the Collateral Agent or any Secured Party to pursue such
other rights or remedies or to collect any payments from the Borrower or any
such other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of
<PAGE>
12
offset, or any release of the Borrower or any such other Person or of any such
collateral security, guarantee or right of offset, shall not relieve the Pledgor
of any liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Collateral Agent or any Secured Party against the Pledgor or the Collateral.
14. COLLATERAL AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. (a) The Pledgor
hereby irrevocably constitutes and appoints the Collateral Agent and any officer
or agent of the Collateral Agent, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of the Pledgor and in the name of the Pledgor or in the
Collateral Agent's own name, from time to time in the Collateral Agent's
discretion, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer.
(b) The Pledgor hereby ratifies all that said attorneys shall lawfully do
or cause to be done pursuant to the power of attorney granted in Section 14(a).
All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
15. DUTY OF COLLATERAL AGENT. The Collateral Agent's sole duty with
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as the Collateral Agent deals with similar
securities and property for its own account, except that the Collateral Agent
shall have no obligation to invest funds held in any Collateral Account and may
hold the same as demand deposits. Neither the Collateral Agent, any Secured
Party nor any of their respective directors, officers, employees or agents shall
be liable for failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Pledgor or any other
Person or to take any other action whatsoever with regard to the Collateral or
any part thereof.
16. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of the
Code, the Pledgor authorizes the Collateral Agent to file financing statements
with respect to the Collateral without the signature of the Pledgor in such form
and in such filing offices as the Collateral Agent reasonably determines
appropriate
<PAGE>
13
to perfect the security interests of the Collateral Agent under this Agreement.
A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
17. COLLATERAL AGENT. (a) APPOINTMENT. Each Secured Party by its
acceptance of the benefits hereof hereby irrevocably designates and appoints
Chase as the Collateral Agent of such Secured Party under this Agreement, the
Subordination Agreement and the other Security Documents, and each such Secured
Party irrevocably authorizes Chase, as the Collateral Agent for such Secured
Party, to take such action on its behalf under the provisions of this Agreement,
the Subordination Agreement and the other Security Documents and to exercise
such powers and perform such duties as are expressly delegated to the Collateral
Agent by the terms of this Agreement, the Subordination Agreement and the other
Security Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Subordination Agreement or any other Security Document, the
Collateral Agent shall not have any duties or responsibilities except those
expressly set forth herein or therein, or any fiduciary relationship with any
Secured Party, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement, the Subordination
Agreement or any other Security Document or otherwise exist against the
Collateral Agent.
(b) DELEGATION OF DUTIES. The Collateral Agent may execute any of its
duties under this Agreement, the Subordination Agreement or any other Security
Document by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The
Collateral Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys in-fact selected by it with reasonable care.
(c) EXCULPATORY PROVISIONS. Neither the Collateral Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement, the Subordination Agreement
or any other Security Document (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Secured Parties for any recitals, statements, representations or warranties
made by the Borrower or any officer thereof contained in this Agreement, any
Interest Rate Protection Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Collateral Agent under or in connection with, any such
documents or for the value, validity, effectiveness, genuineness, enforceability
or
<PAGE>
14
sufficiency of any such documents or for any failure of the Borrower to perform
its obligations hereunder or thereunder. The Collateral Agent shall not be
under any obligation to any Secured Party to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, any Interest Rate Protection Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower.
(d) RELIANCE BY COLLATERAL AGENT. The Collateral Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Collateral Agent. The Collateral Agent may deem and
treat the payee of any note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Collateral Agent. The Collateral Agent shall be fully justified
in failing or refusing to take any action under this Agreement, any Interest
Rate Protection Agreement or the Subordination Agreement or any other Security
Document unless it shall first receive such advice or concurrence of the
Majority Secured Parties as it deems appropriate or it shall first be
indemnified to its satisfaction by the Secured Parties against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Collateral Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement,
any Interest Rate Protection Agreement or any other Loan Document in accordance
with a request of the Majority Secured Parties, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Secured
Parties.
(e) NOTICE OF ACTIONABLE DEFAULT. The Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any Actionable Default
under the Credit Agreement or any Interest Rate Protection Agreement unless the
Collateral Agent has received notice from a Secured Party or the Borrower
referring to the relevant agreement, describing such Actionable Default and
stating that such notice is a "Notice of Actionable Default", In the event that
the Collateral Agent receives such a notice, the Collateral Agent shall give
notice thereof to the Secured Parties. The Collateral Agent shall take such
action with respect to such Actionable Default as shall be reasonably directed
by the Majority Secured Parties; PROVIDED that unless and until the Collateral
Agent shall have received such directions, the Collateral Agent may (but shall
not be obligated
<PAGE>
15
to) take such action, or refrain from taking such action, with respect to such
Actionable Default as it shall deem advisable in the best interests of the
Secured Parties.
(f) NON-RELIANCE ON COLLATERAL AGENT AND OTHER SECURED PARTIES. Each
Secured Party expressly acknowledges that neither the Collateral Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Collateral Agent hereafter taken, including any review of the affairs of the
Borrower, shall be deemed to constitute any representation or warranty by the
Collateral Agent to any Secured Party. Each Secured Party represents to the
Collateral Agent that it has, independently and without reliance upon the
Collateral Agent or any other Secured Party, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its extensions of credit to the Borrower. Each Secured Party also represents
that it will, independently and without reliance upon the Collateral Agent or
any other Secured Party, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
any Interest Rate Protection Agreements and any other Loan Documents, and to
make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Secured Parties by the
Collateral Agent hereunder, the Collateral Agent shall not have any duty or
responsibility to provide any Secured Party with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Collateral Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
(g) INDEMNIFICATION. The Secured Parties agree to indemnify the
Collateral Agent in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so), ratably
according to their respective pro rata shares of the Obligations in effect on
the date on which indemnification is sought under this subsection, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, incurred by or asserted
against the Collateral Agent in any way relating to or arising out of this
Agreement, any Interest Rate Protection Agreements or
<PAGE>
16
any of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by the Collateral Agent under or in connection with any
of the foregoing; PROVIDED that no Secured Party shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Collateral Agent's gross negligence or willful misconduct. The
agreements in this subsection shall survive the payment of the Obligations.
(h) COLLATERAL AGENT IN ITS INDIVIDUAL CAPACITY. The Collateral Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Borrower as though the Collateral Agent were not
the Collateral Agent hereunder and under the Subordination Agreement and the
other Security Documents. With respect to the extensions of credit made by it,
the Collateral Agent shall have the same rights and powers under this Agreement,
any Interest Rate Protection Agreements and the other Loan Documents as any
Secured Party and may exercise the same as though it were not the Collateral
Agent, and the terms "Secured Party" and "Secured Parties" shall include the
Collateral Agent in its individual capacity.
(i) SUCCESSOR COLLATERAL AGENT. The Collateral Agent may resign as
Collateral Agent upon 10 days' notice to the Secured Parties. If the Collateral
Agent shall resign as Collateral Agent under this Agreement, the Subordination
Agreement or any other Security Document, then the Majority Secured Parties
shall appoint from among the Secured Parties a successor agent for the Secured
Parties, which successor agent must be approved by the Borrower, whereupon such
successor agent shall succeed to the rights, powers and duties of the Collateral
Agent, and the term "Collateral Agent" shall mean such successor agent effective
upon such appointment and approval, and the former Collateral Agent's rights,
powers and duties as Collateral Agent shall be terminated, without any other or
further act or deed on the part of such former Collateral Agent or any of the
parties to the Credit Agreement, any Interest Rate Protection Agreements or any
other Loan documents. After any retiring Collateral Agent's resignation as
Collateral Agent, the provisions of this subsection shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Collateral
Agent.
(j) AUTHORITY VIS-A-VIS BORROWER. The Pledgor acknowledges that the
rights and responsibilities of the Collateral Agent under this Agreement with
respect to any action taken by the Collateral Agent or the exercise or non-
exercise by the Collateral Agent of any option, voting right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Collateral
<PAGE>
17
Agent and the Secured Parties, be governed by the above provisions of this
Section 17 and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Collateral Agent and the Pledgor,
the Collateral Agent shall be conclusively presumed to be acting as agent for
the Secured Parties with full and valid authority so to act or refrain from
acting, and neither the Pledgor nor the Borrower shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
18. NOTICES. All notices, requests and demands to or upon the Collateral
Agent or the Pledgor to be effective shall be in writing (or by telex, fax or
similar electronic transfer confirmed in writing) and shall be deemed to have
been duly given or made (a) when delivered by hand or (b) if given by mail, when
deposited in the mails by certified mail, return receipt requested, or (c) if by
telex, fax or similar electronic transfer, when sent and receipt has been
confirmed, addressed as follows:
(a) if to the Collateral Agent, at its address or transmission number for
notices provided in subsection 10.2 of the Credit Agreement; and
(b) if to the Pledgor, at its address or transmission number for notices
set forth under its signature below.
The Collateral Agent and the Pledgor may change their addresses and transmission
numbers for notices by notice in the manner provided in this Section.
19. 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.
20. INTEGRATION. This Agreement represents the agreement of the Pledgor
with respect to the subject matter hereof and there are no promises or
representations by the Collateral Agent or any Secured Party relative to the
subject matter hereof not reflected herein.
21. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) None of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Pledgor and
the Collateral Agent, PROVIDED that any provision of this Agreement may be
waived by the Collateral Agent and the Secured Parties in a
<PAGE>
18
letter or agreement executed by the Collateral Agent or by telex or facsimile
transmission from the Collateral Agent.
(b) Neither the Collateral Agent nor any Secured Party shall by any act
(except by a written instrument pursuant to Section 21(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Actionable Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Collateral Agent or any Secured
Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent or any
Secured Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Collateral Agent or such
Secured Party would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
22. SECTION HEADINGS. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
23. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of the
Collateral Agent and the Secured Parties and their successors and assigns.
24. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
25. REGULATORY APPROVALS. Any provision contained herein to the contrary
notwithstanding, no action shall be taken hereunder by the Collateral Agent with
respect to any item of the Collateral unless and until all applicable
requirements (if any) of the Federal Communications Commission under the Federal
Communications Act of 1934, as amended, the Communication Antenna Television
Commission, and the respective rules and regulations thereunder and thereof, as
well as any other federal or state laws, rules and regulations of other
operating municipality regulatory or governmental bodies applicable to or having
jurisdiction over the Pledgor, have been satisfied with respect to such action
and there have been obtained such consents, approvals and authorizations (if
any) as may be required to be obtained from the Federal Communications
Commission, the
<PAGE>
19
Communication Antenna Television Commission, any operating municipality and any
other governmental authority under the terms of any franchise, license or
similar operating right held by the Borrower and included in the Collateral. It
is the intention of the parties hereto that the Liens in favor of the Collateral
Agent on the Collateral shall in all relevant aspects be subject to and governed
by said statutes, rules and regulations and that nothing in this Agreement shall
be construed to diminish the control exercised by the Pledgor, except in
accordance with the provisions of such statutory requirements and rules and
regulations. The Pledgor agrees that upon request from time to time by the
Collateral Agent it will use its reasonable efforts to obtain any governmental,
regulatory or third party consents, approvals or authorizations referred to in
this Section 25.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
CABLEVISION OF FRAMINGHAM HOLDINGS, INC.
By_______________________________
Title____________________________
Address:_________________________
_________________________
_________________________
Telex: _______________________
Fax: _________________________
<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement dated June __, 1994, made by Cablevision of Framingham Holdings, Inc.
for the benefit of The Chase Manhattan Bank, N.A., as Collateral Agent (the
"PLEDGE AGREEMENT"). The undersigned agrees for the benefit of the Collateral
Agent and the Secured Parties as follows:
1. The undersigned will be bound by the terms of the Pledge Agreement
and will comply with such terms insofar as such terms are applicable to the
undersigned.
2. The undersigned will notify the Collateral Agent promptly in writing
of the occurrence of any of the events described in Section 6(a) of the Pledge
Agreement.
3. The terms of Section 10(c) of the Pledge Agreement shall apply to
it, MUTATIS MUTANDIS, with respect to all actions that may be required of it
under or pursuant to or arising out of Section 10 of the Pledge Agreement.
CABLEVISION OF FRAMINGHAM, INC.
By ____________________________
Title _________________________
Address for Notices:
c/o Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Fax: 516-496-1780
<PAGE>
SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of
Issuer Pledgor Stock* No. Shares
---------- ---------- ---------- ---------- ----------
Cablevision of Cablevision of Common 2 100
Framingham, Inc. Framingham
Holdings, Inc.
____________________
*Stock is assumed to be common stock unless otherwise indicated.
<PAGE>
AMENDMENT NO. 1
August 8, 1994
Cablevision of Framingham, Inc.
c/o Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Attention: Frank Golden
and the Lenders referred
to below
Ladies and Gentlemen:
We refer you to the Credit Agreement dated as of June 15, 1994 (the "CREDIT
AGREEMENT") among Cablevision of Framingham, Inc., a Delaware corporation (the
"BORROWER"), the several banks and other financial institutions from time to
time parties thereto (the "LENDERS"), The Chase Manhattan Bank, N.A., as agent
and a Lender (the "AGENT"), and CIBC Inc., as co-agent and a Lender (the "CO-
AGENT"). Terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings so defined.
Each of the undersigned acknowledges, consents and agrees that, notwithstanding
the contemplation of the parties as reflected in the Credit Agreement:
(i) the definition of "Parents' Loans" in the Credit Agreement is hereby
amended by deleting that definition in its entirety and substituting in
lieu thereof the following new definition:
"the subordinated loans to be made by Cablevision Systems
Corporation, and the WP Parent to the Borrower on or prior to the
Closing Date in an aggregate principal amount of $1,000,000, which
subordinated loans shall be subject to the terms and provisions of
the Subordination Agreement and shall be evidenced by promissory
notes containing terms and conditions reasonably satisfactory to the
Lenders."
(ii) Section 5.1(p) of the Credit Agreement is hereby amended by deleting
clause (iii) thereof, substituting in lieu thereof the following new
clause (iii):
"(iii) Cablevision and the WP Parent shall have made the Parents'
Loans to the Borrower."
<PAGE>
2
(iii) Exhibit F to the Credit Agreement is deleted in its entirety and
Exhibit F attached hereto is hereby substituted in lieu thereof.
This letter shall become effective upon execution by each Person for
which a signature line is provided below.
This letter may be executed by one or more of the Agent, the
Co-Agent, the Borrower and the Lenders on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
<PAGE>
3
This letter shall be governed by, and construed in accordance with,
the laws of the State of New York.
Very truly yours,
THE CHASE MANHATTAN BANK, N.A.
as Agent and as a Lender
By: _______________________
Name:
Title:
Acknowledged and Agreed:
CIBC INC.
as Co-Agent and as a Lender
By: _______________________
Name:
Title:
CABLEVISION OF FRAMINGHAM, INC.
By: _______________________
Name:
Title:
<PAGE>
ASSET PURCHASE AGREEMENT
DATED AS OF
OCTOBER 26, 1993
BETWEEN
MONMOUTH CABLEVISION ASSOCIATES
AND
CABLEVISION MFR, INC.
<PAGE>
TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . 1
2. Assets Sold and Purchased . . . . . . . . . . . . . 8
2.1 System Assets . . . . . . . . . . . . . . 8
2.2 Assumption of Liabilities . . . . . . . . 9
2.3 Purchase Price; Escrow Fund and Accounts
Receivable . . . . . . . . . . . . . . . 10
2.4 Adjustments to Purchase Price . . . . . . 13
2.5 Appraisal and Allocation of Purchase
Price . . . . . . . . . . . . . . . . . . 17
3. Closing Date and Place . . . . . . . . . . . . . . 17
3.1 Closing . . . . . . . . . . . . . . . . . 17
4. Seller's Representations and Warranties . . . . . . 17
4.1 Organization of Seller . . . . . . . . . 18
4.2 Seller's Authority . . . . . . . . . . . 18
4.3 Authorizations and CATV Instruments . . . 19
4.4 Real Property . . . . . . . . . . . . . . 20
4.5 Easements and Rights-of-Way . . . . . . . 20
4.6 Tangible Personal Property . . . . . . . 21
4.7 Contracts; No Defaults . . . . . . . . . 21
4.8 Approvals and Consents . . . . . . . . . 22
4.9 Financial Statements; No Material Adverse
Change . . . . . . . . . . . . . . . . . 22
4.10 Acquired Accounts Receivable . . . . . . 23
4.11 Information Sheet; Competing Franchises . 23
4.12 Compliance with Laws, Regulations and
Reporting . . . . . . . . . . . . . . . . 25
4.13 Environmental Matters . . . . . . . . . . 25
4.14 FCC Matters . . . . . . . . . . . . . . . 26
4.15 Copyright Matters . . . . . . . . . . . . 26
4.16 Claims and Litigation . . . . . . . . . . 26
4.17 Employees; Compensation; Unions . . . . . 27
4.18 Insurance . . . . . . . . . . . . . . . . 27
4.19 Patents and Copyrights . . . . . . . . . 27
4.20 Rates . . . . . . . . . . . . . . . . . . 28
4.21 Special Agreements . . . . . . . . . . . 28
4.22 Taxes . . . . . . . . . . . . . . . . . . 28
4.23 Capital Commitments . . . . . . . . . . . 29
4.24 Financing Commitments . . . . . . . . . . 29
5. Buyer's Representations . . . . . . . . . . . . . . 29
5.1 Organization and Standing of Buyer . . . 29
5.2 Authority to Execute and Consummate
Agreement . . . . . . . . . . . . . . . . 29
5.3 Exchange Act Compliance . . . . . . . . . 30
5.4 Fitness as Franchisee . . . . . . . . . . 30
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<PAGE>
6. Additional Covenants . . . . . . . . . . . . . . . 31
6.1 Negative Covenants of Seller . . . . . . 31
6.2 Affirmative Covenants of Seller . . . . . 32
6.3 Affirmative Covenants of Buyer . . . . . 33
6.4 Access to Information . . . . . . . . . . 34
6.5 Notification . . . . . . . . . . . . . . 34
6.6 Upper Freehold and Millstone . . . . . . 35
6.7 Right to Cure; Purchase Price Adjustment 36
6.8 Closing Conditions . . . . . . . . . . . 36
7. Conditions of Buyer's Obligations . . . . . . . . . 36
7.1 Consents and Waivers . . . . . . . . . . 36
7.2 No Material Adverse Changes . . . . . . . 38
7.3 Representations and Covenants . . . . . . 39
7.4 Legal Proceedings . . . . . . . . . . . . 39
7.5 Deliveries at Closing . . . . . . . . . . 39
7.6 HSR Act Waiting Period . . . . . . . . . 39
7.7 Cash Flow . . . . . . . . . . . . . . . . 40
7.8 Number of Subscribers . . . . . . . . . . 40
8. Conditions of Seller's Obligations . . . . . . . . 40
8.1 Consents . . . . . . . . . . . . . . . . 40
8.2 Representations and Covenants . . . . . . 40
8.3 Legal Proceedings . . . . . . . . . . . . 41
8.4 Deliveries at Closing . . . . . . . . . . 41
8.5 HSR Act Waiting Period . . . . . . . . . 41
9. Seller's Deliveries at Closing . . . . . . . . . . 41
9.1 Deeds, Documents of Conveyance and
Transfer . . . . . . . . . . . . . . . . 41
9.2 Power of Attorney . . . . . . . . . . . . 42
9.3 Ancillary Agreements . . . . . . . . . . 42
10. Buyer's and CSC's Deliveries at Closing . . . . . . 42
10.1 Ancillary Agreements . . . . . . . . . . 42
10.2 Guaranty . . . . . . . . . . . . . . . . 42
10.3 Registration Rights Agreement . . . . . . 42
10.4 Opinion of Counsel . . . . . . . . . . . 42
10.5 Other Documents . . . . . . . . . . . . . 43
10.6 Assumption of Assumed Liabilities;
Other Documents . . . . . . . . . . . . . 43
10.7 Payment . . . . . . . . . . . . . . . . . 43
11. Brokerage Fees . . . . . . . . . . . . . . . . . . 43
12. Indemnification by Seller and Buyer . . . . . . . . 43
12.1 Seller's Indemnification Liability . . . 43
12.2 Buyer's Indemnification Liability . . . . 45
12.3 Procedures . . . . . . . . . . . . . . . 45
12.4 Payment of Indemnification Liabilities . 46
12.5 Exclusive Remedy . . . . . . . . . . . . 46
12.6 Limitations on Seller's Indemnity
Obligation . . . . . . . . . . . . . . . 47
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<PAGE>
12.7 Non-recourse to Seller's Partners . . . . 47
13. Preservation of Records . . . . . . . . . . . . . . 48
14. Non-Assignable Contracts . . . . . . . . . . . . . 48
15. Survival of Obligations . . . . . . . . . . . . . . 49
16. Termination . . . . . . . . . . . . . . . . . . . . 49
17. Miscellaneous . . . . . . . . . . . . . . . . . . . 50
17.1 Liability of Buyer . . . . . . . . . . . 50
17.2 Indulgences, Etc. . . . . . . . . . . . . 50
17.3 Controlling Law . . . . . . . . . . . . . 51
17.4 Notices . . . . . . . . . . . . . . . . . 51
17.5 Exhibits and Schedules . . . . . . . . . 52
17.6 Binding Nature of Agreement; No
Assignment . . . . . . . . . . . . . . . 52
17.7 Execution in Counterparts . . . . . . . . 52
17.8 Severability . . . . . . . . . . . . . . 52
17.9 Entire Agreement . . . . . . . . . . . . 52
17.10 Section Headings . . . . . . . . . . . . 53
17.11 No Third Party Rights . . . . . . . . . . 53
17.12 Expenses . . . . . . . . . . . . . . . . 53
17.13 Further Assurances . . . . . . . . . . . 53
17.14 Confidential Information . . . . . . . . 54
17.15 Bulk Transfer . . . . . . . . . . . . . . 54
17.16 Public Announcements . . . . . . . . . . 54
-iii-
<PAGE>
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
1.3 Acquired Accounts Receivable
1.8 Assumed Liabilities
1.30 Excluded Assets
1.45 Programming Contracts
4.2 Exceptions to Seller's Authority
4.3 Exceptions to Authorizations & CATV Instruments
4.4 Real Property
4.4.1 Encumbrances
4.5 Easements and Rights-of-Way
4.6 Tangible Personal Property
4.6.1 Exceptions to Title on Tangible Personal Property
4.7 Business Contracts
4.8 Approvals and Consents
4.9 Financial Statements
4.11(a) Information Sheet; Technical and Business Information
4.11(b) Information Sheet; Retransmission Commitments
4.11(c) Information Sheet; Competing Franchises
4.12 Exception to Seller's Compliance with Laws
4.13 Hazardous Materials
4.14 FCC Matters
4.16 Claims and Litigation
4.17 Employees; Compensation; Union
4.18 Insurance Policies
4.19 Patents and Copyrights
4.21 Special Agreements
4.22 Taxes
4.23 Capital Commitments
4.24 Financing Commitments
5.2 Exceptions to Buyer's Authority
6.2 Seaside Rebuild Capital Expenditures
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<PAGE>
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
A List of Communities served by the CATV System
B List of cable television franchises and
Certificates of Approval
C Form of Escrow Agreement
D [intentionally omitted]
E Form of Indemnification Note
F Form of Bill of Sale and Assignment
G Form of Opinion of Seller's counsel
H Form of Opinion of Seller's FCC counsel
I Form of Non-Compete Agreements
J Form of Opinion of Buyer's counsel
K Form of Senior Subordinated Note
L Form of Guaranty
M Form of Registration Rights Agreement
-v-
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of October 26, 1993, by and between MONMOUTH
CABLEVISION ASSOCIATES, a New Jersey limited partnership ("Seller"), and
Cablevision MFR, Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller owns and operates the cable television system, and
business in respect thereof, in the communities listed on Exhibit A, pursuant to
the cable franchises and Certificates of Approval listed on Exhibit B
(collectively referred to herein as the "System"); and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the
terms and subject to the conditions contained in this Agreement, the System,
together with those franchises, Certificates of Approval, assets, contracts and
rights used by Seller in connection with the System, all in accordance with and
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises each to the
other made herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS. The following terms, as used herein, shall, except where
the context otherwise requires, have the meanings specified in this Section 1
(such definitions to be equally applicable to the singular and plural forms of
the term defined):
1.1 "ACCOUNTS RECEIVABLE" - All accounts receivable of Seller
relating to the System.
1.2 "ACCOUNTS RECEIVABLE PRICE" - An amount equal to 98% of the face
value of the Acquired Accounts Receivable.
1.3 "ACQUIRED ACCOUNTS RECEIVABLE" - All Accounts Receivable (i)
relating to Subscriber Accounts Receivable and (ii) those other Accounts
Receivable set forth on Schedule
<PAGE>
1.3, that, in each case, are not in excess of 45 days past due, but
specifically excluding all Advertising Accounts Receivable and any Accounts
Receivable other than those relating to Subscriber Accounts Receivable and other
than those set forth on Schedule 1.3. For purposes of this Section 1.3, the
number of days past due of Accounts Receivable shall be determined from the last
day of the period for which the applicable billing for services for that period
is made. Accounts Receivable which are past due pending the resolution of a
BONA FIDE dispute and are in arrears in an amount of $10 or less shall not be
considered past due for purposes of this Section 1.3, except to the extent of
the amount subject to such BONA FIDE dispute.
1.4 "ADJUSTMENT DATE" - As defined in Section 2.4(e).
1.5 "ADVERTISING ACCOUNTS RECEIVABLE" - All Accounts Receivable
relating to the sale of advertising.
1.6 "AGREEMENT" - This Asset Purchase Agreement, as the same may be
amended or modified in accordance with the terms hereof.
1.7 "ANCILLARY AGREEMENTS" - The Escrow Agreement, the
Indemnification Escrow Agreement and the Non-Compete Agreements.
1.8 "ASSUMED LIABILITIES" - All debts, liabilities and obligations
relating directly or indirectly to the System and arising from operation or
ownership of the System from and after the close of business on the Closing
Date, Seller's liability immediately prior to the close of business on the
Closing Date for advance payments and for deposits plus interest accrued under
state law, and any other debt, liability or obligation set forth on Schedule
1.8.
1.9 "AUDITED FINANCIAL STATEMENTS" - As defined in Section 4.9.
1.10 "AUTHORIZATIONS" - All franchises, permits, licenses, consents,
Certificates of Approval and other authorizations from governmental authorities
and utilities pursuant to which the System is owned and operated including,
without limitation, the instruments pursuant to which such Authorizations are
granted.
1.11 "BASIC CABLE SERVICE RATE" - The rate charged by the Seller for
Basic Cable Service, as set forth on Schedule 4.11 (a), offered by the System in
a given community.
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<PAGE>
1.12 "BASIC SUBSCRIBERS" - The sum of (i) the number of Subscribers
(other than Seasonal Subscribers) in individually billed residential units,
(ii) the quotient of (x) the total billings (excluding pay-TV and pay-per-view
charges) of the Seller to all Subscribers in commercial venues or bulk billed
multiple residential units for the month during which the Closing occurs,
divided by (y) the sum of Seller's Basic Cable Service Rate and Standard Cable
Service Rate for CATV services to residential units in effect at the Closing
Date, and (iii) the number of Seasonal Subscribers. For purposes of determining
Basic Subscribers, each Seasonal Subscriber shall be counted as one-half (1/2)
of a Subscriber and, for purposes of determining Basic Subscribers, the number
calculated pursuant to (ii) above shall not exceed 1,500.
1.13 "BUSINESS CONTRACT" - As defined in Section 4.7.
1.14 "BUSINESS DAY" - Any Monday, Tuesday, Wednesday, Thursday or
Friday, other than a Federal holiday in the United States.
1.15 "BUYER" - Cablevision MFR, Inc., a Delaware corporation and a
wholly-owned subsidiary of Cablevision Systems Corporation, a Delaware
corporation.
1.16 "CASH FLOW" - Shall mean for any fiscal period, the aggregate net
income of Seller for such period after restoring thereto amounts deducted for
(a) depreciation, (b) amortization, (c) interest expense, (d) Taxes based on
income, (e) costs incurred in connection with this Agreement and the
transactions hereunder (including, without limitation, (A) any one-time
severance or bonus payments made by Seller to employees of Seller and (B) any
one-time payments made by Seller to employees of Seller in satisfaction of
accrued vacation and accrued sick days), (f) payments, if any, made in respect
of management fees paid to the general partners of Seller or to Landmark
Management, Inc., a special limited partner of the Seller, and (g) seasonal cash
flow items in the amount of $238,735, each of (a) through (g) as determined in
accordance with GAAP.
1.17 "CASH PURCHASE PRICE" - As defined in Section 2.3(a).
1.18 "CATV" - Cable television.
-3-
<PAGE>
1.19 "CATV INSTRUMENTS" - The instruments granting the Authorizations.
1.20 "CLOSING" and "CLOSING DATE" - As defined in Section 3.1.
1.21 "CLOSING DATE CASH FLOW" - As defined in Section 7.7.
1.22 "CODE" - The Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
1.23 "DEDUCTIBLE" - As defined in Section 12.6.
1.24 "ENVIRONMENTAL REQUIREMENTS" - As defined in Section 4.13.
1.25 "ENCUMBRANCES" - Any and all mortgages, security interests,
liens, claims, pledges, restrictions, leases, title exceptions, rights of
others, charges or other encumbrances.
1.26 "ERISA" - The Employee Retirement Income Security Act of 1974,
together with all rules and regulations promulgated thereunder, as such may be
in effect from time to time.
1.27 "ESCROW AGREEMENT" - The escrow agreement, dated as of the date
hereof, among Seller, Buyer and the Escrow Agent with respect to the Escrow
Fund, a copy of which is attached hereto as Exhibit C.
1.28 "ESCROW FUND" - As defined in Section 2.3(b).
1.29 "EXCHANGE ACT" - The Securities Exchange Act of 1934, as amended.
1.30 "EXCLUDED ASSETS" - All cash and cash equivalents (whether on
hand, in bank accounts, or elsewhere) of the Seller, Seller's limited
partnership interest in Riverview Cablevision Associates, L.P., all partnership,
tax (other than real property and state personal property tax) and financial
records of the Seller, all Accounts Receivable other than the Acquired Accounts
Receivable, all assets of the Seller other than the System Assets, all
proprietary computer software licensed to Seller by third parties pursuant to
non-assignable licenses, all rights of Seller hereunder and under the Ancillary
Agreements, all claims for tax abatements in respect of periods prior to the
close of business on the Closing Date, all claims for tax refunds and previously
paid taxes, all insurance contracts of the Seller and all claims
-4-
<PAGE>
thereunder, all rights and obligations under Programming Contracts and
management and consulting agreements of any type, all bonds, letters of credit
or other security instruments provided by Seller, all amounts held in escrow
under the National Cable Television Co-Operative agreement with the Seller or
its affiliates relating to programming, all proceeds, if any, resulting from
actions brought by Seller, pending at the Closing Date, to the extent, but only
to the extent, such proceeds relate to or are attributable to Seller's
ownership, operation or control of the System or any System Assets prior to the
close of business on the Closing Date, and those assets set forth on Schedule
1.30.
1.31 "FCC" - The Federal Communications Commission.
1.32 "FINANCIAL STATEMENTS" - As defined in Section 4.9 and attached
hereto as Schedule 4.9.
1.33 "GAAP" - Generally accepted accounting principles as applied in
the United States of America.
1.34 "INDEMNIFICATION ESCROW AGREEMENT" - The form of indemnification
escrow agreement to be entered into as of the Closing Date among Seller, Buyer
and the Escrow Agent with respect to the Indemnification Note will be agreed
upon by the parties prior to the Closing Date and shall be in form and substance
reasonably satisfactory to the parties.
1.35 "INDEMNIFICATION NOTE" - The indemnification note in the
principal amount of $6,820,000 and otherwise in the form attached hereto as
Exhibit E.
1.36 "INDEMNIFICATION PERIOD" - The period commencing at the close of
business on the Closing Date and ending at midnight on the date of the fifteen-
month anniversary of the Closing Date.
1.37 "INDEMNITEE" - As defined in Section 12.3.
1.38 "INDEMNITOR" - As defined in Section 12.3.
1.39 "MATERIAL ADVERSE EFFECT" - As defined in Section 4.2.
1.40 "NEW SUBSCRIBER" - As defined in Section 2.4(d).
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1.41 "NON-COMPETE AGREEMENTS" - As defined in Section 9.1(g) and
substantially in the forms attached hereto as Exhibit I.
1.42 "OBJECTION NOTICE" - As defined in Section 2.4(b).
1.43 "OTHER RECEIVABLES" - As defined in Section 2.3(c).
1.44 "PRIME RATE" - The interest rate announced from time to time as
the prime rate of Bankers Trust Company in New York, New York.
1.45 "PROGRAMMING CONTRACTS" - Those contracts pursuant to which
Seller purchases programming for use in the System including, without
limitation, those programming contracts referred to in Schedule 1.45.
1.46 "PURCHASE PRICE" - As defined in Section 2.3(a).
1.47 "PURCHASE PRICE ADJUSTMENT" - As defined in Section 2.4(c).
1.48 "REAL PROPERTY" - As defined in Section 4.4 and listed on
Schedule 4.4.
1.49 "RECORDS" - As defined in Section 2.1(g).
1.50 "RIGHT" - As defined in Section 17.2.
1.51 "SEASONAL SUBSCRIBER" - Each Subscriber for periods of less than
12 months related to seasonal requirements, who has paid for at least six months
of CATV service in advance and who is entitled to receive up to six and one-half
months of CATV service.
1.52 "SELLER" - Monmouth Cablevision Associates, a New Jersey limited
partnership.
1.53 "SENIOR SUBORDINATED NOTE" - The senior subordinated note in the
principal amount of $98,938,600 and otherwise in the form attached hereto as
Exhibit K.
1.54 "STANDARD CABLE SERVICE RATE" - The rate charged by the Seller
for Standard Cable Service, as set forth on Schedule 4.11(a), offered by the
System in a given community.
1.55 "SUBSCRIBER" - Any person or entity at any given time that is
paying for and receiving any level of CATV service from Seller who (v) is
supplied CATV signals by the
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System, (w) has paid for at least one month's CATV service to Seller at standard
rates for any level of the service, (x) has an account that is not more that 45
days past due (except for amounts which are past due pending the resolution of a
BONA FIDE dispute or past due amounts of $10 or less, provided such account is
otherwise current), (y) has not requested disconnection and (z) if such person
has been sent a disconnect notification by Seller prior to the Closing, pays all
amounts past due within 30 days after the Closing Date and is not disconnected.
For purposes of this Section 1.55, the determination of "standard rates" shall
be made by reference to the various rates listed on Schedule 4.11(a) for the
month prior to the Closing Date. The definition of "Subscriber" in this Section
1.55 shall include each person or entity supplied CATV signals by the System
pursuant to a special payment plan for delinquent accounts, so long as payments
pursuant to such plan are not more than 15 days past due and that the number of
Subscribers paying pursuant to such plans shall not at any time exceed 200. For
purposes of this Section 1.55 the number of days past due of a Subscriber
Accounts Receivable shall be determined from the last day of the period for
which the applicable billing for services for that period is made.
1.56 "SYSTEM" - As defined in the first WHEREAS clause above.
1.57 "SYSTEM ASSETS" - All assets of the Seller essential to or used
in connection with the ownership or operation of the System, including, without
limitation, those set forth in Section 2.1, and all electronic devices, taps,
trunk and distribution cables, amplifiers, power supplies, conduits, vaults and
pedestals, grounding and pole hardware, drop lines and related fittings, all to
the extent owned or leased by Seller and used in connection with the System, BUT
excluding the Excluded Assets.
1.58 "TANGIBLE PERSONAL PROPERTY" - As defined in Section 4.6 as
described on Schedule 4.6.
1.59 "TARGETED CASH FLOW" - As defined in Section 2.3(a).
1.60 "TAXES" - All federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise,
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employment, withholding or similar taxes, real and personal property taxes,
transfer taxes, gains taxes, mortgage recording taxes, transportation taxes or
gross operating taxes, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties.
1.61 "TERMINATED EMPLOYEES" - As defined in Section 6.3(f).
1.62 "UNAUDITED FINANCIAL STATEMENTS" - As defined in Section 4.9 and
attached as Schedule 4.9.
2. ASSETS SOLD AND PURCHASED.
2.1 SYSTEM ASSETS. On the terms and subject to the conditions
hereinafter set forth, Seller agrees to sell, assign and convey, and Buyer
agrees to buy, the System and the System Assets, including, without limitation,
the following assets (to the extent they constitute System Assets):
(a) All Authorizations and CATV Instruments;
(b) All real property owned by Seller at the Closing Date and
all real property leasehold interests of Seller at the Closing Date;
(c) All tangible personal property owned by Seller at the
Closing Date and used in connection with the System, including, without
limitation, all electronic devices, taps, converters, trunk and distribution
cables, amplifiers, power supplies, conduits, vaults and pedestals, grounding
and pole hardware, droplines and related fittings, installed subscribers'
devices, hardware, tools, inventory, spare parts, motor vehicles, supplies, test
and closed circuit devices, microwave equipment and furniture, furnishings and
office equipment;
(d) All contracts, leases, agreements, licenses, commitments and
understandings (other than Programming Contracts) of Seller relating to the
System, and all contracts entered into by Seller with respect to the System
after the execution of this Agreement which are made in the ordinary course of
business and in conformity with Section 6.1(c) hereof;
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(e) All subscriber agreements, if any, and orders for CATV
service to be provided by the System existing at the Closing Date;
(f) All goodwill, trademarks, service marks, copyrights, trade
names, common law property rights, all rights associated therewith and all other
intangible personal property owned or held by Seller pertinent to the System;
(g) All schematics, blueprints, strand maps, working drawings,
engineering data, current and prior customer lists, system maps and other
reports, lists, plans, specifications, promotional graphics, original art work,
mats, plates, negatives and other advertising, marketing or related materials,
files and records and all other technical and financial information concerning
the System possessed by Seller at the Closing Date (the "Records");
(h) All of Seller's right, title and interest in and to
manufacturers' warranties with respect to the System Assets (to the extent so
assignable and exclusive of claims made on or prior to the Closing Date);
(i) All other assets of whatever nature and wherever located
owned by Seller at the Closing Date and used regularly in connection with the
design, construction or operation of the System, which assets shall include the
System's books and records or, to the extent originals are not in the possession
of Seller or are required to be retained by Seller for audit purposes, copies
thereof, but not including Seller's corporate or partnership books and records
(except for real property and state personal property tax records, which shall
be included).
2.2 ASSUMPTION OF LIABILITIES. Buyer shall, subject to the
provisions hereof, assume at the Closing the Assumed Liabilities. Except for
the Assumed Liabilities, and except to the extent that Buyer otherwise expressly
assumes any liabilities or obligations of Seller pursuant to this Agreement,
Buyer assumes no liabilities or obligations of Seller.
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2.3 PURCHASE PRICE; ESCROW FUND AND ACCOUNTS RECEIVABLE.
(a) PURCHASE PRICE. In consideration of the sale, assignment and
conveyance to it of the System Assets and for receipt of the executed Non-
Compete Agreements, Buyer agrees to purchase from Seller, and Seller agrees to
sell to Buyer, on the terms and subject to the conditions set forth elsewhere in
this Agreement, the System Assets for a total Purchase Price Two Hundred Eighty
Eight Million Eight Hundred Fifty Seven Thousand Five Hundred Dollars
($288,857,500) (the "Purchase Price"), which shall be comprised of (w) (I) an
amount in cash to be delivered by Buyer to Seller at the Closing (the "Closing
Date Cash Payment"), equal to One Hundred Sixty Six Million Forty Eight Thousand
Nine Hundred Dollars ($166,048,900) less the amount of the Released Deposit (as
hereinafter defined)*, and (II) Seventeen Million Fifty Thousand Dollars
($17,050,000) in cash to be placed into escrow pursuant to the New Escrow
Agreement (as hereinafter defined) (the "Escrow Deposit"), (x) the total amount
held in escrow pursuant to the Escrow Agreement (consisting of Six Million Eight
Hundred Twenty Thousand Dollars ($6,820,000) plus earnings thereon) and released
to Seller on June 3, 1994 (the "Released Deposit"), PROVIDED, THAT, the Released
Deposit shall not be credited as part of the Purchase Price if Buyer has not
certified to Seller, on or prior to 5:30 PM on June 16, 1994, that Buyer or
Cablevision of Monmouth, Inc. has entered into a credit agreement providing for
loans to Buyer or such Affiliate in an amount sufficient to permit Buyer to make
the Closing Date Cash Payment at the Closing, in which case the Released Deposit
shall be retained by Seller as a non-refundable option fee (the Released Deposit
(subject to the proviso in the preceding sentence), the Escrow Deposit and the
Closing Date Cash Payment sometimes being referred to collectively herein as the
"Cash Purchase Price"), (y) the Senior Subordinated Note and (z) the
Indemnification Note, in each case subject to the adjustments set forth in this
Section 2.3(a) and Section 2.4, and in all cases subject to the following:
[Subparagraph (A) is intentionally omitted.]
(B) If the number of Estimated Basic Subscribers (as defined in
Section 2.4(a) herein), is greater than 113,000 (the "Adjustment
Target"), the Closing Date Cash Payment shall be increased by an
amount equal to the excess of the number of Estimated Basic
Subscribers over the Adjustment Target, multiplied by $500 (the
"Initial Adjustment"), PROVIDED, HOWEVER, that the Initial
Adjustment, if any, shall under no circumstances exceed
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* Provided, that, if the Released Deposit is not credited as part of the
Purchase Price, but is retained by Buyer as a non-refundable option fee
as provided below, the Closing Date Cash Payment shall be One Hundred Sixty
Six Million Forty Eight Thousand Nine Hundred Dollars ($166,048,900).
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Four Hundred Forty-Three Thousand Three Hundred Dollars
($443,300) in the aggregate.
(C) Notwithstanding any other provision herein, Buyer may, on or
prior to the Closing Date, elect to satisfy all or any portion of
the Purchase Price that is otherwise to be payable by the
issuance by Buyer of the Senior Subordinated Note and/or the
Indemnification Note by delivering shares of CSC Class A Common
Stock (as defined in the form of Senior Subordinated Note
attached as Exhibit K hereto) that are subject to an effective
registration statement. If Buyer makes such an election: (i)
the number of shares of such CSC Class A Common Stock to be
delivered by Buyer to Seller at the Closing shall be equal to (x)
the aggregate amount of the Purchase Price with respect to which
Buyer has elected to deliver CSC Class A Common Stock, divided by
(y) 95% multiplied by the Closing Price (as defined in the form
of Senior Subordinated Note attached as Exhibit K hereto) of the
CSC Class A Common Stock on the sixth American Stock Exchange
trading day prior to the Closing Date; (ii) the amount of the
Senior Subordinated Note and/or the Indemnification Note, as the
case may be, to be delivered by Buyer to Seller at the Closing
shall be reduced by the aggregate amount of the Purchase Price
with respect to which Buyer has made such election and, if the
amount of the Senior Subordinated Note or the Indemnification
Note is reduced to zero, neither Buyer nor CSC shall be obligated
to deliver the Senior Subordinated Note or the Indemnification
Note, as the case may be, or the Guaranty (as defined herein) and
(iii) if after any such election by Buyer the amount of the
Indemnification Note is less than $6,820,000, then at the Closing
Buyer shall deposit an amount of CSC Class A Common Stock that
comprises the Purchase Price with a value equal to such
difference into an escrow account pursuant to the Indemnification
Escrow Agreement, together with the Indemnification Note, if any,
so that the Indemnification Escrow Account has a value equal to
at least $6,820,000 at the Closing.
(D) In the event that there is a Change in Control (as defined in the
form of Senior Subordinated Note attached hereto as Exhibit K) on
or prior to the Closing Date, (i) Buyer shall be obligated to pay
in cash at the Closing the full amount of the Purchase Price (in
lieu of the Closing Date Cash Payment), less the Escrow Deposit
and any adjustments made to the Purchase Price as set forth in
Sections 2.3 and 2.4 hereof, and (ii) the Escrow Agent shall be
instructed by Buyer and Seller to release the Escrow Account at
the Closing and deposit such amounts into an escrow account
pursuant to the Indemnification Escrow Agreement and (iii)
neither Buyer nor CSC shall be obligated to issue the Senior
Subordinated Note, the
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Indemnification Note, the Guaranty or the Registration Rights
Agreement.
At the Closing, the Seller shall deliver to Buyer good, valid and
marketable title to the System Assets and, in consideration therefor, and
subject to the foregoing, (i) the Buyer shall deliver to Seller the Closing Date
Cash Payment (or the payment referred to in subparagraph (D)(i) above in lieu of
such Closing Date Cash Payment) (x) plus the amount of the Initial Adjustment,
if any, as set forth in the prior sentence, (y) plus the amount, if any, of any
Closing Date Adjustment (as defined in Section 2.4(e)) owed by Buyer to Seller
pursuant to Section 2.4(e), and (z) less the amount, if any, of any Closing Date
Adjustment owed by Seller to Buyer pursuant to Section 2.4(e), (ii) Buyer and
Seller jointly shall instruct the Escrow Agent to deliver to Seller $17,050,000
of the Escrow Deposit, (iii) Buyer shall deliver to the Seller the Senior
Subordinated Note (or CSC Class A Common Stock in lieu of all or a portion
thereof as provided in (C) of this Paragraph 2.3(a)), and (iv) Buyer shall
deliver to an escrow agent jointly selected by Buyer and Seller (the
"Indemnification Escrow Agent") the Indemnification Note (or CSC Class A Common
Stock in lieu of all or a portion thereof as provided in (C) of this Paragraph
2.3(a)); PROVIDED, HOWEVER, that the payments required to be made pursuant to
subsections (i) and (ii) above shall be made on the Closing Date by wire
transfer of immediately available funds to a bank account designated by Seller
in writing no later than five Business Days prior to Closing.
(b) ESCROW FUND. (i) Upon and simultaneously with the execution of
this Agreement, Buyer shall execute and deliver the Escrow Agreement and shall
deposit an amount equal to Six Million Eight Hundred Twenty Thousand Dollars
($6,820,000) into escrow with The Bank of New York (the "Escrow Agent") to be
held pursuant to the terms of the Escrow Agreement. Prior to the Closing, the
Escrow Fund shall secure the performance of Buyer in accordance with the terms
of this Agreement. Payment of the Escrow Fund to Seller (which payment, if
made, shall be as full and complete liquidated damages), or return of the Escrow
Fund to Buyer, shall be made pursuant to and in accordance with the terms of the
Escrow Agreement.
(ii) On or prior to June 16, 1994, Buyer shall execute and deliver an
escrow agreement (the "New Escrow Agreement") to be executed between Buyer,
Seller and Escrow Agent and shall deposit Seventeen Million Fifty Thousand
Dollars ($17,050,000) into escrow (the "Escrow Fund") with the Escrow Agent to
be held pursuant to the terms of New Escrow Agreement. Prior to the Closing,
the Escrow Fund shall secure the performance of Buyer in accordance with the
terms of this Agreement. Payment of the Escrow Fund to Seller (which payment,
if made, shall be as full and complete liquidated damages), or return of the
Escrow Fund to Buyer, shall be made pursuant to and in accordance with the terms
of the Escrow Agreement.
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(c) ACCOUNTS RECEIVABLE. At the Closing, Seller shall deliver
to Buyer good, valid and marketable title to the Acquired Accounts Receivable
and the Buyer, in consideration therefor, shall deliver the Accounts Receivable
Price to the Seller by wire transfer of immediately available funds to a bank
account designated by Seller in writing no later than five Business Days prior
to the Closing. In addition, at the Closing Seller will deliver (i) the
Advertising Accounts Receivable to Buyer solely as collection agent therefor and
(ii) the Accounts Receivable other than the Advertising Accounts Receivable and
the Acquired Accounts Receivable (the "Other Receivables"). Buyer agrees, for a
period of one year from the Closing Date, to use its best efforts to collect all
amounts due in respect of the Advertising Accounts Receivable (and shall not
waive any amounts due thereunder without the prior written consent of Seller)
and to promptly remit to Seller 100% of all amounts so collected (net of
collection fees and expenses). Buyer agrees at all times to apply amounts
received from any party to the oldest outstanding Advertising Accounts
Receivable of such party.
2.4 ADJUSTMENTS TO PURCHASE PRICE.
(a) No later than ten Business Days prior to the Closing, the
Seller shall provide Buyer with an estimated calculation of the Basic
Subscribers (the "Estimated Basic Subscribers") and an estimated calculation of
the Accounts Receivable Price on and as of the close of business on the Closing
Date.
(b) Within 45 calendar days after the Closing Date, Buyer shall
deliver a certificate of its Chief Financial Officer to Seller setting forth a
determination of the Basic Subscribers on and as of the Closing Date (the
"Actual Basic Subscribers"). Seller shall be deemed to have accepted such
certification unless, within 30 calendar days of the receipt thereof, Seller
delivers to Buyer a reasonably specific description of Seller's objections (an
"Objection Notice"). In the event an Objection Notice is delivered, Buyer and
Seller shall negotiate in good faith to resolve such objections. If no
resolution is agreed upon within 30 calendar days after receipt of the Objection
Notice by Buyer, the dispute shall be submitted for resolution to Arthur
Andersen & Co. (the "Accountants"), acting as experts, not arbitrators,
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and resolution by such Accountants shall be conclusive, binding and final.
Buyer and Seller shall make readily available to such Accountants all relevant
books and records and other items requested by such Accountants to review any
dispute. Such Accountants shall submit their resolution of the dispute to Buyer
and Seller within 30 calendar days of their engagement hereunder. The fees of
such Accountants shall be borne equally by Buyer and Seller.
(c) Upon acceptance of the certification referred to in Section
2.4(b) above or the resolution of any Objection Notice as set forth in such
Section, the Purchase Price shall be adjusted (the "Purchase Price Adjustment")
as follows:
(i) If an Initial Adjustment was made and the number of Actual Basic
Subscribers exceeds the number of Estimated Basic Subscribers,
the Purchase Price shall be adjusted upward by an amount equal to
$500 multiplied by such excess; PROVIDED, HOWEVER, in no event
shall such upward adjustment, together with the Initial
Adjustment, exceed Four Hundred Forty-Three Thousand Three
Hundred Dollars ($443,300);
(ii) If an Initial Adjustment was made and the number of Estimated
Basic Subscribers exceeds the number of Actual Basic Subscribers,
the Purchase Price shall be adjusted downward by an amount equal
to $500 multiplied by such excess; PROVIDED, HOWEVER, in no event
shall such downward adjustment exceed the Initial Adjustment; or
(iii) If no Initial Adjustment was made and the number of Actual
Basic Subscribers exceeds the Adjustment Target, the Purchase
Price shall be adjusted upward by an amount equal to $500
multiplied by the excess of the Actual Basic Subscriber over the
Adjustment Target; PROVIDED, HOWEVER, in no event shall such
upward adjustment exceed Four Hundred Forty-Three Thousand
Dollars ($443,000);
Payment of the Purchase Price Adjustment, if any, shall be made by wire transfer
of immediately available funds to an account designated in writing by the
recipient of such funds on the later of (i) five Business Days from the date of
the Purchase Price Adjustment and (ii) the Adjustment Date (as defined in
Section 2.4(e) hereof).
(d) In the event that any person or entity is supplied CATV
signals by the System within 30 days prior to the Closing Date and is not
included in the determination of the Estimated Basic Subscribers for purposes of
determining the Initial
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Adjustment and such subscriber pays for one month's service subsequent to
Closing (a "New Subscriber"), such New Subscriber shall be included in the
determination of Actual Basic Subscribers for purposes of making the
adjustments, if any, pursuant to Section 2.4(c) hereof.
(e) All items of (i) deferred revenues, (ii) deferred or prepaid
expenses, (iii) accrued expenses, and (iv) other assets or liabilities which
cannot be individually or easily settled or discharged by the Seller at Closing
because the period to which they pertain overlaps the Closing, or otherwise, and
which arise from the operations of the System, shall be pro rated or allocated
between Buyer and Seller in accordance with GAAP as of the close of business on
the Closing Date. Seller shall be responsible for all liabilities and
obligations incurred in connection with the operation of the System for all
periods prior to the close of business on the Closing Date and shall be entitled
to all revenues derived from the operation of the System for all periods prior
to the close of business on the Closing Date. Buyer shall be responsible for
the Assumed Liabilities and for those liabilities and obligations incurred by
Buyer from and after the close of business on the Closing Date. Such PRO RATA
allocations shall include, without limitation, all advance payments received by
Seller prior to the close of business on the Closing Date for services to be
rendered in whole or in part after Closing, prepayments made by Seller relating
to periods of time subsequent to the close of business on the Closing Date,
prepaid programming fees, property taxes and assessments, unpaid copyright
royalties and fees, rents, pole rents, franchise fees, license fees, power and
utility expenses, prepayment liabilities and obligations under the Business
Contracts, sales commissions, time sales agreements, deposits and other prepaid
expenses and deferred items and all other income and expenses normally pro rated
in the sale of assets of a business (and of a CATV system in particular) and
attributable to the ownership and operation of the System. Adjustments under
this Section 2.4(e) shall be jointly determined by Buyer and Seller and paid
from one party to the other, as the case may be, on the Closing Date to the
extent they are known and agreed to by the parties (the "Closing Date
Adjustment"). Seller shall deliver to Buyer, no later than ten Business Days
prior to the Closing Date, a preliminary list of all such
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adjustments and shall deliver an updated list of adjustments at or prior to
Closing. Otherwise, such adjustments shall be determined within 90 calendar
days thereafter (the "Adjustment Date") and payment therefor by Buyer or Seller,
as the case may be, shall be made on the later of (i) the Adjustment Date and
(ii) five Business Days from the date of the determination, if any, of the
Purchase Price Adjustment pursuant to Section 2.4(c) hereof. With respect to
such adjustments, the parties shall jointly prepare a statement at least ten
business days before the Adjustment Date of the determination of such
adjustments, setting forth in reasonable detail the basis for such
determination. Payments made in respect of such adjustments shall be the net
amount due less any amounts in dispute as between the parties. If the parties
do not concur with any proposed adjustments, then the non-concurring party shall
so inform the other party within such ten business day period, and the parties
shall negotiate in good faith with regard to the matter and an appropriate
adjustment and payment shall be made as agreed upon by the parties. If there
shall be any dispute concerning any amount due pursuant to this provision which
the parties cannot resolve, the dispute shall be submitted to the Accountants
for resolution of the dispute, acting as experts, not arbitrators and such
resolution shall be conclusive, binding and final. Buyer and Seller shall make
readily available to such Accountants all relevant books and records and other
items requested by such Accountants to review such dispute. Such Accountants
shall submit their resolution of the dispute to Buyer and Seller within 30
calendar days of their engagement hereunder. Buyer and Seller agree to share
equally the cost and expenses of the Accountants. All amounts owed pursuant to
this Section 2.4(e) shall be paid by wire transfer of immediately available
funds within ten business days after the resolution of the amount due. If such
amount is not paid within such ten business day period, or, if there is no
dispute with respect to the amount due, if such amount is not paid on the later
of (i) the Adjustment Date and (ii) five Business Days from the date of the
determination, if any, of the Purchase Price Adjustment pursuant to Section
2.4(c) hereof, interest on the amount due shall accrue from the Adjustment Date
until the date paid at the lesser of the Prime Rate plus three percent (3%) or
the maximum rate allowed by law.
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(f) All state or local sales and transfer taxes applicable to
the transactions contemplated by this Agreement shall be borne in equal shares
by Seller and by Buyer. Buyer shall pay the cost of any title insurance,
surveys and recording costs.
2.5 APPRAISAL AND ALLOCATION OF PURCHASE PRICE.
(a) Buyer and Seller agree that one thousand dollars ($1,000) of
the Purchase Price shall be allocated for all purposes to the Non-Compete
Agreements.
(b) Promptly after Closing, Buyer and Seller shall cooperate in
the filing of form 8594; PROVIDED, HOWEVER, that Buyer and Seller will allocate
to the real and tangible personal property included in the System Assets an
amount equal to the fair market value of such assets. Based on the information
provided by Seller as of the date of this Agreement, the parties anticipate that
approximately $51,150,000 (the "Estimated Fair Market Value") represents the
fair market value of such real and tangible personal property. Promptly after
execution of this Agreement, Buyer and Seller jointly shall retain an
independent appraiser in order to verify the accuracy of the Estimated Fair
Market Value.
3. CLOSING DATE AND PLACE.
3.1 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall be held on or before the later of (i) June 30, 1994 or (ii) two Business
Days after the issuance of an Amended Order of Approval of the New Jersey Board
of Regulatory Commissioners, but in no event later than July 15, 1994; PROVIDED,
HOWEVER, that if required by [Buyer's lenders], the Closing may be delayed until
the first Business Day following the expiration of the period of 45 days after
the Amended Order of Approval of the New Jersey Board of Regulatory
Commissioners is served on Buyer upon such Order becoming final and non-
appealable. or, such other date as Buyer and Seller shall mutually agree (the
"Closing Date") at the offices of Cadwalader, Wickersham & Taft, 100 Maiden
Lane, New York, New York 10038, or such other location as Seller and Buyer
mutually agree. If the Closing Date occurs after June 30, 1994, for purposes of
determining whether the conditions to Buyer's obligations set forth in
Section 7.7 of this Agreement have been satisfied, the Closing Date shall be
deemed to be June 30, 1994.
4. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby represents,
warrants and covenants to Buyer that:
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4.1 ORGANIZATION OF SELLER. Seller is a limited partnership duly
organized and validly existing under the laws of the State of New Jersey, has
all requisite power and authority to execute and deliver this Agreement and the
Ancillary Agreements and, at the Closing Date, will have all requisite power and
authority to perform this Agreement and the Ancillary Agreements, and is not
required to be qualified to do business as a foreign limited partnership in any
jurisdiction in order to hold the System Assets or operate the System. Seller
has all requisite power and authority, and all federal, state and local
governmental franchises, licenses, permits, approvals and authorizations which
are necessary, to own and operate the System Assets and the System at the places
and in the manner in which the System is currently owned and operated.
4.2 SELLER'S AUTHORITY. (a) The execution, delivery and performance
of this Agreement and the Ancillary Agreements by Seller have been duly and
validly authorized by all necessary action on the part of Seller, and, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by Seller at the date hereof (except as set forth on Schedule 4.2) do
not and, as of the Closing, will not, result in a breach or violation by Seller
of, or constitute a default (or an event which with or without the passage of
time or the giving of notice, or both, will constitute a breach or default)
under, or create or impose any lien or encumbrance upon, any of the System
Assets pursuant to, or conflict with: (i) any Authorization or CATV Instrument,
(ii) any agreement, indenture, deed, loan agreement or other instrument to which
Seller is a party or by which Seller is bound or to which any of the System
Assets is subject, (iii) Seller's Second Amended and Restated Agreement and
Certificate of Limited Partnership Agreement, dated as of March 31, 1988
("Seller's Partnership Agreement") or certificate of limited partnership or
other governing documents referred to in Section 4.2(b); or (iv) any statute,
ordinance, rule, regulation, order, judgment or decree to which Seller is a
party or by which Seller is bound or to which any of the System Assets is
subject, except in the case of (ii) above, where such breach, violation, default
or creation or imposition of such lien or encumbrance or conflict is not,
individually or in the
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aggregate, reasonably likely to have a material adverse effect on (1) the
business, financial condition or results of operations of the System, taken as a
whole, (2) Seller's or, to the actual knowledge of Seller, Buyer's ability to
own the System Assets or to operate the System as it is now operated or (3)
Seller's ability to perform its obligations under this Agreement (each or any, a
"Material Adverse Effect"). This Agreement constitutes, and the Ancillary
Agreements and each contract delivered by Seller to Buyer pursuant hereto will
constitute, the legal, valid, and binding obligation of Seller enforceable in
accordance with their respective terms except to the extent such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and principles of
equity.
(b) Seller has heretofore delivered to Buyer a copy of the Seller's
Partnership Agreement (excluding Sections 9, 10 and 20.3.5), as in full force
and effect on the date hereof, and Sections 9, 10 and 20.3.5 of Seller's
Partnership Agreement do not, nor are there any other agreements between or
among any general and/or limited partners of Seller that, contain any provisions
that are reasonably likely to affect the transactions contemplated by this
Agreement. Between the date of delivery of Seller's Partnership Agreement and
the Closing, no changes shall have been made to it which are reasonably likely
to adversely affect Seller's ability to perform its obligations under this
Agreement.
4.3 AUTHORIZATIONS AND CATV INSTRUMENTS. Seller has all
Authorizations necessary to own the System Assets and to operate the System in
the manner in which it is now operated by Seller. Except as set forth in
Schedule 4.3, Seller knows of no other franchises, licenses or authorizations
other than the Authorizations which, if not possessed by the Seller, would be
reasonably likely to have a Material Adverse Effect. Each Authorization is
valid, is in full force and effect, is not in default in any respect (and there
exists no event or circumstance that, with notice or the lapse of time or both,
would constitute a default) and is in accordance with all applicable federal,
state and local laws except where any such default or failure to comply is not
reasonably likely to have a Material Adverse
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Effect. True and correct copies of the Authorizations and the CATV Instruments
have heretofore been provided to Buyer by Seller. Subject to obtaining the
Required Consents (as defined in Section 4.8), the execution, delivery and
performance of this Agreement will not entitle any person or entity to cancel,
suspend, terminate or diminish the rights of Seller under any Authorization.
4.4 REAL PROPERTY. All of the real property and all of the leases of
real property included in the System Assets are listed in Schedule 4.4 (the
"Real Property"). As to the premises which are designated on Schedule 4.4 as
being owned by Seller, Seller has good, valid and marketable title in fee simple
to such premises and all buildings, improvements and fixtures thereon, free and
clear of all Encumbrances, except as shown on such Schedule 4.4.1 and except for
minor imperfections of title and Encumbrances which do not materially detract
from the value of such Real Property. Seller is the sole owner of the leasehold
interest in all real property shown on Schedule 4.4 to be leased to it, and such
leases are valid and subsisting and in full force and effect except where any
failure is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. All of the Real Property, buildings, fixtures and
improvements thereon owned or leased by Seller, are in good operating condition
and repair (subject to normal wear and tear).
4.5 EASEMENTS AND RIGHTS-OF-WAY. Except as set forth on Schedule
4.5, each person, firm, corporation or other entity upon or under whose property
are located, maintained, installed or operated any of the System Assets (other
than drop lines to subscriber dwellings which do not cross any property other
than the property of such subscribers) has granted to Seller such easements,
licenses or rights of way as are necessary for the location, maintenance,
installation and operation of such System Assets upon, over or under such
property, except where the failure to have any such easement, license or right
of way is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. All such easements, licenses or rights of way are, to
the knowledge of Seller, valid and binding and are in full force and effect on
the date hereof and will be as of the Closing Date except where any
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failure is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. Except as set forth on Schedule 4.5, the Seller has
not received written notice from any person, firm, corporation or other entity
upon or under whose property are located, maintained, installed or operated any
System Assets of an intention to challenge the continued location, maintenance,
installation or operation of such item on such property.
4.6 TANGIBLE PERSONAL PROPERTY. Schedule 4.6 contains a reasonably
complete description of the tangible personal property included in the System
Assets (the "Tangible Personal Property") as of the date of this Agreement. At
the Closing, Tangible Personal Property shall include a thirty (30) day
operating supply of inventory for operation of the System in the ordinary course
of business. Except as set forth on Schedule 4.6.1, Seller has good, valid and
marketable title to all Tangible Personal Property, free and clear of all
Encumbrances except minor imperfections of title and Encumbrances which do not
materially detract from the value of such Tangible Personal Property. The
Tangible Personal Property is in good operating condition and repair (subject to
normal wear and tear).
4.7 CONTRACTS; NO DEFAULTS. Schedule 4.7 contains a list of all
written contracts in force on the date hereof to which Seller is a party and
relating to the System Assets, to the System or to the business and operations
thereof except for Programming Contracts and management and consulting contracts
and except for contracts entered into in the ordinary course of business
consistent with past practices which call for the payment by or to the Seller of
$50,000 or less individually, or $500,000 or less in the aggregate, in any 12
month period, or which are terminable by Seller on notice of 90 days or less
without penalty or premium (each such contract listed on Schedule 4.7 being
herein referred to as a "Business Contract"). Except as disclosed on Schedule
4.7, (i) each of the Business Contracts is in full force and effect and
constitutes a valid and binding obligation of Seller and is legally enforceable
in accordance with its terms against the parties thereto, (ii) Seller has
complied with all of the provisions of such Business Contracts and is not in
default thereunder, and (iii) there has not occurred any event which (whether
with or without notice, lapse of time, or the
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happening or occurrence of any other event) would constitute such a default,
except in the case of (ii) or (iii) above, where the occurrence of such event is
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect. To the knowledge of Seller and except as disclosed on Schedule
4.7, the parties to the Business Contracts other than Seller are not in default
under any such Business Contracts except where such default is not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect.
4.8 APPROVALS AND CONSENTS. Set forth in Schedule 4.8 is a list of
all required consents, approvals, waivers, permits, licenses or authorizations
of any federal, state, local or other regulatory or public authority, and all
required consents, approvals or waivers of any other persons or entities, which
(i) are required to be obtained by Seller under any law, regulation, court order
or franchise in order to consummate the transactions contemplated by this
Agreement; (ii) are required to be obtained by Seller under any note, bond,
mortgage, permit, agreement or other instrument in order to consummate the
transactions contemplated by this Agreement, except where the failure to obtain
such consents, approvals, waivers, permits, licenses or authorizations,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect; or (iii) are otherwise necessary to prevent the termination of,
or any material restriction under, any franchise agreement or agreement assumed
by Buyer under this Agreement upon consummation of the transactions contemplated
hereby (collectively, the "Required Consents").
4.9 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. Attached
hereto as Schedule 4.9 are true and complete copies of audited financial
statements of Seller as at December 31, 1992 (the "Audited Financial
Statements"), and unaudited financial statements of Seller for the eight-month
period ended August 31, 1993 (the "Unaudited Financial Statements") (the Audited
Financial Statements and the Unaudited Financial Statements are herein
collectively referred to as the "Financial Statements"). The Audited Financial
Statements have been prepared in accordance with GAAP, consistently applied, and
fairly present the financial condition and results of operations of the Seller,
taken as a whole, as of
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the dates and for the periods indicated. The Unaudited Financial Statements
have been prepared in accordance with GAAP (except for the absence of footnotes
and a statement of cash flows), applied consistently with the Audited Financial
Statements, and fairly present the financial condition and results of operations
of the Seller, taken as a whole, as of the dates and for the periods indicated,
subject to year-end adjustments. Except as set forth in the Financial
Statements, since August 31, 1993 and except for changes directly or indirectly
attributable to the Cable Television Consumer Protection and Competition Act of
1992 and the rules, regulations and interpretations promulgated thereunder (the
"1992 Cable Act"), there has been no material adverse change in the financial
condition or results of operations of the Seller.
4.10 ACQUIRED ACCOUNTS RECEIVABLE. At least 98% of the face value of
each of the Acquired Accounts Receivable constitutes (or will constitute) a
valid claim in such amount and has been acquired in the ordinary course of
Seller's business.
4.11 INFORMATION SHEET; COMPETING FRANCHISES.
(a) Schedule 4.11(a) sets forth the following technical and
business information relating to the operation of the System as of the date of
this Agreement (which information is true and correct as of the date hereof, or
if another date is specified in such Schedule, as of such specified date) with
respect to: (i) a rate card setting forth rates currently being charged by
Seller in connection with the System for every service, level of service,
package of service(s), installations and outlets or other services or items for
which Seller has an established charge (the "Current Rates"), and a rate card
setting forth all such rates immediately prior to September 1, 1993 (the "Prior
Rates"); (ii) the current real and personal property lease obligations of Seller
and rental payments; (iii) the signals carried on the System; (iv) the number of
Subscribers as of the date specified in such Schedule 4.11(a) and the total
number of such Subscribers, by level of service subscribed for by such
Subscribers as of such date; (v) the mileage of plant in the System as of the
date specified in such Schedule 4.11(a); (vi) the number of channels capable of
being delivered over the System (without utilization of digital compression);
(vii) the number of addressable converters used in the System; (viii) the
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number of persons or entities receiving free service and the reasons therefor;
(ix) surety and performance bonds required by the Authorizations and/or CATV
Instruments, or otherwise maintained by Seller with respect to the System or
System Assets, and the amount so required; and (x) the current franchise fees
being charged by each franchising authority.
(b) Except as set forth on Schedule 4.11(b), no person or entity
(including without limitation any governmental agency, body or division) has any
right to acquire any interest in the System or the System Assets (including
without limitation any right of first refusal or similar right to purchase any
interest in the System or any of the System Assets), which right has not been
validly, properly and irrevocably (except for the right to revoke such waiver
only if this Agreement is terminated pursuant to Section 16 hereof) waived by
the party entitled to assert such right. Except as set forth on Schedule
4.11(b), Seller has not entered into any agreement and is not bound by any
commitment with respect to retransmissions of broadcast television signals
relating to the System.
(c) Except as set forth in Schedule 4.11(c), to the knowledge of
Seller, no other person or entity:
(i) has been granted or has applied for the consent or approval of
any governmental agency, body or division (a "Governmental
Approval") for the installation, construction, development,
ownership or operation of a CATV system or any MDS or MMDS
technology within all or part of the territory covered by the
System;
(ii) operates any of the foregoing or any SMATV technology within all
or part of the territory covered by the System, regardless of
whether any Governmental Approval is required or has been
obtained;
(iii) has been granted a Governmental Approval that grants a right
of first refusal or similar right to purchase a CATV system
within any territory covered by the System; or
(iv) has commenced, or has received or applied for a Governmental
Approval for, the construction, installation, development or
operation of a CATV system which has resulted, or could result,
in such system being overbuilt with the System.
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4.12 COMPLIANCE WITH LAWS, REGULATIONS AND REPORTING. Except as
disclosed on Schedule 4.12, and except with respect to the matters described in
the Offer of Settlement referred to on Schedule 1.8, the ownership and operation
of the System Assets by Seller comply in all material respects with all
applicable laws, rules, regulations, requirements, standards and guidelines of
all federal, state and local authorities or agencies having jurisdiction over
Seller and with the terms and provisions of any mortgage, lease, license,
indenture, or agreement relating to the System except where any failure to be in
compliance is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
4.13 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.13,
there are no flammable, explosive or radioactive materials, toxic substances or
other hazardous substances or wastes on, under or about any of the properties
included in the System Assets which could result in any governmental or third-
party action, proceeding or claim which is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect. Seller has, and is in
compliance with the terms of, all permits, licenses and other authorizations
required in connection with the operation of the System pursuant to, or to be in
material compliance with, any Environmental Requirements (as defined below).
Seller is in material compliance with all requirements for the operation of the
System or use of the System Assets under federal, state, or local laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic substances, materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
substances, materials or wastes (collectively, "Environmental Requirements").
There are no underground storage tanks storing petroleum substances or any other
hazardous substances at any of the properties included in the System Assets.
There is no asbestos-containing material present in any real property presently
owned, leased or used by Seller and no asbestos-containing material has been
removed from any real property while such real property was owned, leased or
used by Seller, in either case, except
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for such as is not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect. Seller has provided to Buyer copies of any and all
environmental audits, investigations, studies or reports that have been
performed by or at the direction of Seller or to the extent such audits,
investigations, studies and reports concern any real property leased by Seller,
of which Seller has knowledge or possession. For the purpose of this Section,
"hazardous substances", "hazardous materials" and "hazardous waste" shall have
the meaning set forth in, as the case may be, the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, 42 U.S.C. Section 9601,
ET SEQ., and regulations thereunder; the Resource Conservation and Recovery Act;
or any applicable federal, state or local laws pertaining to environmental
regulations.
4.14 FCC MATTERS. Except as set forth on Schedule 4.14, all reports
and filings required to be filed with the FCC and with all franchising
authorities by Seller with respect to the operation of the System have been
filed. All such reports and filings are accurate and complete in all material
respects. Seller has all required certificates, permits, and clearances from
governmental agencies required to operate the System and the System Assets in
the manner currently operated by Seller, except where the failure to have any
such certificate, permit or clearance is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect.
4.15 COPYRIGHT MATTERS. Seller has filed all required reports,
notices and statements with the United States Copyright Office. Seller has paid
all fees required under the Copyright Act of 1976 and has otherwise complied
with such Act in all material respects; PROVIDED, HOWEVER, that Seller makes no
representations regarding the effect of the CATV industry-wide dispute
concerning music licensing fees or the dispute covered by the "Cablevision"
case.
4.16 CLAIMS AND LITIGATION. Except as set forth in Schedule 4.16,
there is no action, suit, claim, arbitration, administrative or other proceeding
pending or, to Seller's knowledge, threatened against or involving Seller, the
System or any of the System Assets, at
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law or in equity, which would prevent or adversely affect in any material
respect the ownership, use or operation of any of the same by Buyer. Except as
set forth in Schedule 4.16, there is no pending or, to Seller's knowledge,
threatened investigation or proceeding based on any violation by Seller of any
state or federal law, rule or regulation pertaining to the System.
4.17 EMPLOYEES; COMPENSATION; UNIONS.
(a) Seller is not a party to any employment agreements or any
collective bargaining agreements that cannot be terminated without liability to
Buyer upon the purchase of the System. Seller is not a party to any pending or,
to Seller's knowledge, threatened labor dispute or labor organization effort.
(b) Except as set forth in Schedule 4.17, Seller has no pension
plans, profit sharing plans, deferred compensation plans, stock option or stock
bonus plans or the like or similar employee or executive benefit plans. Except
as set forth in Schedule 4.17, Seller does not maintain, sponsor or contribute
to any "employee benefit plan" within the meaning of Section 3(3) of ERISA, or
other plan, program, practice, agreement or arrangement of employee
compensation, deferred compensation, severance pay, retiree benefit or fringe
benefit. Seller is in compliance with all provisions, including all reporting
and disclosure requirements, of ERISA and of the Code, relating to employee
benefit plans, except where any such failure is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.
4.18 INSURANCE. Schedule 4.18 lists all insurance policies of Seller
which relate to the ownership, operation or use of the System and System Assets.
All of such policies are in full force and effect and Seller is not in default
of any provision thereof, except where any such default is not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect.
4.19 PATENTS AND COPYRIGHTS. Seller, to its knowledge, owns or
possesses all licenses or other rights to use all copyrights, trademarks,
service marks, service names, trade
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names and patents necessary to operate the System, except where any failure
would not, individually or in the aggregate, have a Material Adverse Effect.
All copyrights, trademarks, service marks, trade names, service names and
patents owned or used by Seller, and applications therefor, are set forth on
Schedule 4.19 and are designated as to whether they are owned by or licensed to
Seller.
4.20 RATES. As of the date hereof, the Current Rates are, to Seller's
knowledge, in substantial compliance with all applicable laws, including without
limitation the 1992 Cable Act as in effect on the date of this Agreement.
Seller has provided to Buyer accurate copies of Seller's worksheets revising the
Prior Rates to the Current Rates.
4.21 SPECIAL AGREEMENTS. Except as set forth in Schedule 4.21,
Seller:
(i) is not a party to any contract or agreement, written or oral,
whereby Seller provides CATV service to one or more persons or
entities in the service area covered by the Systems under any
bulk contract or agreement; or
(ii) does not provide CATV system services to any person or entity in
the service area covered by the System at rates not reflected in
Seller's subscriber rate card.
4.22 TAXES. Except as set forth in Schedule 4.22, Seller has filed or
caused to be filed, or on the date of the Closing will have filed, all federal,
state, local and foreign income, information, franchise, sales, use, property,
excise, payroll and other returns, declarations and reports related to Taxes
that are required to be filed by Seller on or prior to the date hereof. All
Taxes due and payable by Seller on or before the date of this Agreement with
respect to the assets or properties of Seller or the System (including the
System Assets) have been paid or have been provided for in the Financial
Statements. Neither Seller nor its general partners or, to the knowledge of
Seller, its limited partners, have received any notice or assessment to the
effect that there is any unpaid interest, penalty or addition to Taxes due or
claimed to be due from Seller with respect to the assets or properties of Seller
or the System (including the System Assets) nor, to the knowledge
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of Seller, is any such notice contemplated or under consideration; and neither
Seller nor its general partners or, to the knowledge of Seller, its limited
partners, have received notice of the assertion or threatened assertion of any
lien on any of the assets or properties of Seller or the System (including the
System Assets) on account of any unpaid Taxes that are due and payable and no
audits of the return or reports of Seller by any governmental authority are
pending or, the knowledge of Seller, threatened.
4.23 CAPITAL COMMITMENTS. Except as set forth in Schedule 4.23,
Seller has not entered into any agreements and is not otherwise bound to any
written or oral commitments to upgrade any of the System (including without
limitation promises or commitments on the part of Seller in connection with any
of the Authorizations).
4.24 FINANCING COMMITMENTS. Set forth in Schedules 4.4.1, 4.6.1 and
4.24 is a description of all notes, letters of credit, guarantees, instruments
of debt, mortgages, liens, conditional sale or lease purchase agreements,
security agreements and purchase money security interests that, in each case,
create any Encumbrances on the System or any of the System Assets and all
obligations for money owed or debts of Seller relating to the System or any of
the System Assets (other than trade accounts payable incurred in the ordinary
course of Seller's business), setting forth the party to whom the obligation or
debt is due, the collateral, if any, and the amount and date due.
5. BUYER'S REPRESENTATIONS. Buyer represents and warrants that:
5.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to execute,
deliver and perform this Agreement and the Ancillary Agreements. Buyer is a
wholly-owned subsidiary of Cablevision Systems Corporation, a Delaware
corporation ("CSC"). As of the Closing Date, Buyer will be duly qualified to do
business as a foreign corporation in the State of New Jersey.
5.2 AUTHORITY TO EXECUTE AND CONSUMMATE AGREEMENT. The execution,
delivery and performance of this Agreement and the Ancillary Agreements have
been duly authorized by all necessary corporate action on Buyer's part. This
Agreement has been duly executed and delivered by Buyer and constitutes, and the
Ancillary Agreements and each
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contract delivered by Buyer to Seller pursuant hereto will constitute, the
legal, valid, and binding obligation of Buyer enforceable in accordance with its
terms except to the extent such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditor's rights generally and principles of equity. The execution,
delivery and, except as set forth on Schedule 5.2, performance of this Agreement
and the Ancillary Agreements by Buyer do not and, as of the Closing, will not
result in a breach or violation by Buyer of, or constitute a default (or an
event which with or without the passage of time or the giving of notice, or
both, will constitute a breach or default) under, any agreement, instrument,
charter or by-law provision, statute, ordinance, rule, regulation or order to
which Buyer is a party or by which Buyer is bound, other than such breach,
violation, default or conflict that, individually or in the aggregate, will not
materially impair Buyer's ability to perform its obligations under this
Agreement.
5.3 EXCHANGE ACT COMPLIANCE. CSC has timely filed with the
Securities and Exchange Commission all forms, reports, statements and other
documents required to be filed by CSC pursuant to the Exchange Act and the rules
and regulations promulgated thereunder and the information contained in such
forms, reports, statements and other documents, as of the date of filing
thereof, did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Copies
of CSC's most recent reports on Forms 10-K, 10-Q and 8-K and CSC's most recent
proxy statement have heretofore been delivered by CSC to Seller.
5.4 FITNESS AS FRANCHISEE. As of the date hereof, neither Buyer nor
CSC has received any written notification from the Board of Regulatory
Commissioners of the State of New Jersey (the "BRC"), or the Office of Cable
Television indicating, nor do any of William Quinn, Robert Cacase and James
Kofalt (each an "Executive Officer", collectively, the "Executive Officers")
have any actual knowledge, that the transfer of the System (including
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the Authorizations or CATV Instruments), to the Buyer as contemplated herein
would be rejected by the BRC.
5.5 CSC will treat the Senior Subordinated Note as debt for financial
reporting and Federal Income Tax purposes.
6. ADDITIONAL COVENANTS.
6.1 NEGATIVE COVENANTS OF SELLER. From the date of execution of this
Agreement until the Closing, Seller will not, without the prior written consent
of Buyer, which consent shall not be unreasonably withheld, do or agree to do
any of the following:
(a) Sell, assign, lease or otherwise transfer or dispose of any
of the System Assets; or merge or consolidate with or into any other entity or
enter into any agreements relating thereto, PROVIDED, HOWEVER, Seller may sell,
assign, lease or otherwise transfer or dispose of any System Asset (individually
or in the aggregate up to a maximum amount of $682,000) if such System Asset is
expended in the ordinary course of business, consistent with Seller's past
business practices;
(b) Delete any programming service on the System other than in
the ordinary course of business or as required by the 1992 Cable Act.
(c) Enter into any contracts, leases, commitments,
understandings, licenses, or other agreements or incur any obligation or
liability relating to the System; PROVIDED, HOWEVER, that Seller may enter into
such other contracts, leases, commitments, understandings, licenses or other
agreements in the ordinary course of business consistent with Seller's past
business practices or as required by the 1992 Cable Act; and, PROVIDED, FURTHER,
HOWEVER, that Seller may incur obligations or liabilities for which Seller will
remain solely liable after the Closing Date;
(d) With respect to the employees of the System, (i) enter into
or become subject to any employment, labor or union contract not terminable at
will, any professional service contract not terminable at will, or any pension,
insurance, profit sharing, deferred compensation, retirement, hospitalization,
employee benefit, or other similar plan not currently in effect or any renewal
on materially different terms; or (ii) increase the compensation payable or to
become payable to any employee, or pay or arrange to pay any
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bonus payment to any employee for which Buyer will be obligated after the
Closing (except, in the case of clause (ii) only, in the ordinary course of
business consistent with Seller's past business practices); or
(e) Offer free or reduced-price service as an inducement to any
person, except in the ordinary course of business consistent with Seller's past
business practices.
6.2 AFFIRMATIVE COVENANTS OF SELLER. Pending and prior to the
Closing Date, Seller will:
(a) Preserve its existence and business organization intact, use
its best efforts to preserve, for Buyer, Seller's relationship with suppliers,
customers, employees and others having business relations with Seller, and keep
all System Assets in their present condition, ordinary wear and tear excepted;
(b) Operate the System in the normal and usual manner and in
compliance with all applicable laws, rules and regulations except where any
noncompliance is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect;
(c) Maintain the validity of the Authorizations, and comply with
all applicable requirements of the Authorizations except where any noncompliance
is not reasonably likely to have a Material Adverse Effect;
(d) Maintain in full force and effect all of the insurance
policies listed on Schedule 4.18, or substantially similar policies, through the
Closing Date in amounts not less than those in effect on the date hereof;
(e) Provide Buyer with Seller's unaudited internal monthly
financial statements from September 1993 until the Closing Date as soon as
reasonably practicable after such statements are available;
(f) File or submit and diligently prosecute, with the reasonable
cooperation of Buyer, any and all applications or notices with public
authorities necessary for the consummation of the transactions contemplated
hereby or to satisfy the conditions set forth
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in Section 7.1 hereof, including, without limitation, under the Required
Consents, the Authorizations and the CATV Instruments; and, if legally
necessary, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); and
(g) Continue to make capital expenditures to comply with all
promises or commitments on the part of Seller in connection with the rebuild of
the System in Seaside as set forth in Schedule 6.2.
6.3 AFFIRMATIVE COVENANTS OF BUYER. Buyer will:
(a) Cooperate with and assist Seller in promptly filing or
submitting and diligently prosecuting any and all applications or notices with
public authorities necessary for the consummation of the transactions
contemplated hereby or to satisfy the conditions set forth in Section 7.1
hereof, including, without limitation, under the Authorizations, the CATV
Instruments and, if legally necessary, under the HSR Act, including payment of
the requisite $25,000 filing fee;
(b) File or submit and diligently prosecute any and all
applications or notices with public authorities that Buyer is required by
applicable law to file or submit in connection with the consummation of the
transactions contemplated hereby or to satisfy the conditions set forth in
Section 8.1 hereof;
(c) Notify Seller, on or prior to the 60th day prior to the
Closing, of the names of those employees of Seller whom Buyer reasonably expects
will be offered employment by Buyer on and after the Closing Date;
(d) Buyer shall indemnify Seller for any financial liability
incurred by Seller after the Closing under the programming agreements listed on
Schedule 1.45 to the extent such liability arises out of the failure of Buyer or
one of its affiliates to enter into any oral or written agreements to carry such
programming.
(e) Promptly disclose to Seller if William Bell or Barry O'Leary
has actual knowledge of information obtained through Buyer's due diligence
investigation or otherwise (other than information that is also known to Seller
or any of its general partners,
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agents or representatives) of a breach or inaccuracy of any representation or
warranty of Seller contained in this Agreement or the failure by Seller to
perform or comply with any agreement or covenant herein required to be performed
or complied with on or prior to the Closing Date; and
(f) Assist Seller in complying with its obligations under the
Consolidated Omnibus Budget Reconciliation Act of 1985 that relate to continued
insurance coverage to be made available to any of the employees of Seller on the
Closing Date who are not employed by Buyer immediately after the Closing Date
("Terminated Employees"), including, without limitation, offering such
Terminated Employees participation (at the expense of such Terminated Employees)
in employee benefit plans maintained by Buyer, PROVIDED, THAT Seller shall
indemnify and hold Buyer harmless from any and all costs and expenses incurred
in connection with such assistance.
6.4 ACCESS TO INFORMATION. Seller shall afford reasonable access
during normal business hours and on reasonable prior notice prior to Closing to
Buyer and to Buyer's counsel, accountants, engineers, and other representatives
to all the System Assets, and Seller will provide Buyer and Buyer's counsel,
accountants, engineers, and other representatives such information concerning
the System Assets and the operation of the System in Seller's possession as
Buyer may reasonably request to facilitate Buyer's due diligence review. Any
and all information, disclosures, knowledge or facts regarding Seller and its
operations and properties shall be confidential and shall not be divulged,
disclosed or communicated to any other person, firm, corporation or entity
except for Buyer's attorneys, accountants and lenders, and such lenders'
attorneys (and all such persons shall be informed of, and shall acknowledge, the
confidential nature of such information) for the purpose of consummating the
transactions set forth in this Agreement.
6.5 NOTIFICATION. Each party will promptly notify the other in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated
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hereby, or upon receiving any notice from any governmental department, court,
agency or commission of its intention to institute an investigation into, or
institute a suit or proceeding to restrain or enjoin the consummation of this
Agreement or such transactions, or to nullify or render ineffective this
Agreement or such transactions contemplated if consummated, or upon the
occurrence of, or upon becoming aware of the impending or threatened occurrence
of, any event which would cause or constitute a breach or would have caused a
breach had such event occurred or been known to such party prior to the date
hereof, of any of the respective representations and warranties contained in or
referred to in this Agreement or in any Schedule hereto.
6.6 UPPER FREEHOLD AND MILLSTONE. Seller and Buyer acknowledge that
certain of the provisions of the 1992 Cable Act and the regulations of the BRC
may prohibit Seller from transferring and assigning to Buyer the System Assets
solely utilized in connection with the Authorizations for Upper Freehold (the
"Upper Freehold Assets") and Millstone (the "Millstone Assets") until Seller has
held the particular Authorization for three years. The Seller and Buyer shall
use all reasonable efforts to obtain necessary waivers or approvals from the FCC
and the BRC, if necessary, so that the Upper Freehold Assets and the Millstone
Assets may be transferred and assigned to Buyer on the Closing Date. If such
waivers and approvals are not obtained on or prior to the Closing Date, the
Upper Freehold Assets and the Millstone Assets will be retained by Seller and
shall be managed by Buyer under a management agreement with Seller whereby Buyer
shall be responsible for the operation of the Upper Freehold Assets and the
Millstone Assets, including the payment of any and all expenses, in exchange for
a management fee equal to the net cash flow generated by such properties. The
Upper Freehold Assets and the Millstone Assets shall be transferred and assigned
to Buyer upon the earlier to occur of: (i) obtaining any necessary FCC and BRC
approval or waiver; (ii) receipt of an opinion of counsel reasonably acceptable
to Seller and Buyer that no approval or waiver from the FCC and BRC is
necessary; (iii) as to the Upper Freehold Assets, January 1, 1995; and (iv) as
to the Millstone Assets, June 30, 1994.
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6.7 RIGHT TO CURE; PURCHASE PRICE ADJUSTMENT. In the event Buyer
notifies Seller, pursuant to Section 6.3(e) hereof, of any breach or inaccuracy
of a representation or warranty of Seller or any non-performance or non-
compliance by Seller of any agreement or covenant required to be performed or
complied with on or prior to the Closing and Buyer does not waive such breach,
inaccuracy, non-performance or non-compliance, Seller shall have the right, but
not the obligation, to (i) cure any breach, non-performance or non-compliance or
(ii) negotiate with Buyer, in good faith, a reduction in the Purchase Price.
6.8 CLOSING CONDITIONS. Seller and Buyer will exert their best
efforts in good faith to cause the Closing conditions set forth in Sections 7
and 8 to be met on or before the Closing Date (including without limitation
executing the Ancillary Agreements, as applicable, at the time and in the form
contemplated by this Agreement).
7. CONDITIONS OF BUYER'S OBLIGATIONS. The obligations of Buyer to
purchase the System Assets and to proceed with the Closing are subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
one or more of which may be waived in whole or in part by Buyer by giving
written notice to Seller to that effect:
7.1 CONSENTS AND WAIVERS.
(a) Seller shall, with the reasonable cooperation of Buyer, have
obtained all Required Consents and/or all consents or waivers necessary to
effect valid assignment of all Authorizations on terms which are not less
favorable than those held by Seller on the date hereof, or, in lieu of such
consents or waivers, Buyer shall have been issued or shall have entered into
such Authorizations necessary for the operation of the System by Buyer on terms
and conditions which are not less favorable than those held by Seller on the
date
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hereof and shall have provided Buyer with evidence reasonably satisfactory to it
of such consents, waivers and/or issuances, as the case may be. A Required
Consent, or a consent or waiver, shall be deemed to satisfy the condition
contained in this Section 7.1(a) notwithstanding its containing a term or terms
less favorable than those held by Seller on the date hereof, unless:
(i) Buyer believes the less favorable term or terms, in the
aggregate, is or are reasonably likely to have a material adverse
effect on (i) the business, financial condition, results of
operation of Buyer or the Systems, taken as a whole; (ii) Buyer's
ability to own or operate the Systems or CATV systems in New
Jersey generally or (iii) Buyer's ability to perform its
obligations under this Agreement; or that would require Buyer to
make capital expenditures in excess of ongoing maintenance
capital expenditures greater than $40,000,000; and
(ii) Buyer reasonably believes, on the advice of its counsel, that the
less favorable term does not comply with, or is otherwise
inconsistent with, any state or federal law, rule or regulation.
In connection with the obtaining of any Required Consent, neither
Buyer nor any of its affiliates shall be required to agree to, or provide any
consents or waivers with respect to, any new or amended term or condition
contained in any franchise, license, approval or agreement held by any affiliate
of Buyer, or affecting cable television systems currently operated by any
affiliate of Buyer in the State of New Jersey.
Seller's obligation with respect to any of the Authorizations listed
in Exhibit B, which are in the franchise renewal process, is limited to the
assignment to Buyer of (a) such Authorization or, in situations wherein the
Authorization has expired, a letter of continued operating authority issued by
the Office of Cable Television authorizing Buyer to continue operating the
relevant system pending completion of renewal proceedings and, (b) all of
Seller's rights in connection with such renewal proceedings. The failure of
Seller to obtain renewal Authorizations with respect to the franchises listed in
Exhibit B, which are in the franchise renewal process, prior to the Closing Date
shall not be deemed a breach of Seller's representations, warranties, covenants
or obligations under this Agreement (provided that
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Seller has validly assigned the Authorizations, if applicable, or received and
validly assigned the letters of continued operating authority, and validly
assigned its rights in connection with all such renewal proceedings), nor shall
any such failure be deemed to (x) be a term or terms less favorable than those
held by Seller on the date hereof, or (y) constitute a Material Adverse Effect.
(b) Seller shall have obtained the Required Consents, including
consents and approvals of other persons or parties as may be required for the
assignment of the Business Contracts, or Seller shall have provided, at its own
expense, a substantially equivalent facility, product or service, reasonably
acceptable to Buyer, as currently provided by any such Business Contract, or
Seller shall provide Buyer the benefit of any such Business Contract by
remaining a party thereto, PROVIDED, THAT, Buyer shall indemnify and hold Seller
harmless for any and all costs and expenses incurred after the Closing in
connection therewith to the extent Buyer would have incurred such costs and
expenses had the applicable Business Contract been assigned to Buyer.
(c) Notwithstanding anything to the contrary in this Section
7.1, if Seller obtains any consents contemplated by Section 7.1(a) hereof
subject to any conditions other than those contemplated by such Section 7.1(a),
Seller shall be deemed to comply with Section 7.1(a) if Seller (i) performs or
otherwise satisfies such conditions on or prior to the Closing Date, or (ii)
agrees to perform or otherwise satisfy such conditions at its own expense
(including, without limitation, by paying Buyer to perform such conditions)
after the Closing Date and indemnifies and holds Buyer harmless from any direct
loss, liability or expense incurred in connection therewith.
7.2 NO MATERIAL ADVERSE CHANGES. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change to the
business, financial condition or the results of operations of the System (taken
as a whole) or to the System Assets (taken as a whole), nor shall Seller have
suffered any damage (whether or not covered by insurance) by fire or other
casualty to the System Assets which (i) materially and adversely
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affects the business, financial condition or results of operations of the
System (taken as a whole) or the operation of the System Assets (taken as a
whole) and (ii) has not been substantially repaired or replaced or provisions
for repair or replacement made prior to the Closing Date.
7.3 REPRESENTATIONS AND COVENANTS. The representations and
warranties of Seller set forth in this Agreement, the Ancillary Agreements or in
any agreement, instrument, Schedule, Exhibit or other documents to be delivered
by Seller pursuant hereto shall be true and correct when made and on and as of
the Closing Date with the same effect as if made on and as of the Closing Date
(except for (i) representations and warranties which speak as of a specified
date which need to be true and correct only as of such specified date and (ii)
any breaches or inaccuracies which, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect), PROVIDED, HOWEVER, any
breach or inaccuracy which is due to a material adverse change resulting from
factors generally applicable to the CATV industry in New Jersey, as a whole,
shall not be deemed a breach or inaccuracy for purposes of this Section 7.3; and
Seller shall have performed and complied in all material respects with all
material covenants and agreements required by this Agreement to be performed or
complied with on or before the Closing Date.
7.4 LEGAL PROCEEDINGS. No action, suit or proceeding shall have been
instituted against any of the parties to this Agreement before any court or
governmental department, agency or commission which would restrain, prohibit or
otherwise invalidate this Agreement or the consummation of the transactions
contemplated hereby (other than an action or proceeding instituted or threatened
by Buyer or any affiliate of Buyer).
7.5 DELIVERIES AT CLOSING. Seller shall have delivered to Buyer on
or before the Closing all agreements, instruments and documents required to be
delivered pursuant to Section 9 below.
7.6 HSR ACT WAITING PERIOD. All waiting periods applicable to this
Agreement and transactions contemplated hereby under the HSR Act shall have
expired or
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terminated without objection by the Federal Trade Commission ("FTC") or the
United States Department of Justice ("USDOJ").
7.7 CASH FLOW. Seller shall have provided evidence reasonably
satisfactory to Buyer that the product of (x) total running rate Cash Flow from
the operation of the System for the most recent three completed full months
prior to the Closing, multiplied by (y) four (the "Closing Date Cash Flow") is
equal to at least Twenty Seven Million Two Hundred Eighty Four Thousand Dollars
($27,284,000).
7.8 NUMBER OF SUBSCRIBERS. Seller shall have provided evidence
reasonably satisfactory to Buyer that, as of the Closing Date, the System has at
least 107,000 Basic Subscribers.
8. CONDITIONS OF SELLER'S OBLIGATIONS. The obligations of Seller to be
performed under this Agreement on the Closing Date are subject to the conditions
hereinafter set forth, any one or more of which may be waived in whole or in
part by Seller by giving written notice to Buyer to that effect:
8.1 CONSENTS. Buyer shall have obtained all consents, approvals,
permits, licenses or authorization from any and all public authorities that
Buyer is required under applicable law in connection with the consummation of
the transactions contemplated hereby.
8.2 REPRESENTATIONS AND COVENANTS. The representations and
warranties of Buyer set forth in this Agreement, the Ancillary Agreements, the
Marketing and Distribution Agreement, a form of which is attached hereto as
Exhibit D (the "Marketing Agreement"), or in any agreement, instrument,
Schedule, Exhibit or other document to be delivered by Buyer pursuant hereto and
the representations and warranties of CSC set forth in the guaranty, a form of
which is attached hereto as Exhibit L (the "Guaranty"), and the registration
rights agreement, a form of which is attached hereto as Exhibit M (the
"Registration Rights Agreement"), to be delivered by CSC on the Closing Date, as
the case may be, shall be true and correct, when made and on as of the Closing
Date with the same effect as if made on and as of the Closing Date (except for
(i) representations and warranties which speak as of a specified date which need
to be true and correct only as of such specified date and (ii) any breaches or
inaccuracies which, individually
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or in the aggregate, will not materially impair the ability of Buyer or CSC, as
the case may be, to perform its obligations under this Agreement); and Buyer
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with on or
before the Closing Date.
8.3 LEGAL PROCEEDINGS. No action, suit or proceeding shall have been
instituted against any of the parties to this Agreement before any court or
governmental department, agency or commission which would restrain, prohibit, or
otherwise invalidate this Agreement or the consummation of the transactions
contemplated hereby (other than an action or proceeding instituted or threatened
by Seller or an affiliate of Seller).
8.4 DELIVERIES AT CLOSING. Buyer and CSC shall have delivered to
Seller on or before the Closing all agreements, instruments and documents
required to be delivered pursuant to Section 10 below by Buyer or CSC, as the
case may be.
8.5 HSR ACT WAITING PERIOD. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired or terminated without objection by the FTC or the USDOJ.
9. SELLER'S DELIVERIES AT CLOSING. On or prior to the Closing, Seller
shall deliver to Buyer or Buyer shall have otherwise obtained:
9.1 DEEDS, DOCUMENTS OF CONVEYANCE AND TRANSFER.
(a) A bill of sale and assignment, substantially in the form attached
hereto as Exhibit F;
(b) An assignment of lease with respect to each lease of Real
Property included in the System Assets, in form and substance reasonably
satisfactory to counsel to Buyer;
(c) An assignment of franchise with respect to each of the franchises
being assigned (except for franchises subject to pending renewal proceedings for
which Seller shall deliver an assignment of all rights with respect to such
proceedings), in form and substance reasonably satisfactory to counsel to Buyer;
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(d) A bargain and sale deed or deeds with covenant against grantor's
acts for all Real Property listed on Schedule 4.4 and noted thereon as being
owned by Seller, in form and substance reasonably satisfactory to counsel to
Buyer;
(e) An opinion of Cadwalader, Wickersham & Taft, counsel for Seller,
dated as of the Closing Date, substantially in the form attached hereto as
Exhibit G;
(f) An opinion of FCC counsel for Seller, dated as of the Closing
Date, substantially in the form attached hereto as Exhibit H;
(g) Non-compete agreements, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit I (the "Non-Compete
Agreements") duly executed by Seller and each of its general partners; and
(h) Such other documents and instruments as Buyer may reasonably
request to convey the System Assets to Buyer and to consummate the transactions
contemplated hereby.
9.2 POWER OF ATTORNEY. A power of attorney from Seller to Buyer
authorizing the endorsement of any payments by check made with respect to
Accounts Receivable, subject to the provisions of Section 2.3(c) hereof.
9.3. ANCILLARY AGREEMENTS. Indemnification Escrow Agreement and Non-
Compete Agreements duly executed by the Seller and its general partners, as the
case may be.
10. BUYER'S AND CSC'S DELIVERIES AT CLOSING. At the Closing, Buyer or
CSC, as the case may be, shall deliver to Seller:
10.1 ANCILLARY AGREEMENTS. The Buyer shall deliver the
Indemnification Escrow Agreement and Marketing Agreement duly executed by Buyer.
10.2 GUARANTY. CSC shall deliver the Guaranty duly executed by CSC.
10.3 REGISTRATION RIGHTS AGREEMENT AND MARKETING AGREEMENT. CSC shall
deliver the Registration Rights Agreement and the Marketing Agreement in
substantially the form of Exhibit P hereto, each duly executed by CSC.
10.4 OPINION OF COUNSEL. Buyer shall deliver an opinion of Buyer's
counsel, dated as of the Closing Date, substantially in the form attached hereto
as Exhibit J.
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10.5 OTHER DOCUMENTS. Buyer shall deliver such other documents and
instruments as Seller may reasonably request to consummate the transactions
contemplated hereby.
10.6 ASSUMPTION OF ASSUMED LIABILITIES; OTHER DOCUMENTS.
(a) One or more instruments evidencing Buyer's assumption of the
Assumed Liabilities in form and substance reasonably satisfactory to counsel to
Seller; and
(b) all other documents, records, data and information required
to be delivered by Buyer pursuant to the terms of this Agreement.
10.7 PAYMENT. The Purchase Price and the Accounts Receivable Price as
set forth in Section 2.3.
11. BROKERAGE FEES. Except for Waller Capital Corporation (whose fees and
expenses will be paid by Seller), each party represents and warrants to the
other that it has not entered into any agreement with any person, firm or
corporation, or become indirectly a party to any such agreement, nor has it
taken any action nor is it aware of any facts which would result in the
assertion of any liability or claim for the payment of any commission, brokerage
or finder's fee in connection with the execution of this Agreement or the
consummation of the transactions contemplated herein.
12. INDEMNIFICATION BY SELLER AND BUYER.
12.1 SELLER'S INDEMNIFICATION LIABILITY. Subject to the provisions of
Sections 12.5, 12.6 and 15 hereof, and regardless of any investigation made at
any time by or on behalf of Buyer, Seller agrees, from and after the Closing, to
indemnify, defend and hold Buyer harmless from and against and in respect of all
loss, damage or liability (including reasonable legal fees and expenses)
resulting from:
(a) any and all debts, liabilities or obligations (including
without limitation, any liabilities in respect of any copyright or licensing
fees, and any lawsuit or other legal proceedings) of Seller, and any and all
claims and demands made in respect thereof relating in any way to, or arising
from the ownership, operation or control of the System or
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any System Assets at or prior to Closing or arising from Seller's failure to
file a Notice of Bulk Transfer pursuant to the Uniform Commercial Code (except
for the Assumed Liabilities and except to the extent expressly assumed in
writing by Buyer under any Authorization or CATV Instrument) (collectively,
"Pre-Closing Liabilities");
(b) any breach or inaccuracy of any representation or warranty,
or any nonfulfillment of any agreement or covenant on the part of Seller under
this Agreement, or from any misrepresentation in or omission from any Exhibit,
Schedule, Certificate or other instrument furnished or to be furnished to Buyer
hereunder (for purposes of this subsection (b), all representations and
warranties shall be deemed to have been made as of the date of this Agreement
and as of the Closing Date, except for representations and warranties that were
expressly made as of a specific date, which need to be true and correct only as
of such specific date);
(c) any Taxes referred to in Section 4.22 (a "Tax Liability");
or
(d) any lawsuit, obligation or other liability arising out of
any dispute between or among any or all of the partners or former partners of
Seller (a "Partner Dispute").
Notwithstanding anything set forth in this Section 12.1, Buyer
shall not be entitled to any indemnity hereunder with respect to (i) the number
of Basic Subscribers on and as of the close of business on the Closing Date, as
to which the sole remedy of Buyer shall be the Purchase Price Adjustment as set
forth in Sections 2.4(a) and (b) hereof, (ii) the amount of insurance proceeds
received by Buyer with respect to any loss, damage or liability (or such
proceeds received by a third party to the extent that they reduce Buyer's loss,
damage or liability) or (iii) any breach of Seller's representations and
warranties for which a reduction was made to the Purchase Price pursuant to
Section 6.7 hereof.
For purposes of this Section 12 and for purposes of determining
whether Buyer is entitled to indemnification from Seller pursuant to Section
12.1(b), any breaches of or inaccuracies in any representations and warranties
of Seller shall be determined without regard to any materiality qualifications
set forth in such representations or warranties, and all
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references to the terms "material", "materially", "materiality", "Material
Adverse Effect" or any similar terms shall be ignored for purposes of
determining whether such representation or warranty was true and correct when
made.
12.2 BUYER'S INDEMNIFICATION LIABILITY. Subject to the provisions of
Sections 12.5 and 15 hereof, Buyer agrees, from and after the Closing, to
indemnify, defend and hold Seller (and its partners, agents and employees)
harmless from and against and in respect of any loss, damage or liability
(including reasonable legal fees and expenses) resulting from:
(a) any breach or inaccuracy of any representation or warranty,
or any nonfulfillment of any agreement or covenant on the part of Buyer under
this Agreement, or from any misrepresentation in or omission from any Exhibit,
Schedule, Certificate or other instrument furnished or to be furnished to Seller
hereunder; and
(b) any of the Assumed Liabilities.
For purposes of this Section 12 and for purposes of determining
whether Seller is entitled to indemnification from Buyer pursuant to Section
12.2(a), any breaches of or inaccuracies in any representations and warranties
of Buyer shall be determined without regard to any materiality qualifications
set forth in such representations or warranties, and all references to the terms
"material", "materially", "materiality" or any similar terms shall be ignored
for purposes of determining whether such representations or warranty was true
and correct when made.
12.3 PROCEDURES. In the event that any claim shall be asserted
against a party entitled to indemnification hereunder (the "Indemnitee") the
Indemnitee shall promptly notify the other party (the "Indemnitor") of such
claim, and shall extend to the Indemnitor an opportunity to defend against such
claim, at the Indemnitor's sole expense. Within 15 days of receiving any such
notice from the Indemnitee, the Indemnitor must notify the Indemnitee as to
whether or not the Indemnitor elects to assume the defense of any such claim.
In the event Indemnitor does not so elect to assume such defense, any costs
incurred by the Indemnitee in defending such claim shall be indemnified pursuant
to and in accordance with this Section 12.
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In the event Indemnitor does elect to assume such defense, the Indemnitee shall,
at its option and expense, have the right to participate in any defense
undertaken by the Indemnitor with legal counsel of its own selection, provided
that such counsel is reasonably acceptable to the Indemnitor. No settlement or
compromise of any claim which may result in an indemnification liability may be
made by the Indemnitor without the prior written consent of the Indemnitee,
which consent may not be unreasonably withheld, unless prior to such settlement
or compromise the Indemnitor acknowledges in writing its obligation to pay in
full the amount of the settlement or compromise and all associated expenses.
12.4 PAYMENT OF INDEMNIFICATION LIABILITIES. The Indemnitor shall
promptly pay the Indemnitee any amounts owed hereunder. All amounts to be paid
by an Indemnitor under this Section 12 shall include the Indemnitee's actual
costs and attorneys' fees, including, without limitation, fees on appeal, that
are incurred against or in determining responsibility for a claim whether or not
any suit or action has been instituted (it being understood that such costs and
fees shall be counted toward and subject to any applicable deductible or
limitation of liability under this Section 12). In the event that Seller is the
Indemnitor, Buyer shall offset amounts against the principal amount payable
under the Indemnification Note. In the event that Buyer is the Indemnitor,
Buyer shall pay the indemnification liabilities to Seller in immediately
available funds. Any amounts not paid by Buyer when due under this Section 12.4
shall bear interest from the due date thereof until the date paid at a rate
equal to the lesser of the Prime Rate plus three percent per annum or the
highest legal rate permitted by applicable law. For purpose of this Section
12.4, an indemnification liability becomes due on the earlier of (i) the entry
of a final order, judgment or decree of a court of competent jurisdiction with
respect to the related claim, (ii) the date of the effectiveness of the
settlement or compromise of such claim or (iii) the date upon which Buyer and
Seller agree in writing with respect to the amount of such indemnification
liability.
12.5 EXCLUSIVE REMEDY. Seller and Buyer covenant and agree that, if
the Closing occurs, the remedies of offset against the Indemnification Note
provided pursuant to
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the Indemnification Escrow Agreement and this Section 12 shall be the exclusive
remedies to which Buyer is entitled for any breach of any representation,
warranty, covenant or other term or provision of this Agreement or any Exhibit,
Certificate, Agreement, Schedule or other document or instrument delivered in
connection herewith or with the consummation of the transactions contemplated
hereby except as provided in the Non-Compete Agreements and except for (i) in
the case of a breach by Seller, any and all claims relating to Pre-Closing
Liabilities, Taxes or Partners' Disputes, and (ii) in either case, any
fraudulent or intentional misrepresentations of Buyer or Seller, as the case may
be, contained herein or therein, as to which, in the case of both (i) and (ii),
the time and dollar limitations set forth in this Section 12 and in Section 15
shall expressly not apply and Seller and Buyer, respectively, shall retain all
of their rights and remedies at law and in equity.
12.6 LIMITATIONS ON SELLER'S INDEMNITY OBLIGATION. Buyer acknowledges
and agrees that the maximum liability of Seller after the Closing under this
Section 12 is the amounts due and payable under the Indemnification Note except
for (i) any and all claims relating to Pre-Closing Liabilities, Taxes or
Partners' Disputes and (ii) fraudulent or intentional misrepresentations of
Seller contained herein, as to which, in the case of both (i) and (ii), the time
and dollar limitations set forth in this Section 12 and in Section 15 shall
expressly not apply and Buyer shall retain all of its rights and remedies at law
and in equity. Buyer further agrees that, except for (i) any and all claims
relating to Pre-Closing Liabilities, Taxes or Partners' Disputes and (ii)
fraudulent or intentional misrepresentations of Seller contained herein, Buyer
shall not be entitled to indemnity under this Section 12 unless and until the
total amount claimed as indemnity equals or exceeds $341,000 (the "Deductible"),
and only to the extent greater than the Deductible.
12.7 NON-RECOURSE TO SELLER'S PARTNERS. The Buyer hereby acknowledges
that the Seller is a limited partnership and agrees that, for the payment or
performance of any of Seller's obligations hereunder and under all other
Schedules, Exhibits, Agreements, Certificates and other documents and
instruments delivered in connection herewith or with the
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<PAGE>
consummation of the transactions contemplated hereby, or damages for the failure
of performance thereof, except for (i) any and all claims relating to
Pre-Closing Liabilities, Taxes or Partners' Disputes and (ii) fraudulent or
intentional misrepresenta- tions of Seller contained herein or therein, as to
which, in the case of both (i) and (ii), the time and dollar limitations set
forth in this Section 12 and in Section 15 shall expressly not apply and Buyer
shall retain all of its rights and remedies at law and in equity,
notwithstanding anything to the contrary in this Agreement or under applicable
law; Buyer shall have recourse only against the Indemnification Note; and Buyer
shall have no recourse whatsoever to the assets or person of any of the partners
in Seller, corporate or individual, general or limited, past, present or future,
and no such partner of Seller shall be liable for any such payment or
performance or for damages in respect of the failure thereof, all of which
recourse to the assets or person of any such partner is hereby waived and
released by Buyer.
13. PRESERVATION OF RECORDS. Buyer covenants that it will preserve and
make available (including the right to inspect and copy) to Seller, its
attorneys and accountants, for a reasonable period of time from and after the
Closing Date (and in no case for a period less than seven years) and during
normal business hours, such of the books, records, files, correspondence,
memoranda and other documents transferred pursuant to this Agreement as Seller
may reasonably require in connection with any legitimate purpose, including, but
not limited to, the defense or prosecution of any claims (whether brought by or
against Buyer or otherwise), the preparation of tax reports and returns and
audits thereof and the preparation of financial statements and, further, that
Buyer will preserve and make available to Seller during normal business hours
such books, records and other items as Seller may request for the purpose of
preparing an Objection Notice as contemplated by Section 2.4(b) hereof.
14. NON-ASSIGNABLE CONTRACTS. Nothing contained in this Agreement shall
be construed as an assignment or an attempted assignment of any contract which
is in law non-assignable without the consent of the other party or parties
thereto, unless such consent shall be given
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<PAGE>
.
15. SURVIVAL OF OBLIGATIONS. All representations, warranties, indemnities
and other agreements made by Seller and Buyer in this Agreement, or pursuant
hereto, shall survive the Closing for a period commencing on the Closing Date
and ending at midnight on the date of the fifteen month anniversary of the
Closing Date, regardless of any investigation at any time made by or on behalf
of Buyer or Seller, and shall not be deemed merged in any document or instrument
executed or delivered at the Closing, PROVIDED, HOWEVER, that Buyer has complied
with its obligations pursuant to Section 6.3(e) hereof. Notwithstanding the
previous sentence, the agreements contained in Sections 2.2, 6.3(f), 6.4, 6.6,
Section 12 (except to the extent that the survival of the representations and
warranties is limited to 15 months pursuant to the previous sentence), 13, 15,
17.2, 17.8, and 17.14 shall survive the Closing indefinitely.
16. TERMINATION. This Agreement may be terminated as follows:
(a) This Agreement may be terminated at any time prior to the Closing
Date by mutual written agreement between Buyer and Seller;
(b) If the Closing shall not have occurred on or prior to July 15,
1994, either Buyer or Seller shall have the right to terminate this Agreement by
giving written notice of termination to the other party; PROVIDED, HOWEVER, that
if the Closing has not occurred by July 15, 1994 because the 45-day period
following receipt by Buyer of the approval of the BRC has not yet expired or
such BRC approval has not become final and non-appealable, or for any reason
related to or arising out of obtaining the approval of the BRC, neither party
shall have the right to terminate this Agreement pursuant to this Section;
PROVIDED, FURTHER, HOWEVER, that a party may not terminate this Agreement
pursuant to this Section 16(b) if such party is in material breach of its
obligations under this Agreement;
[Paragraph (c) intentionally omitted.]
(d) This Agreement may be terminated by Buyer, at its sole option, by
giving written notification to Seller of such termination, if Buyer has not
received, at or prior
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<PAGE>
to 2 p.m. on Friday, October 29, 1993, a written notification signed by each of
the general partners of the Seller to the effect that such general partners have
received all the consents required under Seller's Partnership Agreement (as in
effect on the date hereof) in connection with the transactions contemplated by
this Agreement.
Upon termination of this Agreement pursuant to this Section 16, all
filings, applications and other submissions relating to the transactions
contemplated hereby shall, to the extent practical, be withdrawn from the agency
or other person to which made.
17. MISCELLANEOUS.
17.1 LIABILITY OF BUYER. Seller and Buyer acknowledge and agree that
the sole liability of Buyer for its failure to consummate the transactions
contemplated hereby after satisfaction of the conditions set forth in Section 7
hereof shall be as set forth in the Escrow Agreement.
17.2 INDULGENCES, ETC. Neither the failure nor any delay on the part
of either party to exercise any right, remedy, power or privilege under this
Agreement (a "Right") shall operate as a waiver thereof, nor shall any single or
partial exercise of any Right preclude any other or further exercise of the same
or of any other Right, nor shall any waiver of any Right with respect to any
occurrence be construed as a waiver of such Right with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the party asserted to have granted such waiver.
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17.3 CONTROLLING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT-OF-LAWS.
17.4 NOTICES. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered
personally, by courier service such as Federal Express, or by other messenger,
when deposited in the United States mails, registered or certified mail, postage
prepaid, return receipt requested or transmitted by facsimile (followed promptly
by a copy deposited in the United States mails), in each case, addressed as set
forth below or to such other address or other person as any party may designate
by written notice to the other parties hereto:
(i) If to Seller:
Monmouth Cablevision Associates
c/o Joel A. Goldblatt
1501 18th Avenue
Wall Township, New Jersey 07719
with a copy, given in the manner prescribed above, to:
Jonathan M. Wainwright, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Telecopy: (212) 504-6666
(ii) If to Buyer:
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
ATTENTION: General Counsel
with a copy, given in the manner prescribed above, to:
George H. White, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
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<PAGE>
17.5 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of, this
Agreement.
17.6 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. No party may assign or transfer
its rights or obligations under this Agreement without the prior written consent
of the other party hereto; PROVIDED, HOWEVER, that Buyer may assign this
Agreement to CSC or to a direct or indirect wholly-owned subsidiary of CSC prior
to the filing of a petition with the BRC to approve or transfer any of the
Authorizations.
17.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. In proving this Agreement, it
shall not be necessary to produce or account for more than one such counterpart.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
17.8 SEVERABILITY. If any provision of this Agreement or the
Ancillary Agreements is held illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall not affect any other provision hereof.
Such provision and the remainder of this Agreement or the Ancillary Agreements
shall, in such circumstances, be deemed modified to the extent necessary to
render enforceable the remaining provisions hereof, so long as such modification
does not affect the original intent of the parties hereto.
17.9 ENTIRE AGREEMENT. This Agreement, the Ancillary Agreements,
including the Schedules and Exhibits hereto, the Master Agreement executed by
Buyer and Seller as of the date hereof and other instruments and documents
referred to herein or delivered pursuant hereto, represent the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements
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and understandings, inducements or conditions, express or implied, oral or
written (including, without limitation, any documents or information given to
Buyer), except as herein contained. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other
than by an agreement in writing signed by each of the parties hereto.
17.10 SECTION HEADINGS. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.
17.11 NO THIRD PARTY RIGHTS. Nothing in this Agreement, express
or implied, shall be construed to confer upon any person, other than the parties
hereto, their successors and permitted assigns, any legal or equitable rights,
remedies, claims, obligations or liabilities under or by reason of this
Agreement.
17.12 EXPENSES. Except as otherwise expressly provided herein,
each party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated hereunder, including all legal and accounting fees and
disbursements, and costs of obtaining all necessary consents.
17.13 FURTHER ASSURANCES. The parties hereto will use their
reasonable efforts to comply with all legal requirements imposed on them with
respect to the transactions contemplated by this Agreement. Each party agrees
to execute and deliver any and all further agreements, documents or instruments
reasonably necessary to effectuate this Agreement and the transactions referred
to herein, contemplated hereby or reasonably requested by the other party to
perfect or evidence its rights hereunder. Each of Seller and Buyer will use its
best efforts to effect an early transfer of the System Assets contemplated by
this Agreement and to complete the transactions contemplated by this Agreement
as promptly as practicable and will promptly notify the other party of any
information delivered to or obtained by such party concerning an event that
would prevent the consummation of the transactions contemplated by this
Agreement.
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17.14 CONFIDENTIAL INFORMATION. In the event this Agreement is
terminated for any reason, Buyer shall keep and shall take reasonable steps to
cause its attorney's, accountants, lenders and lender's attorney's to keep
confidential any and all information obtained from Seller in connection with
this Agreement and the transactions contemplated hereby, will not utilize such
information for any purpose, and will promptly return to Seller all documents,
work papers and other written materials (and all documents reflecting or
incorporating such information) obtained by it in connection with this Agreement
or the transactions contemplated hereby.
17.15 BULK TRANSFER. Buyer acknowledges that Seller has not and
will not file any Notice of Bulk Transfer pursuant to the Uniform Commercial
Code, and Buyer hereby waives any and all rights it might have under those
provisions.
17.16 PUBLIC ANNOUNCEMENTS. The parties hereto agree to cooperate
in the making of any public announcements relating to the execution of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first above written.
By: Barry J. O'Leary
-------------------------------------
Authorized Officer
MONMOUTH CABLEVISION ASSOCIATES
By: Joel A. Goldblatt
-------------------------------------
Joel A. Goldblatt
General Partner
By: Cable Management of Monmouth, Inc.
General Partner
By:
--------------------------------
Authorized Officer
By: Sutton Capital Associates of Monmouth, Inc.
General Partner
By: William Ingram
--------------------------------
Authorized Officer
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<PAGE>
ASSET PURCHASE AGREEMENT
DATED AS OF
OCTOBER 26, 1993
BETWEEN
RIVERVIEW CABLEVISION ASSOCIATES, L.P.
AND
CABLEVISION MFR, INC.
<PAGE>
TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
2. Assets Sold and Purchased . . . . . . . . . . . . . . . . 8
2.1 System Assets . . . . . . . . . . . . . . . . . 8
2.2 Assumption of Liabilities . . . . . . . . . . . 9
2.3 Purchase Price; Escrow Fund and Accounts
Receivable . . . . . . . . . . . . . . . . . . 10
2.4 Adjustments to Purchase Price . . . . . . . . . 13
2.5 Appraisal and Allocation of Purchase
Price . . . . . . . . . . . . . . . . . . . . . 17
3. Closing Date and Place . . . . . . . . . . . . . . . . . 17
3.1 Closing . . . . . . . . . . . . . . . . . . . . 17
4. Seller's Representations and Warranties . . . . . . . . . 17
4.1 Organization of Seller . . . . . . . . . . . . 17
4.2 Seller's Authority . . . . . . . . . . . . . . 18
4.3 Authorizations and CATV Instruments . . . . . . 19
4.4 Real Property . . . . . . . . . . . . . . . . . 20
4.5 Easements and Rights-of-Way . . . . . . . . . . 20
4.6 Tangible Personal Property . . . . . . . . . . 21
4.7 Contracts; No Defaults . . . . . . . . . . . . 21
4.8 Approvals and Consents . . . . . . . . . . . . 22
4.9 Financial Statements; No Material Adverse
Change . . . . . . . . . . . . . . . . . . . . 22
4.10 Acquired Accounts Receivable . . . . . . . . . 23
4.11 Information Sheet; Competing Franchises . . . . 23
4.12 Compliance with Laws, Regulations and
Reporting . . . . . . . . . . . . . . . . . . . 25
4.13 Environmental Matters . . . . . . . . . . . . . 25
4.14 FCC Matters . . . . . . . . . . . . . . . . . . 26
4.15 Copyright Matters . . . . . . . . . . . . . . . 26
4.16 Claims and Litigation . . . . . . . . . . . . . 27
4.17 Employees; Compensation; Unions . . . . . . . . 27
4.18 Insurance . . . . . . . . . . . . . . . . . . . 27
4.19 Patents and Copyrights . . . . . . . . . . . . 28
4.20 Rates . . . . . . . . . . . . . . . . . . . . . 28
4.21 Special Agreements . . . . . . . . . . . . . . 28
4.22 Taxes . . . . . . . . . . . . . . . . . . . . . 28
4.23 Capital Commitments . . . . . . . . . . . . . . 29
4.24 Financing Commitments . . . . . . . . . . . . . 29
5. Buyer's Representations . . . . . . . . . . . . . . . . . 29
5.1 Organization and Standing of Buyer . . . . . . 29
5.2 Authority to Execute and Consummate
Agreement . . . . . . . . . . . . . . . . . . . 30
5.3 Exchange Act Compliance . . . . . . . . . . . . 30
5.4 Fitness as Franchisee . . . . . . . . . . . . . 31
6. Additional Covenants . . . . . . . . . . . . . . . . . . 31
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6.1 Negative Covenants of Seller . . . . . . . . . 31
6.2 Affirmative Covenants of Seller . . . . . . . . 32
6.3 Affirmative Covenants of Buyer . . . . . . . . 33
6.4 Access to Information . . . . . . . . . . . . . 34
6.5 Notification . . . . . . . . . . . . . . . . . 35
6.6 Right to Cure; Purchase Price Adjustment . . . 35
6.7 Closing Conditions . . . . . . . . . . . . . . 36
7. Conditions of Buyer's Obligations . . . . . . . . . . . . 36
7.1 Consents and Waivers . . . . . . . . . . . . . 36
7.2 No Material Adverse Changes . . . . . . . . . . 38
7.3 Representations and Covenants . . . . . . . . . 38
7.4 Legal Proceedings . . . . . . . . . . . . . . . 39
7.5 Deliveries at Closing . . . . . . . . . . . . . 39
7.6 HSR Act Waiting Period . . . . . . . . . . . . 39
7.7 Cash Flow . . . . . . . . . . . . . . . . . . . 39
7.8 Number of Subscribers . . . . . . . . . . . . . 39
8. Conditions of Seller's Obligations . . . . . . . . . . . 40
8.1 Consents . . . . . . . . . . . . . . . . . . . 40
8.2 Representations and Covenants . . . . . . . . . 40
8.3 Legal Proceedings . . . . . . . . . . . . . . . 40
8.4 Deliveries at Closing . . . . . . . . . . . . . 41
8.5 HSR Act Waiting Period . . . . . . . . . . . . 41
9. Seller's Deliveries at Closing . . . . . . . . . . . . . 41
9.1 Deeds, Documents of Conveyance and
Transfer . . . . . . . . . . . . . . . . . . . 41
9.2 Power of Attorney . . . . . . . . . . . . . . . 42
9.3 Ancillary Agreements . . . . . . . . . . . . . 42
10. Buyer's and CSC's Deliveries at Closing . . . . . . . . . 42
10.1 Ancillary Agreements . . . . . . . . . . . . . 42
10.2 Guaranty . . . . . . . . . . . . . . . . . . . 42
10.3 Registration Rights Agreement . . . . . . . . . 42
10.4 Opinion of Counsel . . . . . . . . . . . . . . 42
10.5 Other Documents . . . . . . . . . . . . . . . . 42
10.6 Assumption of Assumed Liabilities;
Other Documents . . . . . . . . . . . . . . . . 42
10.7 Payment . . . . . . . . . . . . . . . . . . . . 43
11. Brokerage Fees . . . . . . . . . . . . . . . . . . . . . 43
12. Indemnification by Seller and Buyer . . . . . . . . . . . 43
12.1 Seller's Indemnification Liability . . . . . . 43
12.2 Buyer's Indemnification Liability . . . . . . . 45
12.3 Procedures . . . . . . . . . . . . . . . . . . 45
12.4 Payment of Indemnification Liabilities . . . . 46
12.5 Exclusive Remedy . . . . . . . . . . . . . . . 46
12.6 Limitations on Seller's Indemnity
Obligation . . . . . . . . . . . . . . . . . . 47
12.7 Non-recourse to Seller's Partners . . . . . . . 47
13. Preservation of Records . . . . . . . . . . . . . . . . . 48
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14. Non-Assignable Contracts . . . . . . . . . . . . . . . . 48
15. Survival of Obligations . . . . . . . . . . . . . . . . . 49
16. Termination . . . . . . . . . . . . . . . . . . . . . . . 49
17. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 50
17.1 Liability of Buyer . . . . . . . . . . . . . . 50
17.2 Indulgences, Etc. . . . . . . . . . . . . . . . 50
17.3 Controlling Law . . . . . . . . . . . . . . . . 51
17.4 Notices . . . . . . . . . . . . . . . . . . . . 51
17.5 Exhibits and Schedules . . . . . . . . . . . . 52
17.6 Binding Nature of Agreement; No
Assignment . . . . . . . . . . . . . . . . . . 52
17.7 Execution in Counterparts . . . . . . . . . . . 52
17.8 Severability . . . . . . . . . . . . . . . . . 52
17.9 Entire Agreement . . . . . . . . . . . . . . . 52
17.10 Section Headings . . . . . . . . . . . . . . . 53
17.11 No Third Party Rights . . . . . . . . . . . . . 53
17.12 Expenses . . . . . . . . . . . . . . . . . . . 53
17.13 Further Assurances . . . . . . . . . . . . . . 53
17.14 Confidential Information . . . . . . . . . . . 54
17.15 Bulk Transfer . . . . . . . . . . . . . . . . . 54
17.16 Public Announcements . . . . . . . . . . . . . 54
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<PAGE>
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
1.3 Acquired Accounts Receivable
1.8 Assumed Liabilities
1.30 Excluded Assets
1.45 Programming Contracts
4.2 Exceptions to Seller's Authority
4.3 Exceptions to Authorizations and CATV Instruments
4.4 Real Property
4.4.1 Encumbrances
4.5 Easements and Rights-of-Way
4.6 Tangible Personal Property
4.6.1 Exceptions to Title on Tangible Personal Property
4.7 Business Contracts
4.8 Approvals and Consents
4.9 Financial Statements
4.11(a) Information Sheet; Technical and Business Information
4.11(b) Information Sheet; Retransmission Commitments
4.11(c) Information Sheet; Competing Franchises
4.12 Exception to Seller's Compliance with Laws
4.13 Hazardous Materials
4.14 FCC Matters
4.16 Claims and Litigation
4.17 Employees; Compensation; Union
4.18 Insurance Policies
4.19 Patents and Copyrights
4.21 Special Agreements
4.22 Taxes
4.23 Capital Commitments
4.24 Financing Commitments
5.2 Exceptions to Buyer's Authority
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<PAGE>
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
A List of Communities served by the CATV System
B List of cable television franchises and
Certificates of Approval
C Form of Escrow Agreement
D [Intentionally Omitted]
E Form of Indemnification Note
F Form of Bill of Sale and Assignment
G Form of Opinion of Seller's counsel
H Form of Opinion of Seller's FCC counsel
I Form of Non-Compete Agreements
J Form of Opinion of Buyer's counsel
K Form of Senior Subordinated Note
L Form of Guaranty
M Form of Registration Rights Agreement
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<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of October 26, 1993, by and between RIVERVIEW
CABLEVISION ASSOCIATES, L.P., a Delaware limited partnership ("Seller"), and
Cablevision MFR, Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller owns and operates the cable television system, and
business in respect thereof, in the communities listed on Exhibit A, pursuant to
the cable franchises and Certificates of Approval listed on Exhibit B
(collectively referred to herein as the "System"); and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, on the
terms and subject to the conditions contained in this Agreement, the System,
together with those franchises, Certificates of Approval, assets, contracts and
rights used by Seller in connection with the System, all in accordance with and
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises each to the
other made herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. DEFINITIONS. The following terms, as used herein, shall, except
where the context otherwise requires, have the meanings specified in this
Section 1 (such definitions to be equally applicable to the singular and plural
forms of the term defined):
1.1 "ACCOUNTS RECEIVABLE" - All accounts receivable of Seller
relating to the System.
<PAGE>
1.2 "ACCOUNTS RECEIVABLE PRICE" - An amount equal to 98% of the face
value of the Acquired Accounts Receivable.
1.3 "ACQUIRED ACCOUNTS RECEIVABLE" - All Accounts Receivable (i)
relating to Subscriber Accounts Receivable and (ii) other Accounts Receivable
set forth on Schedule 1.3, that, in each case, are not in excess of 45 days past
due, but specifically excluding all Advertising Accounts Receivable and any
Accounts Receivable other than those relating to Subscriber Accounts Receivable
and other than those set forth on Schedule 1.3. For purposes of this Section
1.3, the number of days past due of Accounts Receivable shall be determined from
the last day of the period for which the applicable billing for services for
that period is made. Accounts Receivable which are past due pending the
resolution of a BONA FIDE dispute and are in arrears in an amount of $10 or less
shall not be considered past due for purposes of this Section 1.3, except to the
extent of the amount subject to such BONA FIDE dispute.
1.4 "ADJUSTMENT DATE" - As defined in Section 2.4(e).
1.5 "ADVERTISING ACCOUNTS RECEIVABLE" - All Accounts Receivable
relating to the sale of advertising.
1.6 "AGREEMENT" - This Asset Purchase Agreement, as the same may be
amended or modified in accordance with the terms hereof.
1.7 "ANCILLARY AGREEMENTS" - The Escrow Agreement, the
Indemnification Escrow Agreement and the Non-Compete Agreements.
1.8 "ASSUMED LIABILITIES" - All debts, liabilities and obligations
relating directly or indirectly to the System and arising from operation or
ownership of the System from and after the close of business on the Closing
Date, Seller's liability immediately prior to the close of business on the
Closing Date for advance payments and for deposits plus interest accrued under
state law, and any other debt, liability or obligation set forth on Schedule
1.8.
1.9 "AUDITED FINANCIAL STATEMENTS" - As defined in Section 4.9.
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1.10 "AUTHORIZATIONS" - All franchises, permits, licenses, consents,
Certificates of Approval and other authorizations from governmental authorities
and utilities pursuant to which the System is owned and operated including,
without limitation, the instruments pursuant to which such Authorizations are
granted.
1.11 "BASIC CABLE SERVICE RATE" - The rate charged by the Seller for
Basic Cable Service, as set forth on Schedule 4.11(a), offered by the System in
a given community.
1.12 "BASIC SUBSCRIBERS" - The sum of (i) the number of Subscribers in
individually billed residential units, (ii) the quotient of (x) the total
billings (excluding pay-TV and pay-per-view charges) of the Seller to all
Subscribers in commercial venues or bulk billed multiple residential units for
the month during which the Closing occurs, divided by (y) the sum of Seller's
Basic Cable Service Rate and Standard Cable Service Rate for CATV services to
residential units in effect at the Closing Date. For purposes of determining
Basic Subscribers, the number calculated pursuant to (ii) above shall not exceed
500.
1.13 "BUSINESS CONTRACT" - As defined in Section 4.7.
1.14 "BUSINESS DAY" - Any Monday, Tuesday, Wednesday, Thursday or
Friday, other than a Federal holiday in the United States.
1.15 "BUYER" - Cablevision MFR, Inc., a Delaware corporation and a
wholly-owned subsidiary of Cablevision Systems Corporation, a Delaware
corporation.
1.16 "CASH FLOW" - Shall mean for any fiscal period, the aggregate net
income of Seller for such period after restoring thereto amounts deducted for
(a) depreciation, (b) amortization, (c) interest expense, (d) Taxes based on
income, (e) costs incurred in connection with this Agreement and the
transactions hereunder including, without limitation, (A) any one-time severance
or bonus payments made by Seller to employees of Seller, and (B) any one-time
payments made by Seller to employees of Seller in satisfaction of accrued
vacation and accrued sick-days, and (f) payments, if any, made in
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respect of management fees paid to the general partners of Seller and (g)
seasonal cash flow items in the amount of $80,430, each of (a) through (g) as
determined in accordance with GAAP.
1.17 "CASH PURCHASE PRICE" - As defined in Section 2.3(a).
1.18 "CATV" - Cable television.
1.19 "CATV INSTRUMENTS" - The instruments granting the Authorizations.
1.20 "CLOSING" and "CLOSING DATE" - As defined in Section 3.1.
1.21 "CLOSING DATE CASH FLOW" - As defined in Section 7.7.
1.22 "CODE" - The Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
1.23 "DEDUCTIBLE" - As defined in Section 12.6.
1.24 "ENVIRONMENTAL REQUIREMENTS" - As defined in Section 4.13.
1.25 "ENCUMBRANCES" - Any and all mortgages, security interests,
liens, claims, pledges, restrictions, leases, title exceptions, rights of
others, charges or other encumbrances.
1.26 "ERISA" - The Employee Retirement Income Security Act of 1974,
together with all rules and regulations promulgated thereunder, as such may be
in effect from time to time.
1.27 "ESCROW AGREEMENT" - The escrow agreement, dated as of the date
hereof, among Seller, Buyer and the Escrow Agent with respect to the Escrow
Fund, a copy of which is attached hereto as Exhibit C.
1.28 "ESCROW FUND" - As defined in Section 2.3(b).
1.29 "EXCHANGE ACT" - The Securities Exchange Act of 1934, as amended.
1.30 "EXCLUDED ASSETS" - All cash and cash equivalents (whether on
hand, in bank accounts, or elsewhere) of the Seller, all partnership, tax (other
than real property and state personal property tax) and financial records of the
Seller, all Accounts Receivable other than the Acquired Accounts Receivable, all
assets of the Seller other
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than the System Assets, all proprietary computer software licensed to Seller by
third parties pursuant to non-assignable licenses, all rights of Seller
hereunder and under the Ancillary Agreements, all claims for tax abatements in
respect of periods prior to the close of business on the Closing Date, all
claims for tax refunds and previously paid taxes, all insurance contracts of the
Seller and all claims thereunder, all rights and obligations under Programming
Contracts and management and consulting agreements of any type, all bonds,
letters of credit or other security instruments provided by Seller, all amounts
held in escrow under the National Cable Television Co- Operative agreement with
the Seller or its Affiliates relating to programming, all proceeds, if any,
resulting from actions brought by Seller, pending at the Closing Date, to the
extent, but only to the extent, such proceeds relate to or are attributable to
Seller's ownership, operation or control of the System or any System Assets
prior to the close of business on the Closing Date, and those assets set forth
on Schedule 1.30.
1.31 "FCC" - The Federal Communications Commission.
1.32 "FINANCIAL STATEMENTS" - As defined in Section 4.9 and attached
hereto as Schedule 4.9.
1.33 "GAAP" - Generally accepted accounting principles as applied in
the United States of America.
1.34 "INDEMNIFICATION ESCROW AGREEMENT" - The form of indemnification
escrow agreement to be entered into as of the Closing Date among Seller, Buyer
and the Escrow Agent with respect to the Indemnification Note will be agreed
upon by the parties prior to the Closing Date and shall be in form and substance
reasonably satisfactory to the parties.
1.35 "INDEMNIFICATION NOTE" - The indemnification note in the
principal amount of $2,290,000 and otherwise in the form attached hereto as
Exhibit E.
1.36 "INDEMNIFICATION PERIOD" - The period commencing at the close of
business on the Closing Date and ending at midnight on the date of the fifteen-
month anniversary of the Closing Date.
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1.37 "INDEMNITEE" - As defined in Section 12.3.
1.38 "INDEMNITOR" - As defined in Section 12.3.
1.39 "MATERIAL ADVERSE EFFECT" - As defined in Section 4.2.
1.40 "NEW SUBSCRIBER" - As defined in Section 2.4(d).
1.41 "NON-COMPETE AGREEMENTS" - As defined in Section 9.1(g) and
substantially in the forms attached hereto as Exhibit I.
1.42 "OBJECTION NOTICE" - As defined in Section 2.4(b).
1.43 "OTHER RECEIVABLES" - As defined in Section 2.3(c).
1.44 "PRIME RATE" - The interest rate announced from time to time as
the prime rate of Bankers Trust Company in New York, New York.
1.45 "PROGRAMMING CONTRACTS" - Those contracts pursuant to which
Seller purchases programming for use in the System including, without
limitation, those programming contracts referred to in Schedule 1.45.
1.46 "PURCHASE PRICE" - As defined in Section 2.3(a).
1.47 "PURCHASE PRICE ADJUSTMENT" - As defined in Section 2.4(c).
1.48 "REAL PROPERTY" - As defined in Section 4.4 and listed on
Schedule 4.4.
1.49 "RECORDS" - As defined in Section 2.1(g).
1.50 "RIGHT" - As defined in Section 17.2.
1.51 "SELLER" - Riverview Cablevision Associates, L.P., a Delaware
limited partnership.
1.52 "SENIOR SUBORDINATED NOTE" - The senior subordinated note in the
principal amount of $33,219,300 and otherwise in the form attached hereto as
Exhibit K.
1.53 "STANDARD CABLE SERVICE RATE" - The rate charged by the Seller
for Standard Cable Service, as set forth on Schedule 4.11(a), offered by the
System in a given community.
1.54 "SUBSCRIBER" - Any person or entity at any given time that is
paying for and receiving any level of CATV service from Seller who (v) is
supplied CATV signals by
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the System, (w) has paid for at least one month's CATV service to Seller at
standard rates for any level of the service, (x) has an account that is not more
that 45 days past due (except for amounts which are past due pending the
resolution of a BONA FIDE dispute or past due amounts of $10 or less, provided
such account is otherwise current), (y) has not requested disconnection and (z)
if such person has been sent a disconnect notification by Seller prior to the
Closing, pays all amounts past due within 30 days after the Closing and is not
disconnected. For purposes of this Section 1.54, the determination of "standard
rates" shall be made by reference to the various rates listed on Schedule
4.11(a) for the month prior to the Closing Date. The definition of "Subscriber"
in this Section 1.54 shall include each person or entity supplied CATV signals
by the System pursuant to a special payment plan for delinquent accounts, so
long as payments pursuant to such plan are not more than 15 days past due and
that the number of Subscribers paying pursuant to such plans shall not at any
time exceed 200. For purposes of this Section 1.54 the number of days past due
of a Subscriber Accounts Receivable shall be determined from the last day of the
period for which the applicable billing for services for that period is made.
1.55 "SYSTEM" - As defined in the first WHEREAS clause above.
1.56 "SYSTEM ASSETS" - All assets of the Seller essential to or used
in connection with the ownership or operation of the System, including, without
limitation, those set forth in Section 2.1, and all electronic devices, taps,
trunk and distribution cables, amplifiers, power supplies, conduits, vaults and
pedestals, grounding and pole hardware, drop lines and related fittings, all to
the extent owned or leased by Seller and used in connection with the System, BUT
excluding the Excluded Assets.
1.57 "TANGIBLE PERSONAL PROPERTY" - As defined in Section 4.6 as
described on Schedule 4.6.
1.58 "TARGETED CASH FLOW" - As defined in Section 2.3(a).
1.59 "TAXES" - All federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise,
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employment, withholding or similar taxes, real and personal property taxes,
transfer taxes, gains taxes, mortgage recording taxes, transportation taxes or
gross operating taxes, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties.
1.60 "TERMINATED EMPLOYEES" - As defined in Section 6.3(f).
1.61 "UNAUDITED FINANCIAL STATEMENTS" - As defined in Section 4.9 and
attached as Schedule 4.9.
2. ASSETS SOLD AND PURCHASED.
2.1 SYSTEM ASSETS. On the terms and subject to the conditions
hereinafter set forth, Seller agrees to sell, assign and convey, and Buyer
agrees to buy, the System and the System Assets, including, without limitation,
the following assets (to the extent they constitute System Assets):
(a) All Authorizations and CATV Instruments;
(b) All real property owned by Seller at the Closing Date and
all real property leasehold interests of Seller at the Closing Date;
(c) All tangible personal property owned by Seller at the
Closing Date and used in connection with the System, including, without
limitation, all electronic devices, taps, converters, trunk and distribution
cables, amplifiers, power supplies, conduits, vaults and pedestals, grounding
and pole hardware, droplines and related fittings, installed subscribers'
devices, hardware, tools, inventory, spare parts, motor vehicles, supplies, test
and closed circuit devices, microwave equipment and furniture, furnishings and
office equipment;
(d) All contracts, leases, agreements, licenses, commitments and
understandings (other than Programming Contracts) of Seller relating to the
System, and all contracts entered into by Seller with respect to the System
after the execution of this Agreement which are made in the ordinary course of
business and in conformity with Section 6.1(c) hereof;
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(e) All subscriber agreements, if any, and orders for CATV
service to be provided by the System existing at the Closing Date;
(f) All goodwill, trademarks, service marks, copyrights, trade
names, common law property rights, all rights associated therewith and all other
intangible personal property owned or held by Seller pertinent to the System;
(g) All schematics, blueprints, strand maps, working drawings,
engineering data, current and prior customer lists, system maps and other
reports, lists, plans, specifications, promotional graphics, original art work,
mats, plates, negatives and other advertising, marketing or related materials,
files and records and all other technical and financial information concerning
the System possessed by Seller at the Closing Date (the "Records");
(h) All of Seller's right, title and interest in and to
manufacturers' warranties with respect to the System Assets (to the extent so
assignable and exclusive of claims made on or prior to the Closing Date);
(i) All other assets of whatever nature and wherever located
owned by Seller at the Closing Date and used regularly in connection with the
design, construction or operation of the System, which assets shall include the
System's books and records or, to the extent originals are not in the possession
of Seller or are required to be retained by Seller for audit purposes, copies
thereof, but not including Seller's corporate or partnership books and records
(except for real property and state personal property tax records, which shall
be included).
2.2 ASSUMPTION OF LIABILITIES. Buyer shall, subject to the
provisions hereof, assume at the Closing the Assumed Liabilities. Except for
the Assumed Liabilities, and except to the extent that Buyer otherwise expressly
assumes any liabilities or obligations of Seller pursuant to this Agreement,
Buyer assumes no liabilities or obligations of Seller.
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2.3 PURCHASE PRICE; ESCROW FUND AND ACCOUNTS RECEIVABLE.
(a) PURCHASE PRICE. In consideration of the sale, assignment and
conveyance to it of the System Assets and for receipt of the executed Non-
Compete Agreements, Buyer agrees to purchase from Seller, and Seller agrees to
sell to Buyer, on the terms and subject to the conditions set forth elsewhere in
this Agreement, the System Assets for a total Purchase Price of Ninety Six
Million Nine Hundred Eighty Six Thousand Three Hundred Dollars ($96,986,300)
(the "Purchase Price"), which shall be comprised of (w) (I) an amount in cash to
be delivered by Buyer to Seller at the Closing (the "Closing Date Cash
Payment"), equal to Fifty Five Million Seven Hundred Fifty Two Thousand Dollars
($55,752,000) less the amount of the Released Deposit (as hereinafter
defined)*, and (II) Five Million Seven Hundred Twenty Five Thousand Dollars
($5,725,000) in cash to be placed into escrow pursuant to the New Escrow
Agreement (as hereinafter defined) (the "Escrow Deposit"), (x) the total amount
held in escrow pursuant to the Escrow Agreement (consisting of Two Million Two
Hundred Ninety Thousand Dollars ($2,290,000) plus earnings thereon) and released
to Seller on June 3, 1994 (the "Released Deposit"), PROVIDED, THAT, the Released
Deposit shall not be credited as part of the Purchase Price if Buyer has not
certified to Seller, on or prior to 5:30 PM on June 16, 1994, that Buyer or
Cablevision of Riverview, Inc. has entered into a credit agreement providing for
loans to Buyer or such Affiliate in an amount sufficient to permit Buyer to make
the Closing Date Cash Payment at the Closing, in which case the Released Deposit
shall be retained by Seller as a non-refundable option fee (the Released Deposit
(subject to the proviso in the preceding sentence), the Escrow Deposit and the
Closing Date Cash Payment sometimes being referred to collectively herein as the
"Cash Purchase Price"), (y) the Senior Subordinated Note and (z) the
Indemnification Note, in each case subject to the adjustments set forth in this
Section 2.3(a) and Section 2.4, and in all cases subject to the following:
[Subparagraph (A) is intentionally omitted.]
(B) If the number of Estimated Basic Subscribers (as defined in
Section 2.4(a) herein), is greater than 47,000 (the "Adjustment
Target"), the Closing Date Cash Payment shall be increased by an
amount equal to the excess of the number of Estimated Basic
Subscribers over the Adjustment Target, multiplied by $500 (the
"Initial Adjustment"), PROVIDED, HOWEVER, that the Initial
Adjustment, if any, shall under no circumstances exceed One
Hundred Forty Eight Thousand Nine Hundred dollars ($148,900) in
the aggregate.
(C) Notwithstanding any other provision herein, Buyer may, on or
prior to the Closing Date, elect to satisfy all or any portion of
the Purchase Price that is otherwise to be payable by the
issuance by Buyer of the Senior Subordinated Note and/or the
Indemnification Note by
* Provided, that, if the Released Deposit is not credited as part of the
Purchase Price, but is retained by Buyer as a non-refundable option fee as
provided below, the Closing Date Cash Payment shall be Fifty Five Million
Seven Hundred Fifty Two Thousand Dollars ($55,752,000).
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delivering shares of CSC Class A Common Stock (as defined in the
form of Senior Subordinated Note attached as Exhibit K hereto)
that are subject to an effective registration statement. If
Buyer makes such an election: (i) the number of shares of such
CSC Class A Common Stock to be delivered by Buyer to Seller at
the Closing shall be equal to (x) the aggregate amount of the
Purchase Price with respect to which Buyer has elected to deliver
CSC Class A Common Stock, divided by (y) 95% multiplied by the
Closing Price (as defined in the form of Senior Subordinated Note
attached as Exhibit K hereto) of the CSC Class A Common Stock on
the sixth American Stock Exchange trading day prior to the
Closing Date; (ii) the amount of the Senior Subordinated Note
and/or the Indemnification Note, as the case may be, to be
delivered by Buyer to Seller at the Closing shall be reduced by
the aggregate amount of the Purchase Price with respect to which
Buyer has made such election, and, if the amount of the Senior
Subordinated Note or the Indemnification Note is reduced to zero,
neither Buyer nor CSC shall be obligated to deliver the Senior
Subordinated Note or the Indemnification Note, as the case may
be, the Guaranty (as defined herein) in connection therewith, and
(iii) if after any such election by Buyer the amount of the
Indemnification Note is less than $2,290,000, then at the Closing
Buyer shall deposit an amount of CSC Class A Common Stock that
comprises the Purchase Price with a value equal to such
difference into an escrow account pursuant to the Indemnification
Escrow Agreement, together with the Indemnification Note, if any,
so that the Indemnification Escrow Account has a value equal to
at least $2,290,000 at the Closing.
(D) In the event that there is a Change in Control (as defined in the
form of Senior Subordinated Note attached hereto as Exhibit K) on
or prior to the Closing Date, (i) Buyer shall be obligated to pay
in cash at the Closing the full amount of the Purchase Price (in
lieu of the Closing Date Cash Payment), less the Escrow Deposit
and any adjustments made to the Purchase Price as set forth in
Sections 2.3 and 2.4 hereof, and (ii) the Escrow Agent shall be
instructed by Buyer and Seller to release the Escrow Account at
the Closing and deposit such amounts into an escrow account
pursuant to the Indemnification Escrow Agreement and (iii)
neither Buyer nor CSC shall be obligated to issue the Senior
Subordinated Note, the Indemnification Note, the Guaranty or the
Registration Rights Agreement.
At the Closing, the Seller shall deliver to Buyer good, valid and
marketable title to the System Assets and, in consideration therefor, and
subject to the foregoing, (i) the Buyer shall deliver to Seller the Closing Date
Cash Payment (or the payment referred to in (D)(i) above in lieu of such Closing
Date Cash Payment) (x) plus the amount of the Initial Adjustment, if any, as set
forth in the prior sentence, (y) plus the amount, if any, of any Closing Date
Adjustment (as defined in Section 2.4(e)) owed by Buyer to Seller pursuant to
Section 2.4(e), and (z) less the amount, if any, of any Closing Date Adjustment
owed by Seller to Buyer pursuant to Section 2.4(e), (ii) Buyer and Seller
jointly shall
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instruct the Escrow Agent to deliver to Seller $5,725,000 of the Escrow Deposit,
(iii) Buyer shall deliver to the Seller the Senior Subordinated Note (or CSC
Class A Common Stock in lieu of all or a portion thereof as provided in (C) of
this Paragraph 2.3(a)), and (iv) Buyer shall deliver to an escrow agent jointly
selected by Buyer and Seller (the "Indemnification Escrow Agent") the
Indemnification Note (or CSC Class A Common Stock in lieu of all or a portion
thereof as provided in (C) of this Paragraph 2.3(a)); PROVIDED, HOWEVER, that
the payments required to be made pursuant to subsections (i) and (ii) above
shall be made on the Closing Date by wire transfer of immediately available
funds to a bank account designated by Seller in writing no later than five
Business Days prior to Closing.
(b) ESCROW FUND. (i) Upon and simultaneously with the execution of
this Agreement, Buyer shall execute and deliver the Escrow Agreement and shall
deposit an amount equal to Two Million Two Hundred Ninety Thousand Dollars
($2,290,000) into escrow with The Bank of New York (the "Escrow Agent") to be
held pursuant to the terms of the Escrow Agreement. Prior to the Closing, the
Escrow Fund shall secure the performance of Buyer in accordance with the terms
of this Agreement. Payment of the Escrow Fund to Seller (which payment, if
made, shall be as full and complete liquidated damages), or return of the Escrow
Fund to Buyer, shall be made pursuant to and in accordance with the terms of the
Escrow Agreement.
(ii) On or prior to June 16, 1994, Buyer shall execute and deliver an
escrow agreement (the "New Escrow Agreement") to be executed between Buyer,
Seller and Escrow Agent and shall deposit Five Million Seven Hundred Twenty Five
Thousand Dollars ($5,725,000) into escrow (the "Escrow Fund") with the Escrow
Agent to be held pursuant to the terms of New Escrow Agreement. Prior to the
Closing, the Escrow Fund shall secure the performance of Buyer in accordance
with the terms of this Agreement. Payment of the Escrow Fund to Seller (which
payment, if made, shall be as full and complete liquidated damages), or return
of the Escrow Fund to Buyer, shall be made pursuant to and in accordance with
the terms of the Escrow Agreement.
(c) ACCOUNTS RECEIVABLE. At the Closing, Seller shall deliver to
Buyer good, valid and marketable title to the Acquired Accounts Receivable and
the Buyer, in consideration therefor, shall deliver the Accounts Receivable
Price to the Seller by wire transfer of immediately available funds to a bank
account designated by Seller in writing no later than five Business Days prior
to the Closing. In addition, at the Closing Seller will deliver (i) the
Advertising Accounts Receivable to Buyer solely as collection agent therefor and
(ii) the Accounts Receivable other than the Advertising Accounts Receivable and
the Acquired Accounts Receivable (the "Other Receivables"). Buyer agrees, for a
period of one year from the Closing Date, to use its best efforts to collect all
amounts due in respect of the Advertising Accounts Receivable (and shall not
waive any
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amounts due thereunder without the prior written consent of Seller) and to
promptly remit to Seller 100% of all amounts so collected (net of collection
fees and expenses). Buyer agrees at all times to apply amounts received from
any party to the oldest outstanding Advertising Accounts Receivable of such
party.
2.4 ADJUSTMENTS TO PURCHASE PRICE.
(a) No later than ten Business Days prior to the Closing, the
Seller shall provide Buyer with an estimated calculation of the Basic
Subscribers (the "Estimated Basic Subscribers") and an estimated calculation of
the Accounts Receivable Price on and as of the close of business on the Closing
Date.
(b) Within 45 calendar days after the Closing Date, Buyer shall
deliver a certificate of its Chief Financial Officer to Seller setting forth a
determination of the Basic Subscribers on and as of the Closing Date (the
"Actual Basic Subscribers"). Seller shall be deemed to have accepted such
certification unless, within 30 calendar days of the receipt thereof, Seller
delivers to Buyer a reasonably specific description of Seller's objections (an
"Objection Notice"). In the event an Objection Notice is delivered, Buyer and
Seller shall negotiate in good faith to resolve such objections. If no
resolution is agreed upon within 30 calendar days after receipt of the Objection
Notice by Buyer, the dispute shall be submitted for resolution to Arthur
Andersen & Co. (the "Accountants"), acting as experts, not arbitrators, and
resolution by such Accountants shall be conclusive, binding and final. Buyer
and Seller shall make readily available to such Accountants all relevant books
and records and other items requested by such Accountants to review any dispute.
Such Accountants shall submit their resolution of the dispute to Buyer and
Seller within 30 calendar days of their engagement hereunder. The fees of such
Accountants shall be borne equally by Buyer and Seller.
(c) Upon acceptance of the certification referred to in Section
2.4(b) above or the resolution of any Objection Notice as set forth in such
Section, the Purchase Price shall be adjusted (the "Purchase Price Adjustment")
as follows:
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(i) If an Initial Adjustment was made and the number of Actual Basic
Subscribers exceeds the number of Estimated Basic Subscribers,
the Purchase Price shall be adjusted upward by an amount equal to
$500 multiplied by such excess; PROVIDED, HOWEVER, in no event
shall such upward adjustment, together with the Initial
Adjustment, exceed One Hundred Forty Eight Thousand Nine Hundred
Dollars ($148,900);
(ii) If an Initial Adjustment was made and the number of Estimated
Basic Subscribers exceeds the number of Actual Basic Subscribers,
the Purchase Price shall be adjusted downward by an amount equal
to $500 multiplied by such excess; PROVIDED, HOWEVER, in no event
shall such downward adjustment exceed the Initial Adjustment; or
(iii) If no Initial Adjustment was made and the number of Actual
Basic Subscribers exceeds the Adjustment Target, the Purchase
Price shall be adjusted upward by an amount equal to $500
multiplied by the excess of the Actual Basic Subscriber over the
Adjustment Target; PROVIDED, HOWEVER, in no event shall such
upward adjustment exceed One Hundred Forty Eight Thousand Nine
Hundred Dollars ($148,900);
Payment of the Purchase Price Adjustment, if any, shall be made by wire transfer
of immediately available funds to an account designated in writing by the
recipient of such funds on the later of (i) five Business Days from the date of
the Purchase Price Adjustment and (ii) the Adjustment Date (as defined in
Section 2.4(e) hereof).
(d) In the event that any person or entity is supplied CATV
signals by the System within 30 days prior to the Closing Date and is not
included in the determination of the Estimated Basic Subscribers for purposes of
determining the Initial Adjustment and such subscriber pays for one month's
service subsequent to Closing (a "New Subscriber"), such New Subscriber shall be
included in the determination of Actual Basic Subscribers for purposes of making
the adjustments, if any, pursuant to Section 2.4(c) hereof.
(e) All items of (i) deferred revenues, (ii) deferred or prepaid
expenses, (iii) accrued expenses, and (iv) other assets or liabilities which
cannot be individually or easily settled or discharged by the Seller at Closing
because the period to
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which they pertain overlaps the Closing, or otherwise, and which arise from
the operations of the System, shall be pro rated or allocated between Buyer and
Seller in accordance with GAAP as of the close of business on the Closing Date.
Seller shall be responsible for all liabilities and obligations incurred in
connection with the operation of the System for all periods prior to the close
of business on the Closing Date and shall be entitled to all revenues derived
from the operation of the System for all periods prior to the close of business
on the Closing Date. Buyer shall be responsible for the Assumed Liabilities and
for those liabilities and obligations incurred by Buyer from and after the close
of business on the Closing Date. Such PRO RATA allocations shall include,
without limitation, all advance payments received by Seller prior to the close
of business on the Closing Date for services to be rendered in whole or in part
after Closing, prepayments made by Seller relating to periods of time subsequent
to the close of business on the Closing Date, prepaid programming fees, property
taxes and assessments, unpaid copyright royalties and fees, rents, pole rents,
franchise fees, license fees, power and utility expenses, prepayment liabilities
and obligations under the Business Contracts, sales commissions, time sales
agreements, deposits and other prepaid expenses and deferred items and all other
income and expenses normally pro rated in the sale of assets of a business (and
of a CATV system in particular) and attributable to the ownership and operation
of the System. Adjustments under this Section 2.4(e) shall be jointly
determined by Buyer and Seller and paid from one party to the other, as the case
may be, on the Closing Date to the extent they are known and agreed to by the
parties (the "Closing Date Adjustment"). Seller shall deliver to Buyer, no
later than ten Business Days prior to the Closing Date, a preliminary list of
all such adjustments and shall deliver an updated list of adjustments at or
prior to Closing. Otherwise, such adjustments shall be determined within 90
calendar days thereafter (the "Adjustment Date") and payment therefor by Buyer
or Seller, as the case may be, shall be made on the later of (i) the Adjustment
Date and (ii) five Business Days from the date of the determination, if any, of
the Purchase Price Adjustment pursuant to Section 2.4(c)
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hereof. With respect to such adjustments, the parties shall jointly prepare a
statement at least ten business days before the Adjustment Date of the
determination of such adjustments, setting forth in reasonable detail the basis
for such determination. Payments made in respect of such adjustments shall be
the net amount due less any amounts in dispute as between the parties. If the
parties do not concur with any proposed adjustments, then the non-concurring
party shall so inform the other party within such ten business day period, and
the parties shall negotiate in good faith with regard to the matter and an
appropriate adjustment and payment shall be made as agreed upon by the parties.
If there shall be any dispute concerning any amount due pursuant to this
provision which the parties cannot resolve, the dispute shall be submitted to
the Accountants for resolution of the dispute, acting as experts, not
arbitrators and such resolution shall be conclusive, binding and final. Buyer
and Seller shall make readily available to such Accountants all relevant books
and records and other items requested by such Accountants to review such
dispute. Such Accountants shall submit their resolution of the dispute to Buyer
and Seller within 30 calendar days of their engagement hereunder. Buyer and
Seller agree to share equally the cost and expenses of the Accountants. All
amounts owed pursuant to this Section 2.4(e) shall be paid by wire transfer of
immediately available funds within ten business days after the resolution of the
amount due. If such amount is not paid within such ten business day period, or,
if there is no dispute with respect to the amount due, if such amount is not
paid on the later of (i) the Adjustment Date and (ii) five Business Days from
the date of the determination, if any, of the Purchase Price Adjustment pursuant
to Section 2.4(c) hereof, interest on the amount due shall accrue from the
Adjustment Date until the date paid at the lesser of the Prime Rate plus three
percent (3%) or the maximum rate allowed by law.
(f) All state or local sales and transfer taxes applicable to
the transactions contemplated by this Agreement shall be borne in equal shares
by Seller and by Buyer. Buyer shall pay the cost of any title insurance,
surveys and recording costs.
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2.5 APPRAISAL AND ALLOCATION OF PURCHASE PRICE.
(a) Buyer and Seller agree that one thousand dollars ($1,000) of
the Purchase Price shall be allocated for all purposes to the Non-Compete
Agreements.
(b) Promptly after Closing, Buyer and Seller shall cooperate in
the filing of form 8594; PROVIDED, HOWEVER, that Buyer and Seller will allocate
to the real and tangible personal property included in the System Assets an
amount equal to the fair market value of such assets. Based on the information
provided by Seller as of the date of this Agreement, the parties anticipate that
approximately $17,175,000 (the "Estimated Fair Market Value") represents the
fair market value of such real and tangible personal property. Promptly after
execution of this Agreement, Buyer and Seller jointly shall retain an
independent appraiser in order to verify the accuracy of the Estimated Fair
Market Value.
3. CLOSING DATE AND PLACE.
3.1 CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall be held on or before the later of (i) June 30, 1994 or (ii) two Business
Days after the issuance of an Amended Order of Approval of the New Jersey Board
of Regulatory Commissioners, but in no event later than July 15, 1994; PROVIDED;
HOWEVER, that if required by [Buyer's lenders], the Closing may be delayed until
the first Business Day following the expiration of the period of 45 days after
the Amended Order of Approval of the New Jersey Board of Regulatory
Commissioners is served on Buyer upon such Order becoming final and non-
appealable. or, such other date as Buyer and Seller shall mutually agree (the
"Closing Date") at the offices of Cadwalader, Wickersham & Taft, 100 Maiden
Lane, New York, New York 10038, or such other location as Seller and Buyer
mutually agree. If the Closing Date occurs after June 30, 1994, for purposes of
determining whether the conditions to Buyer's obligations set forth in
Section 7.7 of this Agreement have been satisfied, the Closing Date shall be
deemed to be June 30, 1994.
4. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby represents,
warrants and covenants to Buyer that:
4.1 ORGANIZATION OF SELLER. Seller is a limited partnership duly
organized and validly existing under the laws of the State of Delaware, has all
requisite power and authority to execute and deliver this Agreement and the
Ancillary Agreements and, at the
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Closing Date, will have all requisite power and authority to perform this
Agreement and the Ancillary Agreements, and is not required to be qualified to
do business as a foreign limited partnership in any jurisdiction in order to
hold the System Assets or operate the System. Seller has all requisite power
and authority, and all federal, state and local governmental franchises,
licenses, permits, approvals and authorizations which are necessary, to own and
operate the System Assets and the System at the places and in the manner in
which the System is currently owned and operated.
4.2 SELLER'S AUTHORITY. (a) The execution, delivery and performance
of this Agreement and the Ancillary Agreements by Seller have been duly and
validly authorized by all necessary action on the part of Seller, and, the
execution, delivery and performance of this Agreement and the Ancillary
Agreements by Seller at the date hereof (except as set forth on Schedule 4.2) do
not and, as of the Closing, will not, result in a breach or violation by Seller
of, or constitute a default (or an event which with or without the passage of
time or the giving of notice, or both, will constitute a breach or default)
under, or create or impose any lien or encumbrance upon, any of the System
Assets pursuant to, or conflict with: (i) any Authorization or CATV Instrument,
(ii) any agreement, indenture, deed, loan agreement or other instrument to which
Seller is a party or by which Seller is bound or to which any of the System
Assets is subject, (iii) Seller's Amended and Restated Agreement of Limited
Partnership, dated as of April 30, 1986 ("Seller's Partnership Agreement") or
certificate of limited partnership or other governing documents referred to in
Section 4.2(b); or (iv) any statute, ordinance, rule, regulation, order,
judgment or decree to which Seller is a party or by which Seller is bound or to
which any of the System Assets is subject, except in the case of (ii) above,
where such breach, violation, default or creation or imposition of such lien or
encumbrance or conflict is not, individually or in the aggregate, reasonably
likely to have a material adverse effect on (1) the business, financial
condition or results of operations of the System, taken as a whole, (2) Seller's
or, to the actual knowledge of Seller, Buyer's ability to own the System Assets
or to operate the System as it
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is now operated or (3) Seller's ability to perform its obligations under this
Agreement (each or any, a "Material Adverse Effect"). This Agreement
constitutes, and the Ancillary Agreements and each contract delivered by Seller
to Buyer pursuant hereto will constitute, the legal, valid, and binding
obligation of Seller enforceable in accordance with their respective terms
except to the extent such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and principles of equity.
(b) Seller has heretofore delivered to Buyer a copy of the
Seller's Partnership Agreement (excluding Sections 9, 10, 11 and 20.3), as in
full force and effect on the date hereof, and Sections 9, 10, 11 and 20.3 of
Seller's Partnership Agreement do not, nor are there any other agreements
between or among any general and/or limited partners of Seller that, contain any
provisions that are reasonably likely to affect the transactions contemplated by
this Agreement. Between the date of delivery of Seller's Partnership Agreement
and the Closing, no changes shall have been made to it which are reasonably
likely to adversely affect Seller's ability to perform its obligations under
this Agreement.
4.3 AUTHORIZATIONS AND CATV INSTRUMENTS. Seller has all
Authorizations necessary to own the System Assets and to operate the System in
the manner in which it is now operated by Seller. Except as set forth in
Schedule 4.3, Seller knows of no other franchises, licenses or authorizations
other than the Authorizations which, if not possessed by the Seller, would be
reasonably likely to have a Material Adverse Effect. Each Authorization is
valid, is in full force and effect, is not in default in any respect (and there
exists no event or circumstance that, with notice or the lapse of time or both,
would constitute a default) and is in accordance with all applicable federal,
state and local laws except where any such default or failure to comply is not
reasonably likely to have a Material Adverse Effect. True and correct copies of
the Authorizations and the CATV Instruments have heretofore been provided to
Buyer by Seller. Subject to obtaining the Required Consents (as defined in
Section 4.8), the execution, delivery and performance
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of this Agreement will not entitle any person or entity to cancel, suspend,
terminate or diminish the rights of Seller under any Authorization.
4.4 REAL PROPERTY. All of the real property and all of the leases of
real property included in the System Assets are listed in Schedule 4.4 (the
"Real Property"). As to the premises which are designated on Schedule 4.4 as
being owned by Seller, Seller has good, valid and marketable title in fee simple
to such premises and all buildings, improvements and fixtures thereon, free and
clear of all Encumbrances, except as shown on such Schedule 4.4.1 and except for
minor imperfections of title and Encumbrances which do not materially detract
from the value of such Real Property. Seller is the sole owner of the leasehold
interest in all real property shown on Schedule 4.4 to be leased to it, and such
leases are valid and subsisting and in full force and effect except where any
failure is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. All of the Real Property, buildings, fixtures and
improvements thereon owned or leased by Seller, are in good operating condition
and repair (subject to normal wear and tear).
4.5 EASEMENTS AND RIGHTS-OF-WAY. Except as set forth on Schedule
4.5, each person, firm, corporation or other entity upon or under whose property
are located, maintained, installed or operated any of the System Assets (other
than drop lines to subscriber dwellings which do not cross any property other
than the property of such subscribers) has granted to Seller such easements,
licenses or rights of way as are necessary for the location, maintenance,
installation and operation of such System Assets upon, over or under such
property, except where the failure to have any such easement, license or right
of way is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. All such easements, licenses or rights of way are, to
the knowledge of Seller, valid and binding and are in full force and effect on
the date hereof and will be as of the Closing Date except where any failure is
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect. Except as set forth on Schedule 4.5, the Seller has not
received written notice from any person, firm, corporation or other entity upon
or under
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whose property are located, maintained, installed or operated any System Assets
of an intention to challenge the continued location, maintenance, installation
or operation of such item on such property.
4.6 TANGIBLE PERSONAL PROPERTY. Schedule 4.6 contains a reasonably
complete description of the tangible personal property included in the System
Assets (the "Tangible Personal Property") as of the date of this Agreement. At
the Closing, Tangible Personal Property shall include a thirty (30) day
operating supply of inventory for operation of the System in the ordinary course
of business. Except as set forth on Schedule 4.6.1, Seller has good, valid and
marketable title to all Tangible Personal Property, free and clear of all
Encumbrances except minor imperfections of title and Encumbrances which do not
materially detract from the value of such Tangible Personal Property. The
Tangible Personal Property is in good operating condition and repair (subject to
normal wear and tear).
4.7 CONTRACTS; NO DEFAULTS. Schedule 4.7 contains a list of all
written contracts in force on the date hereof to which Seller is a party and
relating to the System Assets, to the System or to the business and operations
thereof except for Programming Contracts and management and consulting contracts
and except for contracts entered into in the ordinary course of business
consistent with past practices which call for the payment by or to the Seller of
$50,000 or less individually, or $500,000 or less in the aggregate, in any 12-
month period, or which are terminable by Seller on notice of 90 days or less
without penalty or premium (each such contract listed on Schedule 4.7 being
herein referred to as a "Business Contract"). Except as disclosed on Schedule
4.7, (i) each of the Business Contracts is in full force and effect and
constitutes a valid and binding obligation of Seller and is legally enforceable
in accordance with its terms against the parties thereto, (ii) Seller has
complied with all of the provisions of such Business Contracts and is not in
default thereunder, and (iii) there has not occurred any event which (whether
with or without notice, lapse of time, or the happening or occurrence of any
other event) would constitute
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such a default, except in the case of (ii) or (iii) above, where the occurrence
of such event is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect. To the knowledge of Seller and except as
disclosed on Schedule 4.7, the parties to the Business Contracts other than
Seller are not in default under any such Business Contracts except where such
default is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
4.8 APPROVALS AND CONSENTS. Set forth in Schedule 4.8 is a list of
all required consents, approvals, waivers, permits, licenses or authorizations
of any federal, state, local or other regulatory or public authority, and all
required consents, approvals or waivers of any other persons or entities, which
(i) are required to be obtained by Seller under any law, regulation, court order
or franchise in order to consummate the transactions contemplated by this
Agreement; (ii) are required to be obtained by Seller under any note, bond,
mortgage, permit, agreement or other instrument in order to consummate the
transactions contemplated by this Agreement, except where the failure to obtain
such consents, approvals, waivers, permits, licenses or authorizations,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect; or (iii) are otherwise necessary to prevent the termination of,
or any material restriction under, any franchise agreement or agreement assumed
by Buyer under this Agreement upon consummation of the transactions contemplated
hereby (collectively, the "Required Consents").
4.9 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. Attached
hereto as Schedule 4.9 are true and complete copies of audited financial
statements of Seller as at December 31, 1992 (the "Audited Financial
Statements"), and unaudited financial statements of Seller for the eight-month
period ended August 31, 1993 (the "Unaudited Financial Statements") (the Audited
Financial Statements and the Unaudited Financial Statements are herein
collectively referred to as the "Financial Statements"). The Audited Financial
Statements have been prepared in accordance with GAAP, consistently applied, and
fairly present the financial condition and results of operations of the Seller,
taken as a
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whole, as of the dates and for the periods indicated. The Unaudited Financial
Statements have been prepared in accordance with GAAP (except for the absence of
footnotes and a statement of cash flows), applied consistently with the Audited
Financial Statements, and fairly present the financial condition and results of
operations of the Seller, taken as a whole, as of the dates and for the periods
indicated, subject to year-end adjustments. Except as set forth in the
Financial Statements, since August 31, 1993 and except for changes directly or
indirectly attributable to the Cable Television Consumer Protection and
Competition Act of 1992 and the rules, regulations and interpretations
promulgated thereunder (the "1992 Cable Act"), there has been no material
adverse change in the financial condition or results of operations of the
Seller.
4.10 ACQUIRED ACCOUNTS RECEIVABLE. At least 98% of the face value of
each of the Acquired Accounts Receivable constitutes (or will constitute) a
valid claim in such amount and has been acquired in the ordinary course of
Seller's business.
4.11 INFORMATION SHEET; COMPETING FRANCHISES.
(a) Schedule 4.11 (a) sets forth the following technical and
business information relating to the operation of the System as of the date of
this Agreement (which information is true and correct as of the date hereof, or
if another date is specified in such Schedule, as of such specified date) with
respect to: (i) a rate card setting forth rates currently being charged by
Seller in connection with the System for every service, level of service,
package of service(s), installations and outlets or other services or items for
which Seller has an established charge (the "Current Rates"), and a rate card
setting forth all such rates immediately prior to September 1, 1993 (the "Prior
Rates"); (ii) the current real and personal property lease obligations of Seller
and rental payments; (iii) the signals carried on the System; (iv) the number of
Subscribers as of the date specified in such Schedule 4.11(a) and the total
number of such Subscribers, by level of service subscribed for by such
Subscribers as of such date; (v) the mileage of plant in the System as of the
date specified in such Schedule 4.11(a); (vi) the number of channels capable of
being
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delivered over the System (without utilization of digital compression); (vii)
the number of addressable converters used in the System; (viii) the number of
persons or entities receiving free service and the reasons therefor; (ix) surety
and performance bonds required by the Authorizations and/or CATV Instruments, or
otherwise maintained by Seller with respect to the System or System Assets, and
the amount so required; and (x) the current franchise fees being charged by each
franchising authority.
(b) Except as set forth on Schedule 4.11(b), no person or entity
(including without limitation any governmental agency, body or division) has any
right to acquire any interest in the System or the System Assets (including
without limitation any right of first refusal or similar right to purchase any
interest in the System or any of the System Assets), which right has not been
validly, properly and irrevocably (except for the right to revoke such waiver
only if this Agreement is terminated pursuant to Section 16 hereof) waived by
the party entitled to assert such right. Except as set forth on Schedule
4.11(b), Seller has not entered into any agreement and is not bound by any
commitment with respect to retransmissions of broadcast television signals
relating to the System.
(c) Except as set forth in Schedule 4.11(c), to the knowledge of
Seller, no other person or entity:
(i) has been granted or has applied for the consent or approval of
any governmental agency, body or division (a "Governmental
Approval") for the installation, construction, development,
ownership or operation of a CATV system or any MDS or MMDS
technology within all or part of the territory covered by the
System;
(ii) operates any of the foregoing or any SMATV technology within all
or part of the territory covered by the System, regardless of
whether any Governmental Approval is required or has been
obtained;
(iii) has been granted a Governmental Approval that grants a right
of first refusal or similar right to purchase a CATV system
within any territory covered by the System; or
(iv) has commenced, or has received or applied for a Governmental
Approval for, the construction, installation, development or
operation of a CATV system which has
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resulted, or could result, in such system being overbuilt with
the System.
4.12 COMPLIANCE WITH LAWS, REGULATIONS AND REPORTING. Except as
disclosed on Schedule 4.12, and except with respect to the matters described in
the offer of settlement referred to on Schedule 1.8, the ownership and operation
of the System Assets by Seller comply in all material respects with all
applicable laws, rules, regulations, requirements, standards and guidelines of
all federal, state and local authorities or agencies having jurisdiction over
Seller and with the terms and provisions of any mortgage, lease, license,
indenture, or agreement relating to the System except where any failure to be in
compliance is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
4.13 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 4.13,
there are no flammable, explosive or radioactive materials, toxic substances or
other hazardous substances or wastes on, under or about any of the properties
included in the System Assets which could result in any governmental or third-
party action, proceeding or claim which is, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect. Seller has, and is in
compliance with the terms of, all permits, licenses and other authorizations
required in connection with the operation of the System pursuant to, or to be in
material compliance with, any Environmental Requirements (as defined below).
Seller is in material compliance with all requirements for the operation of the
System or use of the System Assets under federal, state, or local laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic substances, materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
substances, materials or wastes (collectively, "Environmental Requirements").
There are no underground storage tanks storing petroleum substances or any other
hazardous substances at any of the properties included in the System Assets.
There is no asbestos-containing material present in any real property presently
owned, leased or used by Seller and no asbestos-containing material has
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been removed from any real property while such real property was owned, leased
or used by Seller, in either case, except for such as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect. Seller has
provided to Buyer copies of any and all environmental audits, investigations,
studies or reports that have been performed by or at the direction of Seller or
to the extent such audits, investigations, studies and reports concern any real
property leased by Seller, of which Seller has knowledge or possession. For the
purpose of this Section, "hazardous substances", "hazardous materials" and
"hazardous waste" shall have the meaning set forth in, as the case may be, the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, 42 U.S.C. Section 9601, ET SEQ., and regulations thereunder; the
Resource Conservation and Recovery Act; or any applicable federal, state or
local laws pertaining to environmental regulations.
4.14 FCC MATTERS. Except as set forth on Schedule 4.14, all reports
and filings required to be filed with the FCC and with all franchising
authorities by Seller with respect to the operation of the System have been
filed. All such reports and filings are accurate and complete in all material
respects. Seller has all required certificates, permits, and clearances from
governmental agencies required to operate the System and the System Assets in
the manner currently operated by Seller, except where the failure to have any
such certificate, permit or clearance is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect.
4.15 COPYRIGHT MATTERS. Seller has filed all required reports,
notices and statements with the United States Copyright Office. Seller has paid
all fees required under the Copyright Act of 1976 and has otherwise complied
with such Act in all material respects; PROVIDED, HOWEVER, that Seller makes no
representations regarding the effect of the CATV industry-wide dispute
concerning music licensing fees or the dispute covered by the "Cablevision"
case.
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4.16 CLAIMS AND LITIGATION. Except as set forth in Schedule 4.16,
there is no action, suit, claim, arbitration, administrative or other proceeding
pending or, to Seller's knowledge, threatened against or involving Seller, the
System or any of the System Assets, at law or in equity, which would prevent or
adversely affect in any material respect the ownership, use or operation of any
of the same by Buyer. Except as set forth in Schedule 4.16, there is no pending
or, to Seller's knowledge, threatened investigation or proceeding based on any
violation by Seller of any state or federal law, rule or regulation pertaining
to the System.
4.17 EMPLOYEES; COMPENSATION; UNIONS.
(a) Seller is not a party to any employment agreements or any
collective bargaining agreements that cannot be terminated without liability to
Buyer upon the purchase of the System. Seller is not a party to any pending or,
to Seller's knowledge, threatened labor dispute or labor organization effort.
(b) Except as set forth in Schedule 4.17, Seller has no pension
plans, profit sharing plans, deferred compensation plans, stock option or stock
bonus plans or the like or similar employee or executive benefit plans. Except
as set forth in Schedule 4.17, Seller does not maintain, sponsor or contribute
to any "employee benefit plan" within the meaning of Section 3(3) of ERISA, or
other plan, program, practice, agreement or arrangement of employee
compensation, deferred compensation, severance pay, retiree benefit or fringe
benefit. Seller is in compliance with all provisions, including all reporting
and disclosure requirements, of ERISA and of the Code, relating to employee
benefit plans, except where any such failure is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.
4.18 INSURANCE. Schedule 4.18 lists all insurance policies of Seller
which relate to the ownership, operation or use of the System and System Assets.
All of such policies are in full force and effect and Seller is not in default
of any provision thereof,
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except where any such default is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect.
4.19 PATENTS AND COPYRIGHTS. Seller, to its knowledge, owns or
possesses all licenses or other rights to use all copyrights, trademarks,
service marks, service names, trade names and patents necessary to operate the
System, except where any failure would not, individually or in the aggregate,
have a Material Adverse Effect. All copyrights, trademarks, service marks,
trade names, service names and patents owned or used by Seller, and applications
therefor, are set forth on Schedule 4.19 and are designated as to whether they
are owned by or licensed to Seller.
4.20 RATES. As of the date hereof, the Current Rates are, to Seller's
knowledge, in substantial compliance with all applicable laws, including without
limitation the 1992 Cable Act as in effect on the date of this Agreement.
Seller has provided to Buyer accurate copies of Seller's worksheets revising the
Prior Rates to the Current Rates.
4.21 SPECIAL AGREEMENTS. Except as set forth in Schedule 4.21,
Seller:
(i) is not a party to any contract or agreement, written or oral,
whereby Seller provides CATV service to one or more persons or
entities in the service area covered by the Systems under any
bulk contract or agreement; or
(ii) does not provide CATV system services to any person or entity in
the service area covered by the System at rates not reflected in
Seller's subscriber rate card.
4.22 TAXES. Except as set forth in Schedule 4.22, Seller has filed or
caused to be filed, or on the date of the Closing will have filed, all federal,
state, local and foreign income, information, franchise, sales, use, property,
excise, payroll and other returns, declarations and reports related to Taxes
that are required to be filed by Seller on or prior to the date hereof. All
Taxes due and payable by Seller on or before the date of this Agreement with
respect to the assets or properties of Seller or the System (including the
System Assets) have been paid or have been provided for in the Financial
Statements. Except as set forth on Schedule 4.22, neither Seller nor its
general partners or, to the
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knowledge of Seller, its limited partners, have received any notice or
assessment to the effect that there is any unpaid interest, penalty or addition
to Taxes due or claimed to be due from Seller with respect to the assets or
properties of Seller or the System (including the System Assets) nor, to the
knowledge of Seller, is any such notice contemplated or under consideration; and
neither Seller nor its general partners or, to the knowledge of Seller, its
limited partners, have received notice of the assertion or threatened assertion
of any lien on any of the assets or properties of Seller or the System
(including the System Assets) on account of any unpaid Taxes that are due and
payable and no audits of the return or reports of Seller by any governmental
authority are pending or, the knowledge of Seller, threatened.
4.23 CAPITAL COMMITMENTS. Except as set forth in Schedule 4.23,
Seller has not entered into any agreements and is not otherwise bound to any
written or oral commitments to upgrade any of the System (including without
limitation promises or commitments on the part of Seller in connection with any
of the Authorizations).
4.24 FINANCING COMMITMENTS. Set forth in Schedules 4.4.1, 4.6.1 and
4.24 is a description of all notes, letters of credit, guarantees, instruments
of debt, mortgages, liens, conditional sale or lease purchase agreements,
security agreements and purchase money security interests that, in each case,
create any Encumbrances on the System or any of the System Assets and all
obligations for money owed or debts of Seller relating to the System or any of
the System Assets (other than trade accounts payable incurred in the ordinary
course of Seller's business), setting forth the party to whom the obligation or
debt is due, the collateral, if any, and the amount and date due.
5. BUYER'S REPRESENTATIONS. Buyer represents and warrants that:
5.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to execute,
deliver and perform this Agreement and the Ancillary Agreements. Buyer is a
wholly-owned subsidiary of
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Cablevision Systems Corporation, a Delaware corporation ("CSC"). As of the
Closing Date Buyer will be duly qualified to do business as a foreign
corporation in the State of New Jersey.
5.2 AUTHORITY TO EXECUTE AND CONSUMMATE AGREEMENT. The execution,
delivery and performance of this Agreement and the Ancillary Agreements have
been duly authorized by all necessary corporate action on Buyer's part. This
Agreement has been duly executed and delivered by Buyer and constitutes, and the
Ancillary Agreements and each contract delivered by Buyer to Seller pursuant
hereto will constitute, the legal, valid, and binding obligation of Buyer
enforceable in accordance with its terms except to the extent such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor's rights generally and principles of
equity. The execution, delivery and, except as set forth on Schedule 5.2,
performance of this Agreement and the Ancillary Agreements by Buyer do not and,
as of the Closing, will not result in a breach or violation by Buyer of, or
constitute a default (or an event which with or without the passage of time or
the giving of notice, or both, will constitute a breach or default) under, any
agreement, instrument, charter or by-law provision, statute, ordinance, rule,
regulation or order to which Buyer is a party or by which Buyer is bound, other
than such breach, violation, default or conflict that, individually or in the
aggregate, will not materially impair Buyer's ability to perform its obligations
under this Agreement.
5.3 EXCHANGE ACT COMPLIANCE. CSC has timely filed with the
Securities and Exchange Commission all forms, reports, statements and other
documents required to be filed by CSC pursuant to the Exchange Act and the rules
and regulations promulgated thereunder and the information contained in such
forms, reports, statements and other documents, as of the date of filing
thereof, did not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Copies
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of CSC's most recent reports on Forms 10-K, 10-Q and 8-K and CSC's most recent
proxy statement have heretofore been delivered by CSC to Seller.
5.4 FITNESS AS FRANCHISEE. As of the date hereof, neither Buyer nor
CSC has received any written notification from the Board of Regulatory
Commissioners of the State of New Jersey (the "BRC"), or the Office of Cable
Television indicating, nor do any of William Quinn, Robert Cacase and James
Kofalt (each an "Executive Officer", collectively, the "Executive Officers")
have any actual knowledge, that the transfer of the System (including the
Authorizations or CATV Instruments), to the Buyer as contemplated herein would
be rejected by the BRC.
5.5 CSC will treat the Senior Subordinated Note as debt for financial
reporting and Federal Income Tax purposes.
6. ADDITIONAL COVENANTS.
6.1 NEGATIVE COVENANTS OF SELLER. From the date of execution of this
Agreement until the Closing, Seller will not, without the prior written consent
of Buyer, which consent shall not be unreasonably withheld, do or agree to do
any of the following:
(a) Sell, assign, lease or otherwise transfer or dispose of any
of the System Assets; or merge or consolidate with or into any other entity or
enter into any agreements relating thereto, PROVIDED, HOWEVER, Seller may sell,
assign, lease or otherwise transfer or dispose of any System Asset (individually
or in the aggregate up to a maximum amount of $229,000) if such System Asset is
expended in the ordinary course of business, consistent with Seller's past
business practices;
(b) Delete any programming service on the System other than in
the ordinary course of business or as required by the 1992 Cable Act.
(c) Enter into any contracts, leases, commitments,
understandings, licenses, or other agreements or incur any obligation or
liability relating to the System; PROVIDED, HOWEVER, that Seller may enter into
such other contracts, leases, commitments, understandings, licenses or other
agreements in the ordinary course of business consistent with Seller's past
business practices or as required by the 1992 Cable Act; and, PROVIDED,
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FURTHER, HOWEVER, that Seller may incur obligations or liabilities for which
Seller will remain solely liable after the Closing Date;
(d) With respect to the employees of the System, (i) enter into
or become subject to any employment, labor or union contract not terminable at
will, any professional service contract not terminable at will, or any pension,
insurance, profit sharing, deferred compensation, retirement, hospitalization,
employee benefit, or other similar plan not currently in effect or any renewal
on materially different terms; or (ii) increase the compensation payable or to
become payable to any employee, or pay or arrange to pay any bonus payment to
any employee for which Buyer will be obligated after the Closing (except, in the
case of clause (ii) only, in the ordinary course of business consistent with
Seller's past business practices); or
(e) Offer free or reduced-price service as an inducement to any
person, except in the ordinary course of business consistent with Seller's past
business practices.
6.2 AFFIRMATIVE COVENANTS OF SELLER. Pending and prior to the
Closing Date, Seller will:
(a) Preserve its existence and business organization intact, use its
best efforts to preserve, for Buyer, Seller's relationship with suppliers,
customers, employees and others having business relations with Seller, and keep
all System Assets in their present condition, ordinary wear and tear excepted;
(b) Operate the System in the normal and usual manner and in
compliance with all applicable laws, rules and regulations except where any
noncompliance is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect;
(c) Maintain the validity of the Authorizations, and comply with all
applicable requirements of the Authorizations except where any noncompliance is
not reasonably likely to have a Material Adverse Effect;
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(d) Maintain in full force and effect all of the insurance policies
listed on Schedule 4.18, or substantially similar policies, through the Closing
Date in amounts not less than those in effect on the date hereof;
(e) Provide Buyer with Seller's unaudited internal monthly financial
statements from September 1993 until the Closing Date as soon as reasonably
practicable after such statements are available; and
(f) File or submit and diligently prosecute, with the reasonable
cooperation of Buyer, any and all applications or notices with public
authorities necessary for the consummation of the transactions contemplated
hereby or to satisfy the conditions set forth in Section 7.1 hereof, including,
without limitation, under the Required Consents, the Authorizations and the CATV
Instruments; and, if legally necessary, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
6.3 AFFIRMATIVE COVENANTS OF BUYER. Buyer will:
(a) Cooperate with and assist Seller in promptly filing or
submitting and diligently prosecuting any and all applications or notices with
public authorities necessary for the consummation of the transactions
contemplated hereby or to satisfy the conditions set forth in Section 7.1
hereof, including, without limitation, under the Authorizations, the CATV
Instruments and, if legally necessary, under the HSR Act, including payment of
the requisite $25,000 filing fee;
(b) File or submit and diligently prosecute any and all
applications or notices with public authorities that Buyer is required by
applicable law to file or submit in connection with the consummation of the
transactions contemplated hereby or to satisfy the conditions set forth in
Section 8.1 hereof;
(c) Notify Seller, on or prior to the 60th day prior to the
Closing, of the names of those employees of Seller whom Buyer reasonably expects
will be offered employment by Buyer on and after the Closing Date;
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(d) Buyer shall indemnify Seller for any financial liability
incurred by Seller after the Closing under the programming agreements listed on
Schedule 1.45 to the extent such liability arises out of the failure of Buyer or
one of its affiliates to enter into any oral or written agreements to carry such
programming.
(e) Promptly disclose to Seller if William Bell or Barry O'Leary
has actual knowledge of information obtained through Buyer's due diligence
investigation or otherwise (other than information that is also known to Seller
or any of its general partners, agents or representatives) of a breach or
inaccuracy of any representation or warranty of Seller contained in this
Agreement or the failure by Seller to perform or comply with any agreement or
covenant herein required to be performed or complied with on or prior to the
Closing Date; and
(f) Assist Seller in complying with its obligations under the
Consolidated Omnibus Budget Reconciliation Act of 1985 that relate to continued
insurance coverage to be made available to any of the employees of Seller on the
Closing Date who are not employed by Buyer immediately after the Closing Date
("Terminated Employees"), including, without limitation, offering such
Terminated Employees participation (at the expense of such Terminated Employees)
in employee benefit plans maintained by Buyer, PROVIDED THAT Seller shall
indemnify and hold Buyer harmless from any and all costs and expenses incurred
in connection with such assistance.
6.4 ACCESS TO INFORMATION. Seller shall afford reasonable access
during normal business hours and on reasonable prior notice prior to Closing to
Buyer and to Buyer's counsel, accountants, engineers, and other representatives
to all the System Assets, and Seller will provide Buyer and Buyer's counsel,
accountants, engineers, and other representatives such information concerning
the System Assets and the operation of the System in Seller's possession as
Buyer may reasonably request to facilitate Buyer's due diligence review. Any
and all information, disclosures, knowledge or facts regarding Seller and its
operations and properties shall be confidential and shall not be divulged,
disclosed
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or communicated to any other person, firm, corporation or entity except for
Buyer's attorneys, accountants and lenders, and such lenders' attorneys (and all
such persons shall be informed of, and shall acknowledge, the confidential
nature of such information) for the purpose of consummating the transactions set
forth in this Agreement.
6.5 NOTIFICATION. Each party will promptly notify the other in
writing upon becoming aware of any order or decree or any complaint praying for
an order or decree restraining or enjoining the consummation of this Agreement
or the transactions contemplated hereby, or upon receiving any notice from any
governmental department, court, agency or commission of its intention to
institute an investigation into, or institute a suit or proceeding to restrain
or enjoin the consummation of this Agreement or such transactions, or to nullify
or render ineffective this Agreement or such transactions contemplated if
consummated, or upon the occurrence of, or upon becoming aware of the impending
or threatened occurrence of, any event which would cause or constitute a breach
or would have caused a breach had such event occurred or been known to such
party prior to the date hereof, of any of the respective representations and
warranties contained in or referred to in this Agreement or in any Schedule
hereto.
6.6 RIGHT TO CURE; PURCHASE PRICE ADJUSTMENT. In the event Buyer
notifies Seller, pursuant to Section 6.3(e) hereof, of any breach or inaccuracy
of a representation or warranty of Seller or any non-performance or non-
compliance by Seller of any agreement or covenant required to be performed or
complied with on or prior to the Closing and Buyer does not waive such breach,
inaccuracy, non-performance or non-compliance, Seller shall have the right, but
not the obligation, to (i) cure any breach, non-performance or non-compliance or
(ii) negotiate with Buyer, in good faith, a reduction in the Purchase Price.
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6.7 CLOSING CONDITIONS. Seller and Buyer will exert their best
efforts in good faith to cause the Closing conditions set forth in Sections 7
and 8 to be met on or before the Closing Date (including without limitation
executing the Ancillary Agreements, as applicable, at the time and in the form
contemplated by this Agreement).
7. CONDITIONS OF BUYER'S OBLIGATIONS. The obligations of Buyer to
purchase the System Assets and to proceed with the Closing are subject to the
satisfaction at or prior to the Closing of each of the following conditions, any
one or more of which may be waived in whole or in part by Buyer by giving
written notice to Seller to that effect:
7.1 CONSENTS AND WAIVERS.
(a) Seller shall, with the reasonable cooperation of Buyer, have
obtained all Required Consents and/or all consents or waivers necessary to
effect valid assignment of all Authorizations on terms which are not less
favorable than those held by Seller on the date hereof, or, in lieu of such
consents or waivers, Buyer shall have been issued or shall have entered into
such Authorizations necessary for the operation of the System by Buyer on terms
and conditions which are not less favorable than those held by Seller on the
date hereof and shall have provided Buyer with evidence reasonably satisfactory
to it of such consents, waivers and/or issuances, as the case may be. A
Required Consent, or a consent or waiver, shall be deemed to satisfy the
condition contained in this Section 7.1(a) notwithstanding its containing a term
or terms less favorable than those held by Seller on the date hereof, unless:
(i) Buyer believes the less favorable term or terms, in the
aggregate, is or are reasonably likely to have a material adverse
effect on (i) the business, financial condition, results of
operation of Buyer or the System, taken as a whole; (ii) Buyer's
ability to own or operate the System or CATV systems in New
Jersey generally or (iii) Buyer's ability to perform its
obligations under this Agreement; or that would require Buyer to
make capital expenditures in excess of ongoing maintenance
capital expenditures greater than $8,800,000; and
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(ii) Buyer reasonably believes, on the advice of its counsel, that the
less favorable term does not comply with, or is otherwise
inconsistent with, any state or federal law, rule or regulation.
In connection with the obtaining of any Required Consent, neither
Buyer nor any of its affiliates shall be required to agree to, or provide any
consents or waivers with respect to, any new or amended term or condition
contained in any franchise, license, approval or agreement held by any affiliate
of Buyer, or affecting cable television systems currently operated by any
affiliate of Buyer in the State of New Jersey.
Seller's obligation with respect to any of the Authorizations
listed in Exhibit B, which are in the franchise renewal process, is limited to
the assignment to Buyer of (a) such Authorization or, in situations wherein the
Authorization has expired, a letter of continued operating authority issued by
the Office of Cable Television authorizing Buyer to continue operating the
relevant system pending completion of renewal proceedings and (b) all of
Seller's rights in connection with such renewal proceedings. The failure of
Seller to obtain renewal Authorizations with respect to the franchises listed in
Exhibit B, which are in the franchise renewal process, prior to the Closing Date
shall not be deemed a breach of Seller's representations, warranties, covenants
or obligations under this Agreement (provided that Seller has validly assigned
the Authorizations, if applicable, or received and validly assigned the letters
of continued operating authority, and validly assigned its rights in connection
with all such renewal proceedings), nor shall any such failure be deemed to (x)
be a term or terms less favorable than those held by Seller on the date hereof,
or (y) constitute a Material Adverse Effect.
(b) Seller shall have obtained the Required Consents, including
consents and approvals of other persons or parties as may be required for the
assignment of the Business Contracts, or Seller shall have provided, at its own
expense, a substantially equivalent facility, product or service, reasonably
acceptable to Buyer, as currently provided by any such Business Contract, or
Seller shall provide Buyer the benefit of any such Business Contract by
remaining a party thereto, PROVIDED, THAT, Buyer shall indemnify
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and hold Seller harmless for any and all costs and expenses incurred after the
Closing in connection therewith to the extent Buyer would have incurred such
costs and expenses had the applicable Business Contract been assigned to Buyer.
(c) Notwithstanding anything to the contrary in this Section
7.1, if Seller obtains any consents contemplated by Section 7.1(a) hereof
subject to any conditions other than those contemplated by such Section 7.1(a),
Seller shall be deemed to comply with Section 7.1(a) if Seller (i) performs or
otherwise satisfies such conditions on or prior to the Closing Date, or (ii)
agrees to perform or otherwise satisfy such conditions at its own expense
(including, without limitation, by paying Buyer to perform such conditions)
after the Closing Date and indemnifies and holds Buyer harmless from any direct
loss, liability or expense incurred in connection therewith.
7.2 NO MATERIAL ADVERSE CHANGES. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change to the
business, financial condition or the results of operations of the System (taken
as a whole) or to the System Assets (taken as a whole), nor shall Seller have
suffered any damage (whether or not covered by insurance) by fire or other
casualty to the System Assets which (i) materially and adversely affects the
business, financial condition or results of operations of the System (taken as a
whole) or the operation of the System Assets (taken as a whole) and (ii) has not
been substantially repaired or replaced or provisions for repair or replacement
made prior to the Closing Date.
7.3 REPRESENTATIONS AND COVENANTS. The representations and
warranties of Seller set forth in this Agreement, the Ancillary Agreements or in
any agreement, instrument, Schedule, Exhibit or other documents to be delivered
by Seller pursuant hereto shall be true and correct when made and on and as of
the Closing Date with the same effect as if made on and as of the Closing Date
(except for (i) representations and warranties which speak as of a specified
date which need to be true and correct only as of such specified date and (ii)
any breaches or inaccuracies which, individually or in the
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aggregate, is not reasonably likely to have a Material Adverse Effect),
PROVIDED, HOWEVER, any breach or inaccuracy which is due to a material adverse
change resulting from factors generally applicable to the CATV industry in New
Jersey, as a whole, shall not be deemed a breach or inaccuracy for purposes of
this Section 7.3; and Seller shall have performed and complied in all material
respects with all material covenants and agreements required by this Agreement
to be performed or complied with on or before the Closing Date.
7.4 LEGAL PROCEEDINGS. No action, suit or proceeding shall have been
instituted against any of the parties to this Agreement before any court or
governmental department, agency or commission which would restrain, prohibit or
otherwise invalidate this Agreement or the consummation of the transactions
contemplated hereby (other than an action or proceeding instituted or threatened
by Buyer or any affiliate of Buyer).
7.5 DELIVERIES AT CLOSING. Seller shall have delivered to Buyer on
or before the Closing all agreements, instruments and documents required to be
delivered pursuant to Section 9 below.
7.6 HSR ACT WAITING PERIOD. All waiting periods applicable to this
Agreement and transactions contemplated hereby under the HSR Act shall have
expired or terminated without objection by the Federal Trade Commission ("FTC")
or the United States Department of Justice ("USDOJ").
7.7 CASH FLOW. Seller shall have provided evidence reasonably
satisfactory to Buyer that the product of (x) total running rate Cash Flow from
the operation of the System for the most recent three completed full months
prior to the Closing, multiplied by (y) four (the "Closing Date Cash Flow") is
equal to at least Nine Million One Hundred Ninety Two Thousand ($9,192,000).
7.8 NUMBER OF SUBSCRIBERS. Seller shall have provided evidence
reasonably satisfactory to Buyer that, as of the Closing Date, the System has at
least 43,000 Basic Subscribers.
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8. CONDITIONS OF SELLER'S OBLIGATIONS. The obligations of Seller to be
performed under this Agreement on the Closing Date are subject to the conditions
hereinafter set forth, any one or more of which may be waived in whole or in
part by Seller by giving written notice to Buyer to that effect:
8.1 CONSENTS. Buyer shall have obtained all consents, approvals,
permits, licenses or authorization from any and all public authorities that
Buyer is required under applicable law in connection with the consummation of
the transactions contemplated hereby.
8.2 REPRESENTATIONS AND COVENANTS. The representations and
warranties of Buyer set forth in this Agreement, the Ancillary Agreements, the
Marketing and Distribution Agreement, a form of which is attached hereto as
Exhibit O (the "Marketing Agreement"), or in any agreement, instrument,
Schedule, Exhibit or other document to be delivered by Buyer pursuant hereto and
the representations and warranties of CSC set forth in the guaranty, a form of
which is attached hereto as Exhibit L (the "Guaranty"), and the registration
rights agreement, a form of which is attached hereto as Exhibit M (the
"Registration Rights Agreement") to be delivered by CSC on the Closing Date, as
the case may be, shall be true and correct, when made and on as of the Closing
Date with the same effect as if made on and as of the Closing Date (except for
(i) representations and warranties which speak as of a specified date which need
to be true and correct only as of such specified date and (ii) any breaches or
inaccuracies which, individually or in the aggregate, will not materially impair
the ability of Buyer or CSC, as the case may be, to perform its obligations
under this Agreement); and Buyer shall have performed and complied in all
material respects with all covenants and agreements required by this Agreement
to be performed or complied with on or before the Closing Date.
8.3 LEGAL PROCEEDINGS. No action, suit or proceeding shall have been
instituted against any of the parties to this Agreement before any court or
governmental department, agency or commission which would restrain, prohibit, or
otherwise invalidate
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this Agreement or the consummation of the transactions contemplated hereby
(other than an action or proceeding instituted or threatened by Seller or an
affiliate of Seller).
8.4 DELIVERIES AT CLOSING. Buyer and CSC shall have delivered to
Seller on or before the Closing all agreements, instruments and documents
required to be delivered pursuant to Section 10 below by Buyer or CSC, as the
case may be.
8.5 HSR ACT WAITING PERIOD. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired or terminated without objection by the FTC or the USDOJ.
9. SELLER'S DELIVERIES AT CLOSING. On or prior to the Closing, Seller
shall deliver to Buyer or Buyer shall have otherwise obtained:
9.1 DEEDS, DOCUMENTS OF CONVEYANCE AND TRANSFER.
(a) A bill of sale and assignment, substantially in the form attached
hereto as Exhibit F;
(b) An assignment of lease with respect to each lease of Real
Property included in the System Assets, in form and substance reasonably
satisfactory to counsel to Buyer;
(c) An assignment of franchise with respect to each of the franchises
being assigned (except for franchises subject to pending renewal proceedings for
which Seller shall deliver an assignment of all rights with respect to such
proceedings), in form and substance reasonably satisfactory to counsel to Buyer;
(d) A bargain and sale deed or deeds with covenant against grantor's
acts for all Real Property listed on Schedule 4.4 and noted thereon as being
owned by Seller, in form and substance reasonably satisfactory to counsel to
Buyer;
(e) An opinion of Cadwalader, Wickersham & Taft, counsel for Seller,
dated as of the Closing Date, substantially in the form attached hereto as
Exhibit G;
(f) An opinion of FCC counsel for Seller, dated as of the Closing
Date, substantially in the form attached hereto as Exhibit H;
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(g) Non-compete agreements, dated as of the Closing Date,
substantially in the form attached hereto as Exhibit I (the "Non-Compete
Agreements") duly executed by Seller and each of its general partners; and
(h) Such other documents and instruments as Buyer may reasonably
request to convey the System Assets to Buyer and to consummate the transactions
contemplated hereby.
9.2 POWER OF ATTORNEY. A power of attorney from Seller to Buyer
authorizing the endorsement of any payments by check made with respect to
Accounts Receivable, subject to the provisions of Section 2.3(c) hereof.
9.3. ANCILLARY AGREEMENTS. Indemnification Escrow Agreement and Non-
Compete Agreements duly executed by the Seller and its general partners, as the
case may be.
10. BUYER'S AND CSC'S DELIVERIES AT CLOSING. At the Closing, Buyer or
CSC, as the case may be, shall deliver to Seller:
10.1 ANCILLARY AGREEMENTS. The Buyer shall deliver the
Indemnification Escrow Agreement and Marketing Agreement duly executed by Buyer.
10.2 GUARANTY. CSC shall deliver the Guaranty duly executed by CSC.
10.3 REGISTRATION RIGHTS AGREEMENT AND MARKETING AGREEMENT. CSC shall
deliver the Registration Rights Agreement and the Marketing Agreement
substantially in the form of Exhibit P hereto, each duly executed by CSC.
10.4 OPINION OF COUNSEL. Buyer shall deliver an opinion of Buyer's
counsel, dated as of the Closing Date, substantially in the form attached hereto
as Exhibit J.
10.5 OTHER DOCUMENTS. Buyer shall deliver such other documents and
instruments as Seller may reasonably request to consummate the transactions
contemplated hereby.
10.6 ASSUMPTION OF ASSUMED LIABILITIES; OTHER DOCUMENTS.
(a) One or more instruments evidencing Buyer's assumption of the
Assumed Liabilities in form and substance reasonably satisfactory to counsel to
Seller; and
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(b) all other documents, records, data and information required
to be delivered by Buyer pursuant to the terms of this Agreement.
10.7 PAYMENT. The Purchase Price and the Accounts Receivable Price as
set forth in Section 2.3.
11. BROKERAGE FEES. Except for Waller Capital Corporation (whose fees and
expenses will be paid by Seller), each party represents and warrants to the
other that it has not entered into any agreement with any person, firm or
corporation, or become indirectly a party to any such agreement, nor has it
taken any action nor is it aware of any facts which would result in the
assertion of any liability or claim for the payment of any commission, brokerage
or finder's fee in connection with the execution of this Agreement or the
consummation of the transactions contemplated herein.
12. INDEMNIFICATION BY SELLER AND BUYER.
12.1 SELLER'S INDEMNIFICATION LIABILITY. Subject to the provisions of
Sections 12.5, 12.6 and 15 hereof, and regardless of any investigation made at
any time by or on behalf of Buyer, Seller agrees, from and after the Closing, to
indemnify, defend and hold Buyer harmless from and against and in respect of all
loss, damage or liability (including reasonable legal fees and expenses)
resulting from:
(a) any and all debts, liabilities or obligations (including
without limitation, any liabilities in respect of any copyright or licensing
fees, and any lawsuit or other legal proceedings) of Seller, and any and all
claims and demands made in respect thereof relating in any way to, or arising
from the ownership, operation or control of the System or any System Assets at
or prior to Closing or arising from Seller's failure to file a Notice of Bulk
Transfer pursuant to the Uniform Commercial Code (except for the Assumed
Liabilities and except to the extent expressly assumed in writing by Buyer under
any Authorization or CATV Instrument) (collectively, "Pre-Closing Liabilities");
(b) any breach or inaccuracy of any representation or warranty,
or any nonfulfillment of any agreement or covenant on the part of Seller under
this
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Agreement, or from any misrepresentation in or omission from any Exhibit,
Schedule, Certificate or other instrument furnished or to be furnished to Buyer
hereunder (for purposes of this subsection (b), all representations and
warranties shall be deemed to have been made as of the date of this Agreement
and as of the Closing Date, except for representations and warranties that were
expressly made as of a specific date, which need to be true and correct only as
of such specific date);
(c) any Taxes referred to in Section 4.22 (a "Tax Liability");
or
(d) any lawsuit, obligation or other liability arising out of
any dispute between or among any or all of the partners or former partners of
Seller (a "Partner Dispute").
Notwithstanding anything set forth in this Section 12.1, Buyer
shall not be entitled to any indemnity hereunder with respect to (i) the number
of Basic Subscribers on and as of the close of business on the Closing Date, as
to which the sole remedy of Buyer shall be the Purchase Price Adjustment as set
forth in Sections 2.4(a) and (b) hereof, (ii) the amount of insurance proceeds
received by Buyer with respect to any loss, damage or liability (or such
proceeds received by a third party to the extent that they reduce Buyer's loss,
damage or liability) or (iii) any breach of Seller's representations and
warranties for which a reduction was made to the Purchase Price pursuant to
Section 6.6 hereof.
For purposes of this Section 12 and for purposes of determining
whether Buyer is entitled to indemnification from Seller pursuant to Section
12.1(b), any breaches of or inaccuracies in any representations and warranties
of Seller shall be determined without regard to any materiality qualifications
set forth in such representations or warranties, and all references to the terms
"material", "materially", "materiality", "Material Adverse Effect" or any
similar terms shall be ignored for purposes of determining whether such
representation or warranty was true and correct when made.
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12.2 BUYER'S INDEMNIFICATION LIABILITY. Subject to the provisions of
Sections 12.5 and 15 hereof, Buyer agrees, from and after the Closing, to
indemnify, defend and hold Seller (and its partners, agents and employees)
harmless from and against and in respect of any loss, damage or liability
(including reasonable legal fees and expenses) resulting from:
(a) any breach or inaccuracy of any representation or warranty,
or any nonfulfillment of any agreement or covenant on the part of Buyer under
this Agreement, or from any misrepresentation in or omission from any Exhibit,
Schedule, Certificate or other instrument furnished or to be furnished to Seller
hereunder; and
(b) any of the Assumed Liabilities.
For purposes of this Section 12 and for purposes of determining
whether Seller is entitled to indemnification from Buyer pursuant to Section
12.2(a), any breaches of or inaccuracies in any representations and warranties
of Buyer shall be determined without regard to any materiality qualifications
set forth in such representations or warranties, and all references to the terms
"material", "materially", "materiality" or any similar terms shall be ignored
for purposes of determining whether such representations or warranty was true
and correct when made.
12.3 PROCEDURES. In the event that any claim shall be asserted
against a party entitled to indemnification hereunder (the "Indemnitee") the
Indemnitee shall promptly notify the other party (the "Indemnitor") of such
claim, and shall extend to the Indemnitor an opportunity to defend against such
claim, at the Indemnitor's sole expense. Within 15 days of receiving any such
notice from the Indemnitee, the Indemnitor must notify the Indemnitee as to
whether or not the Indemnitor elects to assume the defense of any such claim.
In the event Indemnitor does not so elect to assume such defense, any costs
incurred by the Indemnitee in defending such claim shall be indemnified pursuant
to and in accordance with this Section 12. In the event Indemnitor does elect
to assume such defense, the Indemnitee shall, at its option and expense, have
the right to participate in any defense undertaken by the Indemnitor with legal
counsel of its own selection, provided that
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such counsel is reasonably acceptable to the Indemnitor. No settlement or
compromise of any claim which may result in an indemnification liability may be
made by the Indemnitor without the prior written consent of the Indemnitee,
which consent may not be unreasonably withheld, unless prior to such settlement
or compromise the Indemnitor acknowledges in writing its obligation to pay in
full the amount of the settlement or compromise and all associated expenses.
12.4 PAYMENT OF INDEMNIFICATION LIABILITIES. The Indemnitor shall
promptly pay the Indemnitee any amounts owed hereunder. All amounts to be paid
by an Indemnitor under this Section 12 shall include the Indemnitee's actual
costs and attorneys' fees, including, without limitation, fees on appeal, that
are incurred against or in determining responsibility for a claim whether or not
any suit or action has been instituted (it being understood that such costs and
fees shall be counted toward and subject to any applicable deductible or
limitation of liability under this Section 12). In the event that Seller is the
Indemnitor, Buyer shall offset amounts against the principal amount payable
under the Indemnification Note. In the event that Buyer is the Indemnitor,
Buyer shall pay the indemnification liabilities to Seller in immediately
available funds. Any amounts not paid by Buyer when due under this Section 12.4
shall bear interest from the due date thereof until the date paid at a rate
equal to the lesser of the Prime Rate plus three percent per annum or the
highest legal rate permitted by applicable law. For purpose of this Section
12.4, an indemnification liability becomes due on the earlier of (i) the entry
of a final order, judgment or decree of a court of competent jurisdiction with
respect to the related claim, (ii) the date of the effectiveness of the
settlement or compromise of such claim or (iii) the date upon which Buyer and
Seller agree in writing with respect to the amount of such indemnification
liability.
12.5 EXCLUSIVE REMEDY. Seller and Buyer covenant and agree that, if
the Closing occurs, the remedies of offset against the Indemnification Note
provided pursuant to the Indemnification Escrow Agreement and this Section 12
shall be the exclusive
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remedies to which Buyer is entitled for any breach of any representation,
warranty, covenant or other term or provision of this Agreement or any Exhibit,
Certificate, Agreement, Schedule or other document or instrument delivered in
connection herewith or with the consummation of the transactions contemplated
hereby except as provided in the Non-Compete Agreements and except for (i) in
the case of a breach by Seller, any and all claims relating to Pre-Closing
Liabilities, Taxes or Partners' Disputes, and (ii) in either case, any
fraudulent or intentional misrepresentations of Buyer or Seller, as the case may
be, contained herein or therein, as to which, in the case of both (i) and (ii),
the time and dollar limitations set forth in this Section 12 and in Section 15
shall expressly not apply and Seller and Buyer, respectively, shall retain all
of their rights and remedies at law and in equity.
12.6 LIMITATIONS ON SELLER'S INDEMNITY OBLIGATION. Buyer acknowledges
and agrees that the maximum liability of Seller after the Closing under this
Section 12 is the amounts due and payable under the Indemnification Note except
for (i) any and all claims relating to Pre-Closing Liabilities, Taxes or
Partners' Disputes and (ii) fraudulent or intentional misrepresentations of
Seller contained herein, as to which, in the case of both (i) and (ii), the time
and dollar limitations set forth in this Section 12 and in Section 15 shall
expressly not apply and Buyer shall retain all of its rights and remedies at law
and in equity. Buyer further agrees that, except for (i) any and all claims
relating to Pre-Closing Liabilities, Taxes or Partners' Disputes and (ii)
fraudulent or intentional misrepresentations of Seller contained herein, Buyer
shall not be entitled to indemnity under this Section 12 unless and until the
total amount claimed as indemnity equals or exceeds $114,500 (the "Deductible")
, and only to the extent greater than the Deductible.
12.7 NON-RECOURSE TO SELLER'S PARTNERS. The Buyer hereby acknowledges
that the Seller is a limited partnership and agrees that, for the payment or
performance of any of Seller's obligations hereunder and under all other
Schedules, Exhibits, Agreements, Certificates and other documents and
instruments delivered in connection herewith or with
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the consummation of the transactions contemplated hereby, or damages for the
failure of performance thereof, except for (i) any and all claims relating to
Pre-Closing Liabilities, Taxes or Partners' Disputes and (ii) fraudulent or
intentional misrepresentations of Seller contained herein or therein, as to
which, in the case of both (i) and (ii), the time and dollar limitations set
forth in this Section 12 and in Section 15 shall expressly not apply and Buyer
shall retain all of its rights and remedies at law and in equity,
notwithstanding anything to the contrary in this Agreement or under applicable
law; Buyer shall have recourse only against the Indemnification Note; and Buyer
shall have no recourse whatsoever to the assets or person of any of the partners
in Seller, corporate or individual, general or limited, past, present or future,
and no such partner of Seller shall be liable for any such payment or
performance or for damages in respect of the failure thereof, all of which
recourse to the assets or person of any such partner is hereby waived and
released by Buyer.
13. PRESERVATION OF RECORDS. Buyer covenants that it will preserve and
make available (including the right to inspect and copy) to Seller, its
attorneys and accountants, for a reasonable period of time from and after the
Closing Date (and in no case for a period less than seven years) and during
normal business hours, such of the books, records, files, correspondence,
memoranda and other documents transferred pursuant to this Agreement as Seller
may reasonably require in connection with any legitimate purpose, including, but
not limited to, the defense or prosecution of any claims (whether brought by or
against Buyer or otherwise), the preparation of tax reports and returns and
audits thereof and the preparation of financial statements and, further, that
Buyer will preserve and make available to Seller during normal business hours
such books, records and other items as Seller may request for the purpose of
preparing an Objection Notice as contemplated by Section 2.4(b) hereof.
14. NON-ASSIGNABLE CONTRACTS. Nothing contained in this Agreement shall
be construed as an assignment or an attempted assignment of any contract which
is in law non-
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assignable without the consent of the other party or parties thereto, unless
such consent shall be given.
15. SURVIVAL OF OBLIGATIONS. All representations, warranties, indemnities
and other agreements made by Seller and Buyer in this Agreement, or pursuant
hereto, shall survive the Closing for a period commencing on the Closing Date
and ending at midnight on the date of the fifteen month anniversary of the
Closing Date, regardless of any investigation at any time made by or on behalf
of Buyer or Seller, and shall not be deemed merged in any document or instrument
executed or delivered at the Closing, PROVIDED, HOWEVER, that Buyer has complied
with its obligations pursuant to Section 6.3(e) hereof. Notwithstanding the
previous sentence, the agreements contained in Sections 2.2, 6.3(f), 6.4, 12
(except to the extent that the survival of the representations and warranties is
limited to 15 months pursuant to the previous sentence), 13, 15, 17.2, 17.8, and
17.14 shall survive the Closing indefinitely.
16. TERMINATION. This Agreement may be terminated as follows:
(a) This Agreement may be terminated at any time prior to the Closing
Date by mutual written agreement between Buyer and Seller;
(b) If the Closing shall not have occurred on or prior to July 15,
1994, either Buyer or Seller shall have the right to terminate this Agreement by
giving written notice of termination to the other party; PROVIDED, HOWEVER, that
if the Closing has not occurred by July 15, 1994 because the 45-day period
following receipt by Buyer of the approval of the BRC has not yet expired or
such BRC approval has not become final and non-appealable, or for any reason
related to or arising out of obtaining the approval of the BRC, neither party
shall have the right to terminate this Agreement pursuant to this Section;
PROVIDED, FURTHER, HOWEVER, that a party may not terminate this Agreement
pursuant to this Section 16(b) if such party is in material breach of its
obligations under this Agreement;
[Paragraph (c) intentionally omitted.]
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(d) This Agreement may be terminated by Buyer, at its sole option, by
giving written notification to Seller of such termination, if either (i) Buyer
has terminated the Asset Purchase Agreement, dated as of October 26, 1993,
between Monmouth Cablevision Associates and Buyer pursuant to Section 16(d)
thereof, or (ii) Buyer has not received, at or prior to 2 p.m. on Friday,
November 5, 1993, a written notification signed by each of the general partners
of the Seller to the effect that such general partners have received all the
consents required under Seller's Partnership Agreement (as in effect on the date
hereof) in connection with the transactions contemplated by this Agreement.
Upon termination of this Agreement pursuant to this Section 16, all
filings, applications and other submissions relating to the transactions
contemplated hereby shall, to the extent practical, be withdrawn from the agency
or other person to which made.
17. MISCELLANEOUS.
17.1 LIABILITY OF BUYER. Seller and Buyer acknowledge and agree that
the sole liability of Buyer for its failure to consummate the transactions
contemplated hereby after satisfaction of the conditions set forth in Section 7
hereof shall be as set forth in the Escrow Agreement.
17.2 INDULGENCES, ETC. Neither the failure nor any delay on the part
of either party to exercise any right, remedy, power or privilege under this
Agreement (a "Right") shall operate as a waiver thereof, nor shall any single or
partial exercise of any Right preclude any other or further exercise of the same
or of any other Right, nor shall any waiver of any Right with respect to any
occurrence be construed as a waiver of such
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Right with respect to any other occurrence. No waiver shall be effective unless
it is in writing and is signed by the party asserted to have granted such
waiver.
17.3 CONTROLLING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT-OF-LAWS.
17.4 NOTICES. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered
personally, by courier service such as Federal Express, or by other messenger,
when deposited in the United States mails, registered or certified mail, postage
prepaid, return receipt requested or transmitted by facsimile (followed promptly
by a copy deposited in the United States mails), in each case, addressed as set
forth below or to such other address or other person as any party may designate
by written notice to the other parties hereto:
(i) If to Seller:
Riverview Cablevision Associates, L.P.
c/o Joel A. Goldblatt
1501 18th Avenue
Wall Township, New Jersey 07719
with a copy, given in the manner prescribed above, to:
Jonathan M. Wainwright, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Telecopy: (212) 504-6666
(ii) If to Buyer:
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
ATTENTION: General Counsel
with a copy, given in the manner prescribed above, to:
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<PAGE>
George H. White, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
17.5 EXHIBITS AND SCHEDULES. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of, this
Agreement.
17.6 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. No party may assign or transfer
its rights or obligations under this Agreement without the prior written consent
of the other party hereto; PROVIDED, HOWEVER, that Buyer may assign this
Agreement to CSC or to a direct or indirect wholly-owned subsidiary of CSC prior
to the filing of a petition with the BRC to approve or transfer any of the
Authorizations.
17.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. In proving this Agreement, it
shall not be necessary to produce or account for more than one such counterpart.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
17.8 SEVERABILITY. If any provision of this Agreement or the
Ancillary Agreements is held illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall not affect any other provision hereof.
Such provision and the remainder of this Agreement or the Ancillary Agreements
shall, in such circumstances, be deemed modified to the extent necessary to
render enforceable the remaining provisions hereof, so long as such modification
does not affect the original intent of the parties hereto.
17.9 ENTIRE AGREEMENT. This Agreement, the Ancillary Agreements,
including the Schedules and Exhibits hereto, the Master Agreement executed by
Buyer and
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Seller as of the date hereof and other instruments and documents referred to
herein or delivered pursuant hereto, represent the entire understanding among
the parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written (including, without limitation,
any documents or information given to Buyer), except as herein contained. The
express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement
may not be modified or amended other than by an agreement in writing signed by
each of the parties hereto.
17.10 SECTION HEADINGS. The section headings in this Agreement
are for convenience only; they form no part of this Agreement and shall not
affect its interpretation.
17.11 NO THIRD PARTY RIGHTS. Nothing in this Agreement, express
or implied, shall be construed to confer upon any person, other than the parties
hereto, their successors and permitted assigns, any legal or equitable rights,
remedies, claims, obligations or liabilities under or by reason of this
Agreement.
17.12 EXPENSES. Except as otherwise expressly provided herein,
each party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated hereunder, including all legal and accounting fees and
disbursements, and costs of obtaining all necessary consents.
17.13 FURTHER ASSURANCES. The parties hereto will use their
reasonable efforts to comply with all legal requirements imposed on them with
respect to the transactions contemplated by this Agreement. Each party agrees
to execute and deliver any and all further agreements, documents or instruments
reasonably necessary to effectuate this Agreement and the transactions referred
to herein, contemplated hereby or reasonably requested by the other party to
perfect or evidence its rights hereunder. Each of Seller and Buyer will use its
best efforts to effect an early transfer of the System Assets
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contemplated by this Agreement and to complete the transactions contemplated by
this Agreement as promptly as practicable and will promptly notify the other
party of any information delivered to or obtained by such party concerning an
event that would prevent the consummation of the transactions contemplated by
this Agreement.
17.14 CONFIDENTIAL INFORMATION. In the event this Agreement is
terminated for any reason, Buyer shall keep and shall take reasonable steps to
cause its attorney's, accountants, lenders and lender's attorney's to keep
confidential any and all information obtained from Seller in connection with
this Agreement and the transactions contemplated hereby, will not utilize such
information for any purpose, and will promptly return to Seller all documents,
work papers and other written materials (and all documents reflecting or
incorporating such information) obtained by it in connection with this Agreement
or the transactions contemplated hereby.
17.15 BULK TRANSFER. Buyer acknowledges that Seller has not and
will not file any Notice of Bulk Transfer pursuant to the Uniform Commercial
Code, and Buyer hereby waives any and all rights it might have under those
provisions.
17.16 PUBLIC ANNOUNCEMENTS. The parties hereto agree to cooperate
in the making of any public announcements relating to the execution of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
CABLEVISION MFR, INC.
By: Barry J. O'Leary
-----------------------------------------------
Authorized Officer
RIVERVIEW CABLEVISION ASSOCIATES, L.P.
By: Joel A. Goldblatt
-----------------------------------------------
Joel A. Goldblatt
General Partner
By: Riverview Cablevision, Inc.
General Partner
By: William Ingram
-----------------------------------------------
Authorized Officer
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Annex I
ASSET PURCHASE AGREEMENT
DATED AS OF
OCTOBER 26, 1993
BETWEEN
FRAMINGHAM CABLEVISION ASSOCIATES, LIMITED PARTNERSHIP
AND
CABLEVISION MFR, INC.
<PAGE>
TABLE OF CONTENTS
1. Definitions. . . . . . . . . . . . . . . . . . . 1
2. Assets Sold and Purchased. . . . . . . . . . . . 7
2.1 System Assets. . . . . . . . . . . . . 7
2.2 Assumption of Liabilities. . . . . . . 9
2.3 Purchase Price; Escrow Fund and Accounts
Receivable . . . . . . . . . . . . . . 9
2.4 Adjustments to Purchase Price. . . . . 13
2.5 Appraisal and Allocation of Purchase
Price. . . . . . . . . . . . . . . . . 16
3. Closing Date and Place . . . . . . . . . . . . . 17
3.1 Closing. . . . . . . . . . . . . . . . 17
4. Seller's Representations and Warranties. . . . . 17
4.1 Organization of Seller . . . . . . . . 17
4.2 Seller's Authority . . . . . . . . . . 17
4.3 Authorizations and CATV Instruments. . 19
4.4 Real Property. . . . . . . . . . . . . 19
4.5 Easements and Rights-of-Way. . . . . . 20
4.6 Tangible Personal Property . . . . . . 20
4.7 Contracts; No Defaults . . . . . . . . 21
4.8 Approvals and Consents . . . . . . . . 21
4.9 Financial Statements; No Material Adverse
Change . . . . . . . . . . . . . . . . 22
4.10 Acquired Accounts Receivable . . . . . 22
4.11 Information Sheet; Competing Franchises 23
4.12 Compliance with Laws, Regulations and
Reporting. . . . . . . . . . . . . . . 24
4.13 Environmental Matters. . . . . . . . . 24
4.14 FCC Matters. . . . . . . . . . . . . . 25
4.15 Copyright Matters. . . . . . . . . . . 26
4.16 Claims and Litigation. . . . . . . . . 26
4.17 Employees; Compensation; Unions. . . . 26
4.18 Insurance. . . . . . . . . . . . . . . 27
4.19 Patents and Copyrights . . . . . . . . 27
4.20 Rates. . . . . . . . . . . . . . . . . 27
4.21 Special Agreements . . . . . . . . . . 27
4.22 Taxes. . . . . . . . . . . . . . . . . 28
4.23 Capital Commitments. . . . . . . . . . 28
4.24 Financing Commitments. . . . . . . . . 28
5. Buyer's Representations. . . . . . . . . . . . . 29
5.1 Organization and Standing of Buyer . . 29
5.2 Authority to Execute and Consummate
Agreement. . . . . . . . . . . . . . . 29
5.3 Exchange Act Compliance. . . . . . . . 29
5.4 Fitness as Franchisee. . . . . . . . . 30
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6. Additional Covenants . . . . . . . . . . . . . . 30
6.1 Negative Covenants of Seller . . . . . 30
6.2 Affirmative Covenants of Seller. . . . 31
6.3 Affirmative Covenants of Buyer . . . . 32
6.4 Access to Information. . . . . . . . . 34
6.5 Notification . . . . . . . . . . . . . 34
6.6 Right to Cure; Purchase Price Adjustment 35
6.7 Closing Conditions . . . . . . . . . . 35
7. Conditions of Buyer's Obligations. . . . . . . . 36
7.1 Consents . . . . . . . . . . . . . . . 36
7.2 No Material Adverse Changes. . . . . . 37
7.3 Representations and Covenants. . . . . 38
7.4 Legal Proceedings. . . . . . . . . . . 38
7.5 Deliveries at Closing. . . . . . . . . 38
7.6 HSR Act Waiting Period . . . . . . . . 38
7.7 Cash Flow. . . . . . . . . . . . . . . 39
7.8 Number of Subscribers. . . . . . . . . 39
8. Conditions of Seller's Obligations . . . . . . . 39
8.1 Consents . . . . . . . . . . . . . . . 39
8.2 Representations and Covenants. . . . . 39
8.3 Legal Proceedings. . . . . . . . . . . 40
8.4 Deliveries at Closing. . . . . . . . . 40
8.5 HSR Act Waiting Period . . . . . . . . 40
9. Seller's Deliveries at Closing . . . . . . . . . 40
9.1 Deeds, Documents of Conveyance and
Transfer . . . . . . . . . . . . . . . 40
9.2 Power of Attorney. . . . . . . . . . . 41
9.3 Ancillary Agreements . . . . . . . . . 41
10. Buyer's and CSC's Deliveries at Closing. . . . . 41
10.1 Ancillary Agreements . . . . . . . . . 41
10.2 Guaranty . . . . . . . . . . . . . . . 41
10.3 Registration Rights Agreement. . . . . 41
10.4 Opinion of Counsel . . . . . . . . . . 41
10.5 Other Documents. . . . . . . . . . . . 41
10.6 Assumption of Assumed Liabilities;
Other Documents. . . . . . . . . . . . 41
10.7 Payment. . . . . . . . . . . . . . . . 42
11. Brokerage Fees . . . . . . . . . . . . . . . . . 42
12. Indemnification by Seller and Buyer. . . . . . . 42
12.1 Seller's Indemnification Liability . . 42
12.2 Buyer's Indemnification Liability. . . 44
12.3 Procedures . . . . . . . . . . . . . . 44
12.4 Payment of Indemnification Liabilities 45
12.5 Exclusive Remedy . . . . . . . . . . . 45
12.6 Limitations on Seller's Indemnity
Obligation . . . . . . . . . . . . . . 46
12.7 Non-recourse to Seller's Partners. . . 46
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13. Preservation of Records. . . . . . . . . . . . . 47
14. Non-Assignable Contracts . . . . . . . . . . . . 47
15. Survival of Obligations. . . . . . . . . . . . . 47
16. Termination. . . . . . . . . . . . . . . . . . . 48
17. Miscellaneous. . . . . . . . . . . . . . . . . . 49
17.1 Liability of Buyer . . . . . . . . . . 49
17.2 Indulgences, Etc.. . . . . . . . . . . 49
17.3 Controlling Law. . . . . . . . . . . . 49
17.4 Notices. . . . . . . . . . . . . . . . 50
17.5 Exhibits and Schedules . . . . . . . . 50
17.6 Binding Nature of Agreement; No
Assignment . . . . . . . . . . . . . . 50
17.7 Execution in Counterparts. . . . . . . 51
17.8 Severability . . . . . . . . . . . . . 51
17.9 Entire Agreement . . . . . . . . . . . 51
17.10 Section Headings . . . . . . . . . . . 52
17.11 No Third Party Rights. . . . . . . . . 52
17.12 Expenses . . . . . . . . . . . . . . . 52
17.13 Further Assurances . . . . . . . . . . 52
17.14 Confidential Information . . . . . . . 52
17.15 Bulk Transfer. . . . . . . . . . . . . 53
17.16 Public Announcements . . . . . . . . . 53
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LIST OF SCHEDULES
SCHEDULE DESCRIPTION
1.3 Acquired Accounts Receivable
1.8 Assumed Liabilities
1.30 Excluded Assets
1.45 Programming Contracts
4.2 Exceptions to Seller's Authority
4.3 Exceptions to Authorizations & CATV Instruments
4.4 Real Property
4.4.1 Encumbrances
4.5 Easements and Rights-of-Way
4.6 Tangible Personal Property
4.6.1 Exceptions to Title on Tangible Personal
Property
4.7 Business Contracts
4.8 Approvals and Consents
4.9 Financial Statements
4.11(a) Information Sheet; Technical and Business
Information
4.11(b) Information Sheet; Retransmission Commitments
4.11(c) Information Sheet; Competing Franchises
4.12 Exception to Seller's Compliance with Laws
4.13 Hazardous Materials
4.14 FCC Matters
4.16 Claims and Litigation
4.17 Employee; Compensation; Unions
4.18 Insurance Policies
4.19 Patents and Copyrights
4.21 Special Agreements
4.22 Taxes
4.23 Capital Commitments
4.24 Financing Commitments
5.2 Exception to Buyer's Authority
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LIST OF EXHIBITS
EXHIBIT DESCRIPTION
A List of Communities served by the CATV System
B List of cable television franchises
C Form of Escrow Agreement
D [intentionally omitted]
E Form of Indemnification Note
F Form of Bill of Sale and Assignment
G Form of Opinion of Seller's counsel
H Form of Opinion of Seller's FCC counsel
I Form of Non-Compete Agreements
J Form of Opinion of Buyer's counsel
K Form of Senior Subordinated Note
L Form of Guaranty
M Form of Registration Rights Agreement
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of October 26, 1993, by and
between FRAMINGHAM CABLEVISION ASSOCIATES, LIMITED PARTNERSHIP, a Delaware
limited partnership ("Seller"), and Cablevision MFR, Inc., a Delaware
corporation ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller owns and operates the cable television
system, and business in respect thereof, in the communities listed on Exhibit A,
pursuant to the cable franchises listed on Exhibit B (collectively referred to
herein as the "System"); and
WHEREAS, Seller desires to sell, and Buyer desires to
purchase, on the terms and subject to the conditions contained in this
Agreement, the System, together with those franchises, assets, contracts and
rights used by Seller in connection with the System, all in accordance with and
subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises
each to the other made herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS. The following terms, as used herein,
shall, except where the context otherwise requires, have the meanings specified
in this Section 1 (such definitions to be equally applicable to the singular and
plural forms of the term defined):
1.1 "ACCOUNTS RECEIVABLE" - All accounts receivable of
Seller relating to the System.
1.2 "ACCOUNTS RECEIVABLE PRICE" - An amount equal to
98% of the face value of the Acquired Accounts Receivable.
1.3 "ACQUIRED ACCOUNTS RECEIVABLE" - All Accounts
Receivable (i) relating to Subscriber Accounts Receivable and (ii) those other
Accounts Receivable set forth on Schedule 1.3, that, in each case, are not in
excess of 61 days past due, but specifically excluding all
<PAGE>
Advertising Accounts Receivable and any Accounts Receivable other than those
relating to Subscriber Accounts Receivable and other than those set forth on
Schedule 1.3. For purposes of this Section 1.3, the number of days past due of
Accounts Receivable shall be determined from the last day of the period for
which the applicable billing for services for that period is made. Accounts
Receivable which are past due pending the resolution of a BONA FIDE dispute and
are in arrears in an amount of $10 or less shall not be considered past due for
purposes of this Section 1.3, except to the extent of the amount subject to such
BONA FIDE dispute.
1.4 "ADJUSTMENT DATE" - As defined in Section 2.4(e).
1.5 "ADVERTISING ACCOUNTS RECEIVABLE" - All Accounts
Receivable relating to the sale of advertising.
1.6 "AGREEMENT" - This Asset Purchase Agreement, as
the same may be amended or modified in accordance with the terms hereof.
1.7 "ANCILLARY AGREEMENTS" - The Escrow Agreement, the
Indemnification Escrow Agreement and the Non-Compete Agreements.
1.8 "ASSUMED LIABILITIES" - All debts, liabilities and
obligations relating directly or indirectly to the System and arising from
operation or ownership of the System from and after the close of business on the
Closing Date, Seller's liability immediately prior to the close of business on
the Closing Date for advance payments and for deposits plus interest accrued
under state law, and any other debt, liability or obligation set forth on
Schedule 1.8.
1.9 "AUDITED FINANCIAL STATEMENTS" - As defined in
Section 4.9.
1.10 "AUTHORIZATIONS" - All franchises, permits,
licenses, consents and other authorizations from governmental authorities and
utilities pursuant to which the System is owned and operated including, without
limitation, the instruments pursuant to which such Authorizations are granted.
1.11 "BASIC SERVICE RATE" - The rate charged by the
Seller for Basic Service, as set forth on Schedule 4.11(a), offered by the
System in a given community.
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1.12 "BASIC SUBSCRIBERS" - The sum of (i) the number of
Subscribers in individually billed residential units, (ii) the quotient of (x)
the total billings (excluding pay-TV and pay-per-view charges) of the Seller to
all Subscribers in commercial venues or bulk billed multiple residential units
for the month during which the Closing occurs, divided by (y) the sum of
Seller's Basic Service Rate and Satellite Tier Rate for CATV services to
residential units in effect at the Closing Date. For purposes of determining
Basic Subscribers, the number calculated pursuant to (ii) above shall not exceed
175.
1.13 "BUSINESS CONTRACT" - As defined in Section 4.7.
1.14 "BUSINESS DAY" - Any Monday, Tuesday, Wednesday,
Thursday or Friday, other than a Federal holiday in the United States.
1.15 "BUYER" - Cablevision MFR, Inc., a Delaware
corporation and a wholly-owned subsidiary of Cablevision Systems Corporation, a
Delaware corporation.
1.16 "CASH FLOW" - Shall mean for any fiscal period,
the aggregate net income of Seller for such period after restoring thereto
amounts deducted for (a) depreciation, (b) amortization, (c) interest expense,
(d) Taxes based on income, (e) costs incurred in connection with this Agreement
and the transactions hereunder (including, without limitation, (A) any one-time
severance or bonus payments made by Seller to employees of Seller and (B) any
one-time payments made by Seller to employees of Seller in satisfaction of
accrued vacation and accrued sick-days, and (f) payments, if any, made in
respect of management fees paid to the general partners of Seller, and (g)
seasonal cash flow items in the amount of $30,835 each of (a) through (g) as
determined in accordance with GAAP.
1.17 "CASH PURCHASE PRICE" - As defined in Section
2.3(a).
1.18 "CATV" - Cable television.
1.19 "CATV INSTRUMENTS" - The instruments granting the
Authorizations.
1.20 "CLOSING" and "CLOSING DATE" - As defined in
Section 3.1.
1.21 "CLOSING DATE CASH FLOW" - As defined in Section
7.7.
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1.22 "CODE" - The Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
1.23 "DEDUCTIBLE" - As defined in Section 12.6.
1.24 "ENVIRONMENTAL REQUIREMENTS" - As defined in
Section 4.13.
1.25 "ENCUMBRANCES" - Any and all mortgages, security
interests, liens, claims, pledges, restrictions, leases, title exceptions,
rights of others, charges or other encumbrances.
1.26 "ERISA" - The Employee Retirement Income Security
Act of 1974, together with all rules and regulations promulgated thereunder, as
such may be in effect from time to time.
1.27 "ESCROW AGREEMENT" - The escrow agreement, dated
as of the date hereof, among Seller, Buyer and the Escrow Agent with respect to
the Escrow Fund, a copy of which is attached hereto as Exhibit C.
1.28 "ESCROW FUND" - As defined in Section 2.3(b).
1.29 "EXCHANGE ACT" - The Securities Exchange Act of
1934, as amended.
1.30 "EXCLUDED ASSETS" - All cash and cash equivalents
(whether on hand, in bank accounts, or elsewhere) of the Seller, all
partnership, tax (other than real property and state personal property tax) and
financial records of the Seller, all Accounts Receivable other than the Acquired
Accounts Receivable, all assets of the Seller other than the System Assets, all
proprietary computer software licensed to Seller by third parties pursuant to
non-assignable licenses, all rights of Seller hereunder and under the Ancillary
Agreements, all claims for tax abatements in respect of periods prior to the
close of business on the Closing Date, all claims for tax refunds and previously
paid taxes, all insurance contracts of the Seller and all claims thereunder, all
rights and obligations under Programming Contracts and management and consulting
agreements of any type, all bonds, letters of credit or other security
instruments provided by Seller, all amounts held in escrow under the National
Cable Television Co-Operative agreement with the Seller or its affiliates
relating to programming, all proceeds, if
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any, resulting from actions brought by Seller, pending at the Closing Date, to
the extent, but only to the extent, such proceeds relate to or are attributable
to Seller's ownership, operation or control of the System or any System Assets
prior to the close of business on the Closing Date, and those assets set forth
on Schedule 1.30.
1.31 "FCC" - The Federal Communications Commission.
1.32 "FINANCIAL STATEMENTS" - As defined in Section 4.9
and attached hereto as Schedule 4.9.
1.33 "GAAP" - Generally accepted accounting principles
as applied in the United States of America.
1.34 "INDEMNIFICATION ESCROW AGREEMENT" - The form of
indemnification escrow agreement to be entered into as of the Closing Date among
Seller, Buyer and the Escrow Agent with respect to the Indemnification Note will
be agreed upon by the parties prior to the Closing Date and shall be in form and
substance reasonably satisfactory to the parties.
1.35 "INDEMNIFICATION NOTE" - The indemnification note
in the principal amount of $890,000 and otherwise in the form attached hereto as
Exhibit E.
1.36 "INDEMNIFICATION PERIOD" - The period commencing
at the close of business on the Closing Date and ending at midnight on the date
of the fifteen-month anniversary of the Closing Date.
1.37 "INDEMNITEE" - As defined in Section 12.3.
1.38 "INDEMNITOR" - As defined in Section 12.3.
1.39 "MATERIAL ADVERSE EFFECT" - As defined in Section
4.2.
1.40 "NEW SUBSCRIBER" - As defined in Section 2.4(d).
1.41 "NON-COMPETE AGREEMENTS" - As defined in
Section 9.1(g) and substantially in the forms attached hereto as Exhibit I.
1.42 "OBJECTION NOTICE" - As defined in Section 2.4(b).
1.43 "OTHER RECEIVABLES" - As defined in
Section 2.3(c).
1.44 "PRIME RATE" - The interest rate announced from
time to time as the prime rate of Bankers Trust Company in New York, New York.
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1.45 "PROGRAMMING CONTRACTS" - Those contracts pursuant
to which Seller purchases programming for use in the System including, without
limitation, those programming contracts referred to in Schedule 1.45.
1.46 "PURCHASE PRICE" - As defined in Section 2.3(a).
1.47 "PURCHASE PRICE ADJUSTMENT" - As defined in
Section 2.4(c).
1.48 "REAL PROPERTY" - As defined in Section 4.4 and
listed on Schedule 4.4.
1.49 "RECORDS" - As defined in Section 2.1(g).
1.50 "RIGHT" - As defined in Section 17.2.
1.51 "SATELLITE TIER RATE" - The rate charged by the
Seller for Satellite Tier Service, as set forth on Schedule 4.11(a), offered by
the System in a given community.
1.52 "SELLER" - Framingham Cablevision Associates,
Limited Partnership, a Delaware limited partnership.
1.53 "SENIOR SUBORDINATED NOTE" - The senior
subordinated note in the principal amount of $8,842,100 and otherwise in the
form attached hereto as Exhibit K.
1.54 "SUBSCRIBER" - Any person or entity at any given
time that is paying for and receiving any level of CATV service from Seller who
(v) is supplied CATV signals by the System, (w) has paid for at least one
month's CATV service to Seller at standard rates for any level of the service,
(x) has an account that is not more than 61 days past due (except for amounts
which are past due pending the resolution of a BONA FIDE dispute or past due
amounts of $10 or less, provided such account is otherwise current), (y) has not
requested disconnection and (z) if such person has been sent a disconnect
notification by Seller prior to the Closing, pays all amounts past due within 30
days after the Closing and is not disconnected. For purposes of this Section
1.54, the determination of "standard rates" shall be made by reference to the
various rates listed on Schedule 4.11(a) for the month prior to the Closing
Date. The definition of "Subscriber" in this Section 1.54 shall include each
person or entity supplied CATV signals by the System pursuant to a special
payment plan for delinquent accounts, so long as payments pursuant to such plan
are not more than 15 days past due and that the number of
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Subscribers paying pursuant to such plans shall not at any time exceed 200. For
purposes of this Section 1.54 the number of days past due of a Subscriber
Accounts Receivable shall be determined from the last day of the period for
which the applicable billing for services for that period is made.
1.55 "SYSTEM" - As defined in the first WHEREAS clause
above.
1.56 "SYSTEM ASSETS" - All assets of the Seller
essential to or used in connection with the ownership or operation of the
System, including, without limitation, those set forth in Section 2.1, and all
electronic devices, taps, trunk and distribution cables, amplifiers, power
supplies, conduits, vaults and pedestals, grounding and pole hardware, drop
lines and related fittings, all to the extent owned or leased by Seller and used
in connection with the System, BUT excluding the Excluded Assets.
1.57 "TANGIBLE PERSONAL PROPERTY" - As defined in
Section 4.6 as described on Schedule 4.6.
1.58 "Targeted Cash Flow" - As defined in Section
2.3(a).
1.59 "TAXES" - All federal, state, local or foreign
income, gross receipts, windfall profits, severance, property, production,
sales, use, license, excise, franchise, employment, withholding or similar
taxes, real and personal property taxes, transfer taxes, gains taxes, mortgage
recording taxes, transportation taxes or gross operating taxes, together with
any interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties.
1.60 "TERMINATED EMPLOYEES" - As defined in Section
6.3(g).
1.61 "UNAUDITED FINANCIAL STATEMENTS" - As defined in
Section 4.9 and attached as Schedule 4.9.
2. ASSETS SOLD AND PURCHASED.
2.1 SYSTEM ASSETS. On the terms and subject to the
conditions hereinafter set forth, Seller agrees to sell, assign and convey, and
Buyer agrees to buy, the System and the
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System Assets, including, without limitation, the following assets (to the
extent they constitute System Assets):
(a) All Authorizations and CATV Instruments;
(b) All real property owned by Seller at the
Closing Date and all real property leasehold interests of Seller at the Closing
Date;
(c) All tangible personal property owned by
Seller at the Closing Date and used in connection with the System, including,
without limitation, all electronic devices, taps, converters, trunk and
distribution cables, amplifiers, power supplies, conduits, vaults and pedestals,
grounding and pole hardware, droplines and related fittings, installed
subscribers' devices, hardware, tools, inventory, spare parts, motor vehicles,
supplies, test and closed circuit devices, microwave equipment and furniture,
furnishings and office equipment;
(d) All contracts, leases, agreements, licenses,
commitments and understandings (other than Programming Contracts) of Seller
relating to the System, and all contracts entered into by Seller with respect to
the System after the execution of this Agreement which are made in the ordinary
course of business and in conformity with Section 6.1(c) hereof;
(e) All subscriber agreements, if any, and orders
for CATV service to be provided by the System existing at the Closing Date;
(f) All goodwill, trademarks, service marks,
copyrights, trade names, common law property rights, all rights associated
therewith and all other intangible personal property owned or held by Seller
pertinent to the System;
(g) All schematics, blueprints, strand maps,
working drawings, engineering data, current and prior customer lists, system
maps and other reports, lists, plans, specifications, promotional graphics,
original art work, mats, plates, negatives and other advertising, marketing or
related materials, files and records and all other technical and financial
information concerning the System possessed by Seller at the Closing Date (the
"Records");
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(h) All of Seller's right, title and interest in
and to manufacturers' warranties with respect to the System Assets (to the
extent so assignable and exclusive of claims made on or prior to the Closing
Date); and
(i) All other assets of whatever nature and
wherever located owned by Seller at the Closing Date and used regularly in
connection with the design, construction or operation of the System, which
assets shall include the System's books and records or, to the extent originals
are not in the possession of Seller or are required to be retained by Seller for
audit purposes, copies thereof, but not including Seller's corporate or
partnership books and records (except for real property and state personal
property tax records, which shall be included).
2.2 ASSUMPTION OF LIABILITIES. Buyer shall, subject
to the provisions hereof, assume at the Closing the Assumed Liabilities. Except
for the Assumed Liabilities, and except to the extent that Buyer otherwise
expressly assumes any liabilities or obligations of Seller pursuant to this
Agreement, Buyer assumes no liabilities or obligations of Seller.
2.3 PURCHASE PRICE; ESCROW FUND AND ACCOUNTS
RECEIVABLE.
(a) PURCHASE PRICE. In consideration of the sale,
assignment and conveyance to it of the System Assets and for receipt of the
executed Non-Compete Agreements, Buyer agrees to purchase from Seller, and
Seller agrees to sell to Buyer, on the terms and subject to the conditions set
forth elsewhere in this Agreement, the System Assets for a total Purchase Price
of Thirty Seven Million Five Hundred Six Thousand Two Hundred Dollars
($37,506,200) (the "Purchase Price"), which shall be comprised of (w) (I) an
amount in cash to be delivered by Buyer to Seller at the Closing (the "Closing
Date Cash Payment"), equal to Twenty Five Million Five Hundred Forty Nine
Thousand One Hundred Dollars ($25,549,100) less the amount of the Released
Deposit (as hereinafter defined)*, and (II) Two Million Two Hundred Twenty Five
Thousand Dollars ($2,225,000) in cash to be placed into escrow pursuant to the
New Escrow Agreement (as hereinafter defined) (the "Escrow Deposit"), (x) the
total amount held in escrow pursuant to the Escrow Agreement (consisting of
Eight Hundred Ninety Thousand Dollars ($890,000) plus earnings thereon) and
released to Seller on June 3, 1994 (the "Released Deposit"), PROVIDED, THAT, the
Released Deposit shall not be credited as part of the Purchase Price if Buyer
has not certified to Seller, on or prior to 5:30 PM on June 16, 1994, that Buyer
or Cablevision of Framingham Holdings, Inc. or Cablevision of Framingham, Inc.
has entered into a credit agreement providing for loans to Buyer or such
Affiliate in an amount sufficient to permit Buyer to make the Closing Date Cash
Payment at the Closing, in which case the Released Deposit shall be retained by
Seller as a non-refundable option fee (the Released Deposit (subject to the
proviso in the preceding sentence), the Escrow Deposit and the Closing Date Cash
Payment sometimes being referred to collectively herein as the "Cash Purchase
Price"), (y) the Senior Subordinated Note and (z) the
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* PROVIDED, THAT, if the Released Deposit is not credited as part of the
Purchase Price, but is retained by Buyer as a non-refundable option fee as
provided below, the Closing Date Cash Payment shall be Twenty Five Million
Five Hundred Forty Nine Thousand One Hundred Dollars ($25,549,100).
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Indemnification Note, in each case subject to the adjustments set forth in this
Section 2.3(a) and Section 2.4, and in all cases subject to the following:
[subparagraph (A) is intentionally omitted.]
(B) If the number of Estimated Basic Subscribers (as
defined in Section 2.4(a) herein), is greater than
17,500 (the "Adjustment Target"), the Closing Date Cash
Payment shall be increased by an amount equal to the
excess of the number of Estimated Basic Subscribers
over the Adjustment Target, multiplied by $500 (the
"Initial Adjustment"), PROVIDED, HOWEVER, that the
Initial Adjustment, if any, shall under no
circumstances exceed Fifty Seven Thousand Eight Hundred
Dollars ($57,800) in the aggregate.
(C) Notwithstanding any other provision herein, Buyer
may, on or prior to the Closing Date, elect to satisfy
all or any portion of the Purchase Price that is
otherwise to be payable by the issuance by Buyer of the
Senior Subordinated Note and/or the Indemnification
Note by delivering shares of CSC Class A Common Stock
(as defined in the form of Senior Subordinated Note
attached as Exhibit K hereto) that are subject to an
effective registration statement. If Buyer makes such
an election: (i) the number of shares of such CSC
Class A Common Stock to be delivered by Buyer to Seller
at the Closing shall be equal to (x) the aggregate
amount of the Purchase Price with respect to which
Buyer has elected to deliver CSC Class A Common Stock,
divided by (y) 95% multiplied by the Closing Price (as
defined in the form of Senior Subordinated Note
attached as Exhibit K hereto) of the CSC Class A Common
Stock on the sixth American Stock Exchange trading day
prior to the Closing Date; (ii) the amount of the
Senior Subordinated Note and/or the Indemnification
Note, as the case may be, to be delivered by Buyer to
Seller at the Closing shall be reduced by the aggregate
amount of the Purchase Price with respect to which
Buyer has made such election and, if the amount of the
Senior Subordinated Note or the Indemnification Note is
reduced to zero, neither Buyer nor CSC shall be
obligated to deliver the Senior Subordinated Note or
the Indemnification Note, as the case may be, or the
Guaranty (as defined herein) in connection therewith,
and (iii) if after any such election by Buyer the
amount of the Indemnification Note is less than
$890,000, then at the Closing Buyer shall deposit an
amount of CSC Class A Common Stock that comprises the
Purchase
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Price with a value equal to such difference into an
escrow account pursuant to the Indemnification Escrow
Agreement, together with the Indemnification Note, if
any, so that the Indemnification Escrow Account has a
value equal to at least $890,000 at the Closing.
(D) In the event that there is a Change in Control (as
defined in the form of Senior Subordinated Note
attached hereto as Exhibit K) on or prior to the
Closing Date, (i) Buyer shall be obligated to pay in
cash at the Closing the full amount of the Purchase
Price (in lieu of the Closing Date Cash Payment), less
the Escrow Deposit and any adjustments made to the
Purchase Price as set forth in Sections 2.3 and 2.4
hereof, and (ii) the Escrow Agent shall be instructed
by Buyer and Seller to release the Escrow Account at
the Closing and deposit such amounts into an escrow
account pursuant to the Indemnification Escrow
Agreement and (iii) neither Buyer nor CSC shall be
obligated to issue the Senior Subordinated Note, the
Indemnification Note, the Guaranty or the Registration
Rights Agreement.
At the Closing, the Seller shall deliver to Buyer good,
valid and marketable title to the System Assets and, in consideration therefor,
and subject to the foregoing, (i) the Buyer shall deliver to Seller the Closing
Date Cash Payment (or the payment referred to in (D)(i) above in lieu of such
Closing Date Cash Payment) (x) plus the amount of the Initial Adjustment, if
any, as set forth in the prior sentence, (y) plus the amount, if any, of any
Closing Date Adjustment (as defined in Section 2.4(e)) owed by Buyer to Seller
pursuant to Section 2.4(e), and (z) less the amount, if any, of any Closing Date
Adjustment owed by Seller to Buyer pursuant to Section 2.4(e), (ii) Buyer and
Seller jointly shall instruct the Escrow Agent to deliver to Seller $2,225,000
of the Escrow Deposit, (iii) Buyer shall deliver to the Seller the Senior
Subordinated Note (or CSC Class A Common Stock in lieu of all or a portion
thereof as provided in (C) of this Paragraph 2.3(a)), and (iv) Buyer shall
deliver to an escrow agent jointly selected by Buyer and Seller (the
"Indemnification Escrow Agent") the Indemnification Note (or CSC Class A Common
Stock in lieu of all or a portion thereof as provided in (C) of this Paragraph
2.3(a)); PROVIDED, HOWEVER, that the payments required to be made pursuant to
subsections (i) and (ii) above shall be made on the Closing Date by wire
transfer of immediately available funds to a bank account designated by Seller
in writing no later than five Business Days prior to Closing.
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(b) ESCROW FUND. (i) Upon and simultaneously with
the execution of this Agreement, Buyer shall execute and deliver the Escrow
Agreement and shall deposit an amount equal to Eight Hundred Ninety Thousand
Dollars ($890,000) into escrow with The Bank of New York (the "Escrow Agent") to
be held pursuant to the terms of the Escrow Agreement. Prior to the Closing,
the Escrow Fund shall secure the performance of Buyer in accordance with the
terms of this Agreement. Payment of the Escrow Fund to Seller (which payment,
if made, shall be as full and complete liquidated damages), or return of the
Escrow Fund to Buyer, shall be made pursuant to and in accordance with the terms
of the Escrow Agreement.
(ii) On or prior to June 16, 1994, Buyer shall execute
and deliver an escrow agreement (the "New Escrow Agreement") to be executed
between Buyer, Seller and Escrow Agent and shall deposit Two Million Two Hundred
Twenty Five Thousand Dollars ($2,225,000) into escrow (the "Escrow Fund") with
the Escrow Agent to be held pursuant to the terms of New Escrow Agreement.
Prior to the Closing, the Escrow Fund shall secure the performance of Buyer in
accordance with the terms of this Agreement. Payment of the Escrow Fund to
Seller (which payment, if made, shall be as full and complete liquidated
damages), or return of the Escrow Fund to Buyer, shall be made pursuant to and
in accordance with the terms of the Escrow Agreement.
(c) ACCOUNTS RECEIVABLE. At the Closing, Seller
shall deliver to Buyer good, valid and marketable title to the Acquired Accounts
Receivable and the Buyer, in consideration therefor, shall deliver the Accounts
Receivable Price to the Seller by wire transfer of immediately available funds
to a bank account designated by Seller in writing no later than five Business
Days prior to the Closing. In addition, at the Closing Seller will deliver (i)
the Advertising Accounts Receivable to Buyer solely as collection agent therefor
and (ii) the Accounts Receivable other than the Advertising Accounts Receivable
and the Acquired Accounts Receivable (the "Other Receivables"). Buyer agrees,
for a period of one year from the Closing Date, to use its best efforts to
collect all amounts due in respect of the Advertising Accounts Receivable (and
shall not waive any amounts due thereunder without the prior written consent of
Seller) and to promptly remit to Seller 100% of all amounts so collected (net of
collection fees and expenses). Buyer agrees at all times to apply amounts
received from any party to the oldest outstanding Advertising Accounts
Receivable of such party.
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2.4 ADJUSTMENTS TO PURCHASE PRICE.
(a) No later than ten Business Days prior to the
Closing, the Seller shall provide Buyer with an estimated calculation of the
Basic Subscribers (the "Estimated Basic Subscribers") and an estimated
calculation of the Accounts Receivable Price on and as of the close of business
on the Closing Date.
(b) Within 45 calendar days after the Closing
Date, Buyer shall deliver a certificate of its Chief Financial Officer to Seller
setting forth a determination of the Basic Subscribers on and as of the Closing
Date (the "Actual Basic Subscribers"). Seller shall be deemed to have accepted
such certification unless, within 30 calendar days of the receipt thereof,
Seller delivers to Buyer a reasonably specific description of Seller's
objections (an "Objection Notice"). In the event an Objection Notice is
delivered, Buyer and Seller shall negotiate in good faith to resolve such
objections. If no resolution is agreed upon within 30 calendar days after
receipt of the Objection Notice by Buyer, the dispute shall be submitted for
resolution to Arthur Andersen & Co. (the "Accountants"), acting as experts, not
arbitrators, and resolution by such Accountants shall be conclusive, binding and
final. Buyer and Seller shall make readily available to such Accountants all
relevant books and records and other items requested by such Accountants to
review any dispute. Such Accountants shall submit their resolution of the
dispute to Buyer and Seller within 30 calendar days of their engagement
hereunder. The fees of such Accountants shall be borne equally by Buyer and
Seller.
(c) Upon acceptance of the certification referred
to in Section 2.4(b) above or the resolution of any Objection Notice as set
forth in such Section, the Purchase Price shall be adjusted (the "Purchase Price
Adjustment") as follows:
(i) If an Initial Adjustment was made and the number
of Actual Basic Subscribers exceeds the number of
Estimated Basic Subscribers, the Purchase Price
shall be adjusted upward by an amount equal to
$500 multiplied by such excess; PROVIDED, HOWEVER,
in no event shall such upward adjustment, together
with the Initial Adjustment, exceed Fifty Seven
Thousand Eight Hundred Dollars ($57,800);
(ii) If an Initial Adjustment was made and the number
of Estimated Basic Subscribers exceeds the number
of Actual
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Basic Subscribers, the Purchase Price shall be
adjusted downward by an amount equal to $500
multiplied by such excess; PROVIDED, HOWEVER, in
no event shall such downward adjustment exceed the
Initial Adjustment; or
(iii)If no Initial Adjustment was made and the number
of Actual Basic Subscribers exceeds both the
Adjustment Target, the Purchase Price shall be
adjusted upward by an amount equal to $500
multiplied by the excess of the Actual Basic
Subscriber over the Adjustment Target; PROVIDED,
HOWEVER, in no event shall such upward adjustment
exceed Fifty Seven Thousand Eight Hundred Dollars
($57,800);
Payment of the Purchase Price Adjustment, if any, shall be made by wire transfer
of immediately available funds to an account designated in writing by the
recipient of such funds on the later of (i) five Business Days from the date of
the Purchase Price Adjustment and (ii) the Adjustment Date (as defined in
Section 2.4(e) hereof).
(d) In the event that any person or entity is
supplied CATV signals by the System within 30 days prior to the Closing Date and
is not included in the determination of the Estimated Basic Subscribers for
purposes of determining the Initial Adjustment and such subscriber pays for one
month's service subsequent to Closing (a "New Subscriber"), such New Subscriber
shall be included in the determination of Actual Basic Subscribers for purposes
of making the adjustments, if any, pursuant to Section 2.4(c) hereof.
(e) All items of (i) deferred revenues,
(ii) deferred or prepaid expenses, (iii) accrued expenses, and (iv) other assets
or liabilities which cannot be individually or easily settled or discharged by
the Seller at Closing because the period to which they pertain overlaps the
Closing, or otherwise, and which arise from the operations of the System, shall
be pro rated or allocated between Buyer and Seller in accordance with GAAP as of
the close of business on the Closing Date. Seller shall be responsible for all
liabilities and obligations incurred in connection with the operation of the
System for all periods prior to the close of business on the Closing Date and
shall be entitled to all revenues derived from the operation of the System for
all periods prior to the close of business on the Closing Date. Buyer shall be
responsible for the Assumed Liabilities and for those liabilities and
obligations incurred by
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Buyer from and after the close of business on the Closing Date. Such PRO RATA
allocations shall include, without limitation, all advance payments received by
Seller prior to the close of business on the Closing Date for services to be
rendered in whole or in part after Closing, prepayments made by Seller relating
to periods of time subsequent to the close of business on the Closing Date,
prepaid programming fees, property taxes and assessments, unpaid copyright
royalties and fees, rents, pole rents, franchise fees, license fees, power and
utility expenses, prepayment liabilities and obligations under the Business
Contracts, sales commissions, time sales agreements, deposits and other prepaid
expenses and deferred items and all other income and expenses normally pro rated
in the sale of assets of a business (and of a CATV system in particular) and
attributable to the ownership and operation of the System. Adjustments under
this Section 2.4(e) shall be jointly determined by Buyer and Seller and paid
from one party to the other, as the case may be, on the Closing Date to the
extent they are known and agreed to by the parties (the "Closing Date
Adjustment"). Seller shall deliver to Buyer, no later than ten Business Days
prior to the Closing Date, a preliminary list of all such adjustments and shall
deliver an updated list of adjustments at or prior to Closing. Otherwise, such
adjustments shall be determined within 90 calendar days thereafter (the
"Adjustment Date") and payment therefor by Buyer or Seller, as the case may be,
shall be made on the later of (i) the Adjustment Date and (ii) five Business
Days from the date of the determination, if any, of the Purchase Price
Adjustment pursuant to Section 2.4(c) hereof. With respect to such adjustments,
the parties shall jointly prepare a statement at least ten business days before
the Adjustment Date of the determination of such adjustments, setting forth in
reasonable detail the basis for such determination. Payments made in respect of
such adjustments shall be the net amount due less any amounts in dispute as
between the parties. If the parties do not concur with any proposed
adjustments, then the non-concurring party shall so inform the other party
within such ten business day period, and the parties shall negotiate in good
faith with regard to the matter and an appropriate adjustment and payment shall
be made as agreed upon by the parties. If there shall be any dispute concerning
any amount due pursuant to this provision which the parties
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cannot resolve, the dispute shall be submitted to the Accountants for resolution
of the dispute, acting as experts, not arbitrators and such resolution shall be
conclusive, binding and final. Buyer and Seller shall make readily available to
such Accountants all relevant books and records and other items requested by
such Accountants to review such dispute. Such Accountants shall submit their
resolution of the dispute to Buyer and Seller within 30 calendar days of their
engagement hereunder. Buyer and Seller agree to share equally the cost and
expenses of the Accountants. All amounts owed pursuant to this Section 2.4(e)
shall be paid by wire transfer of immediately available funds within ten
business days after the resolution of the amount due. If such amount is not
paid within such ten business day period, or, if there is no dispute with
respect to the amount due, if such amount is not paid on the later of (i) the
Adjustment Date and (ii) five Business Days from the date of the determination,
if any, of the Purchase Price Adjustment pursuant to Section 2.4(c) hereof,
interest on the amount due shall accrue from the Adjustment Date until the date
paid at the lesser of the Prime Rate plus three percent (3%) or the maximum rate
allowed by law.
(f) All state or local sales and transfer taxes
applicable to the transactions contemplated by this Agreement shall be borne in
equal shares by Seller and by Buyer. Buyer shall pay the cost of any title
insurance, surveys and recording costs.
2.5 APPRAISAL AND ALLOCATION OF PURCHASE PRICE.
(a) Buyer and Seller agree that one thousand
dollars ($1,000) of the Purchase Price shall be allocated for all purposes to
the Non-Compete Agreements.
(b) Promptly after Closing, Buyer and Seller
shall cooperate in the filing of form 8594; PROVIDED, HOWEVER, that Buyer and
Seller will allocate to the real and tangible personal property included in the
System Assets an amount equal to the fair market value of such assets. Based on
the information provided by Seller as of the date of this Agreement, the parties
anticipate that approximately $6,675,000 (the "Estimated Fair Market Value")
represents the fair market value of such real and tangible personal property.
Promptly after
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execution of this Agreement, Buyer and Seller jointly shall retain an
independent appraiser in order to verify the accuracy of the Estimated Fair
Market Value.
3 CLOSING DATE AND PLACE.
3.1 CLOSING. Subject to the terms and conditions of
this Agreement, the closing of the transactions contemplated by this Agreement
(the "Closing") shall be held on or before the later of (i) June 30, 1994 or
(ii) two Business Days after the issuance of an Amended Order of Approval of the
[Massachusets Board of Regulatory Commissioners], but in no event later than
July 15, 1994; PROVIDED; HOWEVER, that if required by [Buyer's lenders], the
Closing may be delayed until the first Business Day following the expiration of
the period of 45 days after the Amended Order of Approval of the [Massachusets
Board of Regulatory Commissioners] is served on Buyer upon such Order becoming
final and non-appealable., or, such other date as Buyer and Seller shall
mutually agree (the "Closing Date") at the offices of Cadwalader, Wickersham &
Taft, 100 Maiden Lane, New York, New York 10038, or such other location as
Seller and Buyer mutually agree. If the Closing Date occurs after June 30,
1994, for purposes of determining whether the conditions to Buyer's obligations
set forth in Section 7.7 of this Agreement have been satisfied, the Closing Date
shall be deemed to be June 30, 1994.
4. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby
represents, warrants and covenants to Buyer that:
4.1 ORGANIZATION OF SELLER. Seller is a limited
partnership duly organized and validly existing under the laws of the State of
Delaware, has all requisite power and authority to execute and deliver this
Agreement and the Ancillary Agreements and, at the Closing Date, will have all
requisite power and authority to perform this Agreement and the Ancillary
Agreements, and is not required to be qualified to do business as a foreign
limited partnership in any jurisdiction in order to hold the System Assets or
operate the System. Seller has all requisite power and authority, and all
federal, state and local governmental franchises, licenses, permits, approvals
and authorizations which are necessary, to own and operate the System Assets and
the System at the places and in the manner in which the System is currently
owned and operated.
4.2 SELLER'S AUTHORITY. (a) The execution, delivery
and performance of this Agreement and the Ancillary Agreements by Seller have
been duly and validly authorized by all necessary action on the part of Seller,
the execution, delivery and performance of this
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Agreement and the Ancillary Agreements by Seller at the date hereof (except as
set forth on Schedule 4.2) do not and, as of the Closing, will not, result in a
breach or violation by Seller of, or constitute a default (or an event which
with or without the passage of time or the giving of notice, or both, will
constitute a breach or default) under, or create or impose any lien or
encumbrance upon, any of the System Assets pursuant to, or conflict with: (i)
any Authorization or CATV Instrument, (ii) any agreement, indenture, deed, loan
agreement or other instrument to which Seller is a party or by which Seller is
bound or to which any of the System Assets is subject, (iii) Seller's Amended
and Restated Agreement of Limited Partnership dated as of March 1, 1989
("Seller's Partnership Agreement") or certificate of limited partnership or
other governing documents referred to in Section 4.2(b); or (iv) any statute,
ordinance, rule, regulation, order, judgment or decree to which Seller is a
party or by which Seller is bound or to which any of the System Assets is
subject, except in the case of (ii) above, where such breach, violation, default
or creation or imposition of such lien or encumbrance or conflict is not,
individually or in the aggregate, reasonably likely to have a material adverse
effect on (1) the business, financial condition or results of operations of the
System, taken as a whole, (2) Seller's or, to the actual knowledge of the
Seller, Buyer's ability to own the System Assets or to operate the System as it
is now operated or (3) Seller's ability to perform its obligations under this
Agreement (each or any, a "Material Adverse Effect"). This Agreement
constitutes, and the Ancillary Agreements and each contract delivered by Seller
to Buyer pursuant hereto will constitute, the legal, valid, and binding
obligation of Seller enforceable in accordance with their respective terms
except to the extent such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and principles of equity.
(b) Seller has heretofore delivered to Buyer a copy of
the Seller's Partnership Agreement (excluding Sections 9, 10, 11 and 20.3), as
in full force and effect on the date hereof, and Sections 9, 10, 11 and 20.3 of
Seller's Partnership Agreement do not, nor are there any other agreements
between or among any general and/or limited partners of Seller
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that, contain any provisions that are reasonably likely to affect the
transactions contemplated by this Agreement. Between the date of delivery of
Seller's Partnership Agreement and the Closing, no changes shall have been made
to it which are reasonably likely to adversely affect Seller's ability to
perform its obligations under this Agreement.
4.3 AUTHORIZATIONS AND CATV INSTRUMENTS. Seller has
all Authorizations necessary to own the System Assets and to operate the System
in the manner in which it is now operated by Seller. Except as set forth in
Schedule 4.3, Seller knows of no other franchises, licenses or authorizations
other than the Authorizations which, if not possessed by the Seller, would be
reasonably likely to have a Material Adverse Effect. Each Authorization is
valid, is in full force and effect, is not in default in any respect (and there
exists no event or circumstance that, with notice or the lapse of time or both,
would constitute a default) and is in accordance with all applicable federal,
state and local laws except where any such default or failure to comply is not
reasonably likely to have a Material Adverse Effect. True and correct copies of
the Authorizations and the CATV Instruments have heretofore been provided to
Buyer by Seller. Subject to obtaining the Required Consents (as defined in
Section 4.8), the execution, delivery and performance of this Agreement will not
entitle any person or entity to cancel, suspend, terminate or diminish the
rights of Seller under any Authorization.
4.4 REAL PROPERTY. All of the real property and all
of the leases of real property included in the System Assets are listed in
Schedule 4.4 (the "Real Property"). As to the premises which are designated on
Schedule 4.4 as being owned by Seller, Seller has good, valid and marketable
title in fee simple to such premises and all buildings, improvements and
fixtures thereon, free and clear of all Encumbrances, except as shown on such
Schedule 4.4.1 and except for minor imperfections of title and Encumbrances
which do not materially detract from the value of such Real Property. Seller is
the sole owner of the leasehold interest in all real property shown on Schedule
4.4 to be leased to it, and such leases are valid and subsisting and in full
force and effect except where any failure is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect. All of the Real
Property, buildings, fix-
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tures and improvements thereon owned or leased by Seller, are in good operating
condition and repair (subject to normal wear and tear).
4.5 EASEMENTS AND RIGHTS-OF-WAY. Except as set forth
on Schedule 4.5, each person, firm, corporation or other entity upon or under
whose property are located, maintained, installed or operated any of the System
Assets (other than drop lines to subscriber dwellings which do not cross any
property other than the property of such subscribers) has granted to Seller such
easements, licenses or rights of way as are necessary for the location,
maintenance, installation and operation of such System Assets upon, over or
under such property, except where the failure to have any such easement, license
or right of way is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect. All such easements, licenses or rights of way
are, to the knowledge of Seller, valid and binding and are in full force and
effect on the date hereof and will be as of the Closing Date except where any
failure is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect. Except as set forth on Schedule 4.5, the Seller has
not received written notice from any person, firm, corporation or other entity
upon or under whose property are located, maintained, installed or operated any
System Assets of an intention to challenge the continued location, maintenance,
installation or operation of such item on such property.
4.6 TANGIBLE PERSONAL PROPERTY. Schedule 4.6 contains
a reasonably complete description of the tangible personal property included in
the System Assets (the "Tangible Personal Property") as of the date of this
Agreement. At the Closing, Tangible Personal Property shall include a thirty
(30) day operating supply of inventory for operation of the System in the
ordinary course of business. Except as set forth on Schedule 4.6.1, Seller has
good, valid and marketable title to all Tangible Personal Property, free and
clear of all Encumbrances except minor imperfections of title and Encumbrances
which do not materially detract from the value of such Tangible Personal
Property. The Tangible Personal Property is in good operating condition and
repair (subject to normal wear and tear).
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4.7 CONTRACTS; NO DEFAULTS. Schedule 4.7 contains a list
of all written contracts in force on the date hereof to which Seller is a party
and relating to the System Assets, to the System or to the business and
operations thereof except for Programming Contracts and management and
consulting contracts and except for contracts entered into in the ordinary
course of business consistent with past practices which call for the payment by
or to the Seller of $50,000 or less individually, or $500,000 or less in the
aggregate, in any 12-month period, or which are terminable by Seller on notice
of 90 days or less without penalty or premium (each such contract listed on
Schedule 4.7 being herein referred to as a "Business Contract"). Except as
disclosed on Schedule 4.7, (i) each of the Business Contracts is in full force
and effect and constitutes a valid and binding obligation of Seller and is
legally enforceable in accordance with its terms against the parties thereto,
(ii) Seller has complied with all of the provisions of such Business Contracts
and is not in default thereunder, and (iii) there has not occurred any event
which (whether with or without notice, lapse of time, or the happening or
occurrence of any other event) would constitute such a default, except in the
case of (ii) or (iii) above, where the occurrence of such event is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect. To the knowledge of Seller and except as disclosed on Schedule 4.7, the
parties to the Business Contracts other than Seller are not in default under any
such Business Contracts except where such default is not, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect.
4.8 APPROVALS AND CONSENTS. Set forth in Schedule 4.8 is a
list of all required consents, approvals, waivers, permits, licenses or
authorizations of any federal, state, local or other regulatory or public
authority, and all required consents, approvals or waivers of any other persons
or entities, which (i) are required to be obtained by Seller under any law,
regulation, court order or franchise in order to consummate the transactions
contemplated by this Agreement; (ii) are required to be obtained by Seller under
any note, bond, mortgage, permit, agreement or other instrument in order to
consummate the transactions contemplated by this Agreement, except where the
failure to obtain such consents, approvals, waivers,
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permits, licenses or authorizations, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect; or (iii) are otherwise
necessary to prevent the termination of, or any material restriction under, any
franchise agreement or agreement assumed by Buyer under this Agreement upon
consummation of the transactions contemplated hereby (collectively, the
"Required Consents").
4.9 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE.
Attached hereto as Schedule 4.9 are true and complete copies of audited
financial statements of Seller as at December 31, 1992 (the "Audited Financial
Statements"), and unaudited financial statements of Seller for the eight-month
period ended August 31, 1993 (the "Unaudited Financial Statements") (the Audited
Financial Statements and the Unaudited Financial Statements are herein
collectively referred to as the "Financial Statements"). The Audited Financial
Statements have been prepared in accordance with GAAP, consistently applied, and
fairly present the financial condition and results of operations of the Seller,
taken as a whole, as of the dates and for the periods indicated. The Unaudited
Financial Statements have been prepared in accordance with GAAP (except for the
absence of footnotes and a statement of cash flows), applied consistently with
the Audited Financial Statements, and fairly present the financial condition and
results of operations of the Seller, taken as a whole, as of the dates and for
the periods indicated, subject to year-end adjustments. Except as set forth in
the Financial Statements, since August 31, 1993 and except for changes directly
or indirectly attributable to the Cable Television Consumer Protection and
Competition Act of 1992 and the rules, regulations and interpretations
promulgated thereunder (the "1992 Cable Act"), there has been no material
adverse change in the financial condition or results of operations of the
Seller.
4.10 ACQUIRED ACCOUNTS RECEIVABLE. At least 98% of the face
value of each of the Acquired Accounts Receivable constitutes (or will
constitute) a valid claim in such amount and has been acquired in the ordinary
course of Seller's business.
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4.11 INFORMATION SHEET; COMPETING FRANCHISES.
(a) Schedule 4.11 (a) sets forth the following
technical and business information relating to the operation of the System as of
the date of this Agreement (which information is true and correct as of the date
hereof, or if another date is specified in such Schedule, as of such specified
date) with respect to: (i) a rate card setting forth rates currently being
charged by Seller in connection with the System for every service, level of
service, package of service(s), installations and outlets or other services or
items for which Seller has an established charge (the "Current Rates"), and a
rate card setting forth all such rates immediately prior to September 1, 1993
(the "Prior Rates"); (ii) the current real and personal property lease
obligations of Seller and rental payments; (iii) the signals carried on the
System; (iv) the number of Subscribers as of the date specified in such Schedule
4.11(a) and the total number of such Subscribers, by level of service subscribed
for by such Subscribers as of such date; (v) the mileage of plant in the System
as of the date specified in such Schedule 4.11(a); (vi) the number of channels
capable of being delivered over the System (without utilization of digital
compression); (vii) the number of addressable converters used in the System;
(viii) the number of persons or entities receiving free service and the reasons
therefor; (ix) surety and performance bonds required by the Authorizations
and/or CATV Instruments, or otherwise maintained by Seller with respect to the
System or System Assets, and the amount so required; and (x) the current
franchise fees being charged by each franchising authority.
(b) Except as set forth on Schedule 4.11(b), no person
or entity (including without limitation any governmental agency, body or
division) has any right to acquire any interest in the System or the System
Assets (including without limitation any right of first refusal or similar right
to purchase any interest in the System or any of the System Assets), which right
has not been validly, properly and irrevocably (except for the right to revoke
such waiver only if this Agreement is terminated pursuant to Section 16 hereof)
waived by the party entitled to assert such right. Except as set forth on
Schedule 4.11(b), Seller has not entered
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into any agreement and is not bound by any commitment with respect to
retransmissions of broadcast television signals relating to the System.
(c) Except as set forth in Schedule 4.11(c), to the
knowledge of Seller, no other person or entity:
(i) has been granted or has applied for the consent or
approval of any governmental agency, body or
division (a "Governmental Approval") for the
installation, construction, development, ownership
or operation of a CATV system or any MDS or MMDS
technology within all or part of the territory
covered by the System;
(ii) operates any of the foregoing or any SMATV
technology within all or part of the territory
covered by the System, regardless of whether any
Governmental Approval is required or has been
obtained;
(iii)has been granted a Governmental Approval that
grants a right of first refusal or similar right
to purchase a CATV system within any territory
covered by the System; or
(iv) has commenced, or has received or applied for a
Governmental Approval for, the construction,
installation, development or operation of a CATV
system which has resulted, or could result, in
such system being overbuilt with the System.
4.12 COMPLIANCE WITH LAWS, REGULATIONS AND REPORTING.
Except as disclosed on Schedule 4.12, the ownership and operation of the System
Assets by Seller comply in all material respects with all applicable laws,
rules, regulations, requirements, standards and guidelines of all federal, state
and local authorities or agencies having jurisdiction over Seller and with the
terms and provisions of any mortgage, lease, license, indenture, or agreement
relating to the System except where any failure to be in compliance is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect.
4.13 ENVIRONMENTAL MATTERS. Except as set forth in
Schedule 4.13, there are no flammable, explosive or radioactive materials, toxic
substances or other hazardous substances or wastes on, under or about any of the
properties included in the System Assets which could result in any governmental
or third-party action, proceeding or claim which is, individually or in the
aggregate, reasonably likely to have a Material Adverse Effect. Seller has, and
is in compliance with the terms of, all permits, licenses and other
authorizations
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required in connection with the operation of the System pursuant to, or to be in
material compliance with, any Environmental Requirements (as defined below).
Seller is in material compliance with all requirements for the operation of the
System or use of the System Assets under federal, state, or local laws relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic substances, materials or wastes into ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
substances, materials or wastes (collectively, "Environmental Requirements").
There are no underground storage tanks storing petroleum substances or any other
hazardous substances at any of the properties included in the System Assets.
There is no asbestos-containing material present in any real property presently
owned, leased or used by Seller and no asbestos-containing material has been
removed from any real property while such real property was owned, leased or
used by Seller, in either case, except for such as is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect. Seller has
provided to Buyer copies of any and all environmental audits, investigations,
studies or reports that have been performed by or at the direction of Seller or
to the extent such audits, investigations, studies and reports concern any real
property leased by Seller, of which Seller has knowledge or possession. For the
purpose of this Section, "hazardous substances", "hazardous materials" and
"hazardous waste" shall have the meaning set forth in, as the case may be, the
Comprehensive Environmental Response, Compensation, and Liability Act, as
amended, 42 U.S.C. Section 9601, ET SEQ., and regulations thereunder; the
Resource Conservation and Recovery Act; or any applicable federal, state or
local laws pertaining to environmental regulations.
4.14 FCC MATTERS. Except as set forth on Schedule
4.14, all reports and filings required to be filed with the FCC and with all
franchising authorities by Seller with respect to the operation of the System
have been filed. All such reports and filings are accu-
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rate and complete in all material respects. Seller has all required
certificates, permits, and clearances from governmental agencies required to
operate the System and the System Assets in the manner currently operated by
Seller, except where the failure to have any such certificate, permit or
clearance is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect.
4.15 COPYRIGHT MATTERS. Seller has filed all required
reports, notices and statements with the United States Copyright Office. Seller
has paid all fees required under the Copyright Act of 1976 and has otherwise
complied with such Act in all material respects; PROVIDED, HOWEVER, that Seller
makes no representations regarding the effect of the CATV industry-wide dispute
concerning music licensing fees or the dispute covered by the "Cablevision"
case.
4.16 CLAIMS AND LITIGATION. Except as set forth in
Schedule 4.16, there is no action, suit, claim, arbitration, administrative or
other proceeding pending or, to Seller's knowledge, threatened against or
involving Seller, the System or any of the System Assets, at law or in equity,
which would prevent or adversely affect in any material respect the ownership,
use or operation of any of the same by Buyer. Except as set forth in Schedule
4.16, there is no pending or, to Seller's knowledge, threatened investigation or
proceeding based on any violation by Seller of any state or federal law, rule or
regulation pertaining to the System.
4.17 EMPLOYEES; COMPENSATION; UNIONS.
(a) Seller is not a party to any employment
agreements or any collective bargaining agreements that cannot be terminated
without liability to Buyer upon the purchase of the System. Seller is not a
party to any pending or, to Seller's knowledge, threatened labor dispute or
labor organization effort.
(b) Except as set forth in Schedule 4.17, Seller
has no pension plans, profit sharing plans, deferred compensation plans, stock
option or stock bonus plans or the like or similar employee or executive benefit
plans. Except as set forth in Schedule 4.17, Seller does not maintain, sponsor
or contribute to any "employee benefit plan" within the meaning of
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Section 3(3) of ERISA, or other plan, program, practice, agreement or
arrangement of employee compensation, deferred compensation, severance pay,
retiree benefit or fringe benefit. Seller is in compliance with all provisions,
including all reporting and disclosure requirements, of ERISA and of the Code,
relating to employee benefit plans, except where any such failure is not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect.
4.18 INSURANCE. Schedule 4.18 lists all insurance
policies of Seller which relate to the ownership, operation or use of the System
and System Assets. All of such policies are in full force and effect and Seller
is not in default of any provision thereof, except where any such default is
not, individually or in the aggregate, reasonably likely to have a Material
Adverse Effect.
4.19 PATENTS AND COPYRIGHTS. Seller, to its knowledge,
owns or possesses all licenses or other rights to use all copyrights,
trademarks, service marks, service names, trade names and patents necessary to
operate the System, except where any failure would not, individually or in the
aggregate, have a Material Adverse Effect. All copyrights, trademarks, service
marks, trade names, service names and patents owned or used by Seller, and
applications therefor, are set forth on Schedule 4.19 and are designated as to
whether they are owned by or licensed to Seller.
4.20 RATES. As of the date hereof, the Current Rates
are, to Seller's knowledge, in substantial compliance with all applicable laws,
including without limitation the 1992 Cable Act as in effect on the date of this
Agreement. Seller has provided to Buyer accurate copies of Seller's worksheets
revising the Prior Rates to the Current Rates.
4.21 SPECIAL AGREEMENTS. Except as set forth in
Schedule 4.21, Seller:
(i) is not a party to any contract or agreement,
written or oral, whereby Seller provides CATV
service to one or more persons or entities in the
service area covered by the Systems under any bulk
contract or agreement; or
(ii) does not provide CATV system services to any
person or entity in the service area covered by
the System at rates not reflected in Seller's
subscriber rate card.
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4.22 TAXES. Except as set forth in Schedule 4.22,
Seller has filed or caused to be filed, or on the date of the Closing will have
filed, all federal, state, local and foreign income, information, franchise,
sales, use, property, excise, payroll and other returns, declarations and
reports related to Taxes that are required to be filed by Seller on or prior to
the date hereof. All Taxes due and payable by Seller on or before the date of
this Agreement with respect to the assets or properties of Seller or the System
(including the System Assets) have been paid or have been provided for in the
Financial Statements. Neither Seller nor its general partners or, to the
knowledge of Seller, its limited partners, have received any notice or
assessment to the effect that there is any unpaid interest, penalty or addition
to Taxes due or claimed to be due from Seller with respect to the assets or
properties of Seller or the System (including the System Assets) nor, to the
knowledge of Seller, is any such notice contemplated or under consideration; and
neither Seller nor its general partners or, to the knowledge of Seller, its
limited partners, have received notice of the assertion or threatened assertion
of any lien on any of the assets or properties of Seller or the System
(including the System Assets) on account of any unpaid Taxes that are due and
payable and no audits of the return or reports of Seller by any governmental
authority are pending or, the knowledge of Seller, threatened.
4.23 CAPITAL COMMITMENTS. Except as set forth in
Schedule 4.23, Seller has not entered into any agreements and is not otherwise
bound to any written or oral commitments to upgrade any of the System (including
without limitation promises or commitments on the part of Seller in connection
with any of the Authorizations).
4.24 FINANCING COMMITMENTS. Set forth in Schedules
4.4.1, 4.6.1 and 4.24 is a description of all notes, letters of credit,
guarantees, instruments of debt, mortgages, liens, conditional sale or lease
purchase agreements, security agreements and purchase money security interests
that, in each case, create any Encumbrances on the System or any of the System
Assets and all obligations for money owed or debts of Seller relating to the
System or any of the System Assets (other than trade accounts payable incurred
in the ordinary course of Seller's
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business), setting forth the party to whom the obligation or debt is due, the
collateral, if any, and the amount and date due.
5. BUYER'S REPRESENTATIONS. Buyer represents and warrants
that:
5.1 ORGANIZATION AND STANDING OF BUYER. Buyer is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to execute, deliver and perform this Agreement and the Ancillary
Agreements. Buyer is a wholly-owned subsidiary of Cablevision Systems
Corporation, a Delaware corporation ("CSC"). As of the Closing Date Buyer will
be duly qualified to do business as a foreign corporation in the State of
Massachusetts.
5.2 AUTHORITY TO EXECUTE AND CONSUMMATE AGREEMENT.
The execution, delivery and performance of this Agreement and the Ancillary
Agreements have been duly authorized by all necessary corporate action on
Buyer's part. This Agreement has been duly executed and delivered by Buyer and
constitutes, and the Ancillary Agreements and each contract delivered by Buyer
to Seller pursuant hereto will constitute, the legal, valid, and binding
obligation of Buyer enforceable in accordance with its terms except to the
extent such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and principles of equity. The execution, delivery
and, except as set forth on Schedule 5.2, performance of this Agreement and the
Ancillary Agreements by Buyer do not and, as of the Closing, will not result in
a breach or violation by Buyer of, or constitute a default (or an event which
with or without the passage of time or the giving of notice, or both, will
constitute a breach or default) under, any agreement, instrument, charter or by-
law provision, statute, ordinance, rule, regulation or order to which Buyer is a
party or by which Buyer is bound, other than such breach, violation, default or
conflict that, individually or in the aggregate, will not materially impair
Buyer's ability to perform its obligations under this Agreement.
5.3 EXCHANGE ACT COMPLIANCE. CSC has timely filed
with the Securities and Exchange Commission all forms, reports, statements and
other documents required to be filed
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by CSC pursuant to the Exchange Act and the rules and regulations promulgated
thereunder and the information contained in such forms, reports, statements and
other documents, as of the date of filing thereof, did not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Copies of CSC's most recent reports on Forms
10-K, 10-Q and 8-K and CSC's most recent proxy statement have heretofore been
delivered by CSC to Seller.
5.4 FITNESS AS FRANCHISEE. As of the date hereof,
neither Buyer nor CSC has received any written notification from the appropriate
regulatory agency indicating, nor do any of William Quinn, Robert Cacase, and
James Kofalt (each an "Executive Officer", collectively, the "Executive
Officers") have any actual knowledge, that the transfer of the System (including
the Authorizations or CATV Instruments), to the Buyer as contemplated herein
would be rejected by the BRC.
5.5 CSC will treat the Senior Subordinated Note as
debt for financial reporting and Federal Income Tax purposes.
6. ADDITIONAL COVENANTS.
6.1 NEGATIVE COVENANTS OF SELLER. From the date of
execution of this Agreement until the Closing, Seller will not, without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld, do or agree to do any of the following:
(a) Sell, assign, lease or otherwise transfer or
dispose of any of the System Assets; or merge or consolidate with or into any
other entity or enter into any agreements relating thereto, PROVIDED, HOWEVER,
Seller may sell, assign, lease or otherwise transfer or dispose of any System
Asset (individually or in the aggregate up to a maximum amount of $89,000 if
such System Asset is expended in the ordinary course of business, consistent
with Seller's past business practices;
(b) Delete any programming service on the System
other than in the ordinary course of business or as required by the 1992 Cable
Act.
(c) Enter into any contracts, leases,
commitments, understandings, licenses, or other agreements or incur any
obligation or liability relating to the System; PRO-
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VIDED, HOWEVER, that Seller may enter into such other contracts, leases,
commitments, understandings, licenses or other agreements in the ordinary course
of business consistent with Seller's past business practices or as required by
the 1992 Cable Act; and, PROVIDED, FURTHER, HOWEVER, that Seller may incur
obligations or liabilities for which Seller will remain solely liable after the
Closing Date;
(d) With respect to the employees of the System,
(i) enter into or become subject to any employment, labor or union contract not
terminable at will, any professional service contract not terminable at will, or
any pension, insurance, profit sharing, deferred compensation, retirement,
hospitalization, employee benefit, or other similar plan not currently in effect
or any renewal on materially different terms; or (ii) increase the compensation
payable or to become payable to any employee, or pay or arrange to pay any bonus
payment to any employee for which Buyer will be obligated after the Closing
(except, in the case of clause (ii) only, in the ordinary course of business
consistent with Seller's past business practices); or
(e) Offer free or reduced-price service as an
inducement to any person, except in the ordinary course of business consistent
with Seller's past business practices.
6.2 AFFIRMATIVE COVENANTS OF SELLER. Pending and
prior to the Closing Date, Seller will:
(a) Preserve its existence and business organization
intact, use its best efforts to preserve, for Buyer, Seller's relationship with
suppliers, customers, employees and others having business relations with
Seller, and keep all System Assets in their present condition, ordinary wear and
tear excepted;
(b) Operate the System in the normal and usual manner
and in compliance with all applicable laws, rules and regulations except where
any noncompliance is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect;
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(c) Maintain the validity of the Authorizations, and
comply with all applicable requirements of the Authorizations except where any
noncompliance is not reasonably likely to have a Material Adverse Effect;
(d) Maintain in full force and effect all of the
insurance policies listed on Schedule 4.18, or substantially similar policies,
through the Closing Date in amounts not less than those in effect on the date
hereof;
(e) Provide Buyer with Seller's unaudited internal
monthly financial statements from September 1993 until the Closing Date as soon
as reasonably practicable after such statements are available; and
(f) File or submit and diligently prosecute, with the
reasonable cooperation of Buyer, any and all applications or notices with public
authorities necessary for the consummation of the transactions contemplated
hereby or to satisfy the conditions set forth in Section 7.1 hereof, including,
without limitation, under the Required Consents, the Authorizations and the CATV
Instruments; and, if legally necessary, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
6.3 AFFIRMATIVE COVENANTS OF BUYER. Buyer will:
(a) Cooperate with and assist Seller in promptly
filing or submitting and diligently prosecuting any and all applications or
notices with public authorities necessary for the consummation of the
transactions contemplated hereby or to satisfy the conditions set forth in
Section 7.1 hereof, including, without limitation, under the Authorizations, the
CATV Instruments and, if legally necessary, under the HSR Act, including payment
of the requisite $25,000 filing fee;
(b) File or submit and diligently prosecute any
and all applications or notices with public authorities that Buyer is required
by applicable law to file or submit in connection with the consummation of the
transactions contemplated hereby or to satisfy the conditions set forth in
Section 8.1 hereof;
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(c) Prepare and file, subject to Seller's review,
all applications with the Commonwealth of Massachusetts, and any other public
authority, including "Form 100" as set forth in Chapter 207, Section 7 of the
Code of Massachusetts Regulations, necessary to transfer the System to Buyer and
to obtain the consent and approval of the appropriate public authority to the
consummation of the transactions contemplated herein. After such application
has been filed, Buyer shall use its reasonable efforts to file promptly with the
Commonwealth of Massachusetts and any other public authority, all additional
information, data, amendments, exhibits and other material which may become
necessary or desirable or which may be requested by the Commonwealth of
Massachusetts and any other public authority, in connection with the processing
of such application. Buyer shall further use its reasonable efforts to obtain
the consent of any public authority, and Seller hereby agrees to cooperate with
Buyer in good faith and do all things reasonably requested by Buyer in
connection therewith. Buyer shall pay any application fee, transfer fee and
grant fee and all reasonable attorneys' fees and fees of other experts retained
by the Commonwealth of Massachusetts and any other public authority which may be
charged or assessed by the Commonwealth of Massachusetts and any such public
authority in connection with the transactions contemplated hereby. Buyer and
Seller shall each pay fees of their respective attorneys retained in connection
with such transfer;
(d) Notify Seller, on or prior to the 60th day
prior to the Closing, of the names of those employees of Seller whom Buyer
reasonably expects will be offered employment by Buyer on and after the Closing
Date;
(e) Buyer shall indemnify Seller for any
financial liability incurred by Seller after the Closing under the programming
agreements listed on Schedule 1.45 to the extent such liability arises out of
the failure of Buyer or one of it's affiliates to enter into any oral or written
agreements to carry such programming.
(f) Promptly disclose to Seller if William Bell
or Barry O'Leary has actual knowledge of information obtained through Buyer's
due diligence investigation or
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otherwise (other than information that is also known to Seller or any of its
general partners, agents or representatives) of a breach or inaccuracy of any
representation or warranty of Seller contained in this Agreement or the failure
by Seller to perform or comply with any agreement or covenant herein required to
be performed or complied with on or prior to the Closing Date; and
(g) Assist Seller in complying with its
obligations under the Consolidated Omnibus Budget Reconciliation Act of 1985
that relate to continued insurance coverage to be made available to any of the
employees of Seller on the Closing Date who are not employed by Buyer
immediately after the Closing Date ("Terminated Employees"), including, without
limitation, offering such Terminated Employees participation (at the expense of
such Terminated Employees) in employee benefit plans maintained by Buyer,
PROVIDED THAT Seller shall indemnify and hold Buyer harmless from any and all
costs and expenses incurred in connection with such assistance.
6.4 ACCESS TO INFORMATION. Seller shall afford
reasonable access during normal business hours and on reasonable prior notice
prior to Closing to Buyer and to Buyer's counsel, accountants, engineers, and
other representatives to all the System Assets, and Seller will provide Buyer
and Buyer's counsel, accountants, engineers, and other representatives such
information concerning the System Assets and the operation of the System in
Seller's possession as Buyer may reasonably request to facilitate Buyer's due
diligence review. Any and all information, disclosures, knowledge or facts
regarding Seller and its operations and properties shall be confidential and
shall not be divulged, disclosed or communicated to any other person, firm,
corporation or entity except for Buyer's attorneys, accountants and lenders, and
such lenders' attorneys (and all such persons shall be informed of, and shall
acknowledge, the confidential nature of such information) for the purpose of
consummating the transactions set forth in this Agreement.
6.5 NOTIFICATION. Each party will promptly notify the
other in writing upon becoming aware of any order or decree or any complaint
praying for an order or decree
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restraining or enjoining the consummation of this Agreement or the transactions
contemplated hereby, or upon receiving any notice from any governmental
department, court, agency or commission of its intention to institute an
investigation into, or institute a suit or proceeding to restrain or enjoin the
consummation of this Agreement or such transactions, or to nullify or render
ineffective this Agreement or such transactions contemplated if consummated, or
upon the occurrence of, or upon becoming aware of the impending or threatened
occurrence of, any event which would cause or constitute a breach or would have
caused a breach had such event occurred or been known to such party prior to the
date hereof, of any of the respective representations and warranties contained
in or referred to in this Agreement or in any Schedule hereto.
6.6 RIGHT TO CURE; PURCHASE PRICE ADJUSTMENT. In the
event Buyer notifies Seller, pursuant to Section 6.3(f) hereof, of any breach or
inaccuracy of a representation or warranty of Seller or any non-performance or
non-compliance by Seller of any agreement or covenant required to be performed
or complied with on or prior to the Closing and Buyer does not waive such
breach, inaccuracy, non-performance or non-compliance, Seller shall have the
right, but not the obligation, to (i) cure any breach, non performance or non-
compliance or (ii) negotiate with Buyer, in good faith, a reduction in the
Purchase Price.
6.7 CLOSING CONDITIONS. Seller and Buyer will exert
their best efforts in good faith to cause the Closing conditions set forth in
Sections 7 and 8 to be met on or before the Closing Date (including without
limitation executing the Ancillary Agreements, as applicable, at the time and in
the form contemplated by this Agreement).
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7. CONDITIONS OF BUYER'S OBLIGATIONS. The obligations of Buyer to
purchase the System Assets and to proceed with the Closing are subject to the
satisfaction at or prior to the Closing of each of the following conditions,
any one or more of which may be waived in whole or in part by Buyer by giving
written notice to Seller to that effect:
7.1 CONSENTS.
(a) Seller shall, with the reasonable cooperation
of Buyer, have obtained all Required Consents and/or all consents or waivers
necessary to effect valid assignment of all Authorizations on terms which are
not less favorable than those held by Seller on the date hereof, or, in lieu of
such consents or waivers, Buyer shall have been issued or shall have entered
into such Authorizations necessary for the operation of the System by Buyer on
terms and conditions which are not less favorable than those held by Seller on
the date hereof and shall have provided Buyer with evidence reasonably
satisfactory to it of such consents, waivers and/or issuances, as the case may
be. A Required Consent or a consent or waiver shall be deemed to satisfy the
condition contained in this Section 7.1(a) notwithstanding its containing a term
or terms less favorable than those held by Seller on the date hereof, unless:
(i) Buyer believes the less favorable term or terms,
in the aggregate, is or are reasonably likely to
have a material adverse effect on (i) the
business, financial condition, results of
operation of Buyer or the System, taken as a
whole; (ii) Buyer's ability to own or operate the
System or CATV systems in Massachusetts generally;
or (iii) Buyer's ability to perform its
obligations under this Agreement; or that would
require Buyer to make capital expenditures in
excess of ongoing maintenance capital
expenditures; and
(ii) Buyer reasonably believes, on the advice of its
counsel, that the less favorable term does not
comply with, or is otherwise inconsistent with,
any state or federal law, rule or regulation.
In connection with the obtaining of any Required
Consent, neither Buyer nor any of its affiliates shall be required to agree to,
or provide any consents or waivers with respect to, any new or amended term or
condition contained in any franchise, license, approval
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or agreement held by any affiliate of Buyer, or affecting cable television
systems currently operated by any affiliate of Buyer in the State of
Massachusetts.
(b) Seller shall have obtained the Required
Consents, including consents and approvals of other persons or parties as may be
required for the assignment of the Business Contracts, or Seller shall have
provided, at its own expense, a substantially equivalent facility, product or
service, reasonably acceptable to Buyer, as currently provided by any such
Business Contract, or Seller shall provide Buyer the benefit of any such
Business Contract by remaining a party thereto, PROVIDED, THAT, Buyer shall
indemnify and hold Seller harmless for any and all costs and expenses incurred
after the Closing in connection therewith to the extent Buyer would have
incurred such costs and expenses had the applicable Business Contract been
assigned to Buyer.
(c) Notwithstanding anything to the contrary in
this Section 7.1, if Seller obtains any consents contemplated by Section 7.1(a)
hereof subject to any conditions other than those contemplated by such Section
7.1(a), Seller shall be deemed to comply with Section 7.1(a) if Seller (i)
performs or otherwise satisfies such conditions on or prior to the Closing Date,
or (ii) agrees to perform or otherwise satisfy such conditions at its own
expense (including, without limitation, by paying Buyer to perform such
conditions) after the Closing Date and indemnifies and holds Buyer harmless from
any direct loss, liability or expense incurred in connection therewith.
7.2 NO MATERIAL ADVERSE CHANGES. Between the date of
this Agreement and the Closing Date, there shall have been no material adverse
change to the business, financial condition or the results of operations of the
System (taken as a whole) or to the System Assets (taken as a whole), nor shall
Seller have suffered any damage (whether or not covered by insurance) by fire or
other casualty to the System Assets which (i) materially and adversely affects
the business, financial condition or results of operations of the System (taken
as a whole) or the operation of the System Assets (taken as a whole) and
(ii) has not been substan-
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tially repaired or replaced or provisions for repair or replacement made prior
to the Closing Date.
7.3 REPRESENTATIONS AND COVENANTS. The
representations and warranties of Seller set forth in this Agreement, the
Ancillary Agreements or in any agreement, instrument, Schedule, Exhibit or other
documents to be delivered by Seller pursuant hereto shall be true and correct
when made and on and as of the Closing Date with the same effect as if made on
and as of the Closing Date (except for (i) representations and warranties which
speak as of a specified date which need to be true and correct only as of such
specified date and (ii) any breaches or inaccuracies which, individually or in
the aggregate, is not reasonably likely to have a Material Adverse Effect),
PROVIDED, HOWEVER, any breach or inaccuracy which is due to a material adverse
change resulting from factors generally applicable to the CATV industry in
Massachusetts, as a whole, shall not be deemed a breach or inaccuracy for
purposes of this Section 7.3; and Seller shall have performed and complied in
all material respects with all material covenants and agreements required by
this Agreement to be performed or complied with on or before the Closing Date.
7.4 LEGAL PROCEEDINGS. No action, suit or proceeding
shall have been instituted against any of the parties to this Agreement before
any court or governmental department, agency or commission which would restrain,
prohibit or otherwise invalidate this Agreement or the consummation of the
transactions contemplated hereby (other than an action or proceeding instituted
or threatened by Buyer or any affiliate of Buyer).
7.5 DELIVERIES AT CLOSING. Seller shall have
delivered to Buyer on or before the Closing all agreements, instruments and
documents required to be delivered pursuant to Section 9 below.
7.6 HSR ACT WAITING PERIOD. All waiting periods
applicable to this Agreement and transactions contemplated hereby under the HSR
Act shall have expired or terminated without objection by the Federal Trade
Commission ("FTC") or the United States Department of Justice ("USDOJ").
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7.7 CASH FLOW. Seller shall have provided evidence
reasonably satisfactory to Buyer that the product of (x) total running rate Cash
Flow from the operation of the System for the most recent three completed full
months prior to the Closing, multiplied by (y) four (the "Closing Date Cash
Flow") is equal to at least Three Million Five Hundred Twenty Four Thousand
Dollars ($3,524,000).
7.8 NUMBER OF SUBSCRIBERS. Seller shall have provided
evidence reasonably satisfactory to Buyer that, as of the Closing Date, the
System has at least 15,500 Basic Subscribers.
8. CONDITIONS OF SELLER'S OBLIGATIONS. The obligations of
Seller to be performed under this Agreement on the Closing Date are subject to
the conditions hereinafter set forth, any one or more of which may be waived in
whole or in part by Seller by giving written notice to Buyer to that effect:
8.1 CONSENTS. Buyer shall have obtained all consents,
approvals, permits, licenses or authorization from any and all public
authorities that Buyer is required under applicable law in connection with the
consummation of the transactions contemplated hereby.
8.2 REPRESENTATIONS AND COVENANTS. The
representations and warranties of Buyer set forth in this Agreement and the
Ancillary Agreements the Marketing and Distribution Agreement, a form of which
is attached hereto as Exhibit O (the "Marketing Agreement"), or in any
agreement, instrument, Schedule, Exhibit or other document to be delivered by
Buyer pursuant hereto and the representations and warranties of CSC set forth in
the guaranty, a form of which is attached hereto as Exhibit L (the "Guaranty"),
and the registration rights agreement, a form of which is attached hereto as
Exhibit M (the "Registration Rights Agreement"), to be delivered by CSC on the
Closing Date, as the case may be, shall be true and correct, when made and on as
of the Closing Date with the same effect as if made on and as of the Closing
Date (except for (i) representations and warranties which speak as of a
specified date which need to be true and correct only as of such specified date
and (ii) any breaches or inaccuracies which, individually or in the aggregate,
will not materially impair the ability of Buyer or CSC, as the case may be, to
perform its obligations under this Agreement); and Buyer shall have performed
and complied
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in all material respects with all covenants and agreements required by this
Agreement to be performed or complied with on or before the Closing Date.
8.3 LEGAL PROCEEDINGS. No action, suit or proceeding
shall have been instituted against any of the parties to this Agreement before
any court or governmental department, agency or commission which would restrain,
prohibit, or otherwise invalidate this Agreement or the consummation of the
transactions contemplated hereby (other than an action or proceeding instituted
or threatened by Seller or an affiliate of Seller).
8.4 DELIVERIES AT CLOSING. Buyer and CSC shall have
delivered to Seller on or before the Closing all agreements, instruments and
documents required to be delivered pursuant to Section 10 below by Buyer or CSC,
as the case may be.
8.5 HSR ACT WAITING PERIOD. All waiting periods
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or terminated without objection by the FTC or the
USDOJ.
9. SELLER'S DELIVERIES AT CLOSING. On or prior to the
Closing, Seller shall deliver to Buyer or Buyer shall have otherwise obtained:
9.1 DEEDS, DOCUMENTS OF CONVEYANCE AND TRANSFER.
(a) A bill of sale and assignment, substantially in
the form attached hereto as Exhibit F;
(b) An assignment of lease with respect to each lease
of Real Property included in the System Assets, in form and substance reasonably
satisfactory to counsel to Buyer;
(c) An assignment of franchise with respect to each of
the franchises being assigned, in form and substance reasonably satisfactory to
counsel to Buyer;
(d) A bargain and sale deed or deeds with covenant
against grantor's acts for all Real Property listed on Schedule 4.4 and noted
thereon as being owned by Seller, in form and substance reasonably satisfactory
to counsel to Buyer;
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(e) An opinion of Cadwalader, Wickersham & Taft,
counsel for Seller, dated as of the Closing Date, substantially in the form
attached hereto as Exhibit G;
(f) An opinion of FCC counsel for Seller, dated as of
the Closing Date, substantially in the form attached hereto as Exhibit H;
(g) Non-compete agreements, dated as of the Closing
Date, substantially in the form attached hereto as Exhibit I (the "Non-Compete
Agreements") duly executed by Seller and its general partner; and
(h) Such other documents and instruments as Buyer may
reasonably request to convey the System Assets to Buyer and to consummate the
transactions contemplated hereby.
9.2 POWER OF ATTORNEY. A power of attorney from
Seller to Buyer authorizing the endorsement of any payments by check made with
respect to Accounts Receivable, subject to the provisions of Section 2.3(c)
hereof.
9.3. ANCILLARY AGREEMENTS. Indemnification Escrow
Agreement and Non-Compete Agreements duly executed by the Seller and its general
partner, as the case may be.
10. BUYER'S AND CSC'S DELIVERIES AT CLOSING. At the
Closing, Buyer and CSC, as the case may be, shall deliver to Seller:
10.1 ANCILLARY AGREEMENTS. The Buyer shall deliver the
Indemnification Escrow Agreement and Marketing Agreement duly executed by Buyer.
10.2 GUARANTY. CSC shall deliver the Guaranty duly
executed by CSC.
10.3 REGISTRATION RIGHTS AGREEMENT. CSC shall deliver
the Registration Rights Agreement and the Marketing Agreement in substantially
the form of Exhibit P hereto, each duly executed by CSC.
10.4 OPINION OF COUNSEL. Buyer shall deliver an
opinion of Buyer's counsel, dated as of the Closing Date, substantially in the
form attached hereto as Exhibit J.
10.5 OTHER DOCUMENTS. Buyer shall deliver such other
documents and instruments as Seller may reasonably request to consummate the
transactions contemplated hereby.
10.6 ASSUMPTION OF ASSUMED LIABILITIES; OTHER
DOCUMENTS.
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(a) One or more instruments evidencing Buyer's
assumption of the Assumed Liabilities in form and substance reasonably
satisfactory to counsel to Seller; and
(b) all other documents, records, data and
information required to be delivered by Buyer pursuant to the terms of this
Agreement.
10.7 PAYMENT. The Purchase Price and the Accounts
Receivable Price as set forth in Section 2.3.
11. BROKERAGE FEES. Except for Waller Capital Corporation
(whose fees and expenses will be paid by Seller), each party represents and
warrants to the other that it has not entered into any agreement with any
person, firm or corporation, or become indirectly a party to any such agreement,
nor has it taken any action nor is it aware of any facts which would result in
the assertion of any liability or claim for the payment of any commission,
brokerage or finder's fee in connection with the execution of this Agreement or
the consummation of the transactions contemplated herein.
12. INDEMNIFICATION BY SELLER AND BUYER.
12.1 SELLER'S INDEMNIFICATION LIABILITY. Subject to
the provisions of Sections 12.5, 12.6 and 15 hereof, and regardless of any
investigation made at any time by or on behalf of Buyer, Seller agrees, from and
after the Closing, to indemnify, defend and hold Buyer harmless from and against
and in respect of all loss, damage or liability (including reasonable legal fees
and expenses) resulting from:
(a) any and all debts, liabilities or obligations
(including without limitation, any liabilities in respect of any copyright or
licensing fees, and any lawsuit or other legal proceedings) of Seller, and any
and all claims and demands made in respect thereof relating in any way to, or
arising from the ownership, operation or control of the System or any System
Assets at or prior to Closing or arising from Seller's failure to file a Notice
of Bulk Transfer pursuant to the Uniform Commercial Code (except for the Assumed
Liabilities and except to the extent expressly assumed in writing by Buyer under
any Authorization or CATV Instrument) (collectively, "Pre-Closing Liabilities");
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(b) any breach or inaccuracy of any
representation or warranty, or any nonfulfillment of any agreement or covenant
on the part of Seller under this Agreement, or from any misrepresentation in or
omission from any Exhibit, Schedule, Certificate or other instrument furnished
or to be furnished to Buyer hereunder (for purposes of this subsection (b), all
representations and warranties shall be deemed to have been made as of the date
of this Agreement and as of the Closing Date, except for representations and
warranties that were expressly made as of a specific date, which need to be true
and correct only as of such specific date);
(c) any Taxes referred to in Section 4.22 (a "Tax
Liability"); or
(d) any lawsuit, obligation or other liability
arising out of any dispute between or among any or all of the partners or former
partners of Seller (a "Partner Dispute").
Notwithstanding anything set forth in this
Section 12.1, Buyer shall not be entitled to any indemnity hereunder with
respect to (i) the number of Basic Subscribers on and as of the close of
business on the Closing Date, as to which the sole remedy of Buyer shall be the
Purchase Price Adjustment as set forth in Sections 2.4(a) and (b) hereof, (ii)
the amount of insurance proceeds received by Buyer with respect to any loss,
damage or liability (or such proceeds received by a third party to the extent
that they reduce Buyer's loss, damage or liability) or (iii) any breach of
Seller's representations and warranties for which a reduction was made to the
Purchase Price pursuant to Section 6.6 hereof.
For purposes of this Section 12 and for purposes
of determining whether Buyer is entitled to indemnification from Seller pursuant
to Section 12.1(b), any breaches of or inaccuracies in any representations and
warranties of Seller shall be determined without regard to any materiality
qualifications set forth in such representations or warranties, and all
references to the terms "material", "materially", "materiality", "Material
Adverse Effect" or any similar terms shall be ignored for purposes of
determining whether such representation or warranty was true and correct when
made.
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12.2 BUYER'S INDEMNIFICATION LIABILITY. Subject to the
provisions of Sections 12.5 and 15 hereof, Buyer agrees, from and after the
Closing, to indemnify, defend and hold Seller (and its partners, agents and
employees) harmless from and against and in respect of any loss, damage or
liability (including reasonable legal fees and expenses) resulting from:
(a) any breach or inaccuracy of any
representation or warranty, or any nonfulfillment of any agreement or covenant
on the part of Buyer under this Agreement, or from any misrepresentation in or
omission from any Exhibit, Schedule, Certificate or other instrument furnished
or to be furnished to Seller hereunder; and
(b) any of the Assumed Liabilities.
For purposes of this Section 12 and for purposes
of determining whether Seller is entitled to indemnification from Buyer pursuant
to Section 12.2(a), any breaches of or inaccuracies in any representations and
warranties of Buyer shall be determined without regard to any materiality
qualifications set forth in such representations or warranties, and all
references to the terms "material", "materially", "materiality" or any similar
terms shall be ignored for purposes of determining whether such representations
or warranty was true and correct when made.
12.3 PROCEDURES. In the event that any claim shall be
asserted against a party entitled to indemnification hereunder (the
"Indemnitee") the Indemnitee shall promptly notify the other party (the
"Indemnitor") of such claim, and shall extend to the Indemnitor an opportunity
to defend against such claim, at the Indemnitor's sole expense. Within 15 days
of receiving any such notice from the Indemnitee, the Indemnitor must notify the
Indemnitee as to whether or not the Indemnitor elects to assume the defense of
any such claim. In the event Indemnitor does not so elect to assume such
defense, any costs incurred by the Indemnitee in defending such claim shall be
indemnified pursuant to and in accordance with this Section 12. In the event
Indemnitor does elect to assume such defense, the Indemnitee shall, at its
option and expense, have the right to participate in any defense undertaken by
the Indemnitor with legal counsel of its own selection, provided that such
counsel is reasonably acceptable to the
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Indemnitor. No settlement or compromise of any claim which may result in an
indemnification liability may be made by the Indemnitor without the prior
written consent of the Indemnitee, which consent may not be unreasonably
withheld, unless prior to such settlement or compromise the Indemnitor
acknowledges in writing its obligation to pay in full the amount of the
settlement or compromise and all associated expenses.
12.4 PAYMENT OF INDEMNIFICATION LIABILITIES. The
Indemnitor shall promptly pay the Indemnitee any amounts owed hereunder. All
amounts to be paid by an Indemnitor under this Section 12 shall include the
Indemnitee's actual costs and attorneys' fees, including, without limitation,
fees on appeal, that are incurred against or in determining responsibility for a
claim whether or not any suit or action has been instituted (it being understood
that such costs and fees shall be counted toward and subject to any applicable
deductible or limitation of liability under this Section 12). In the event that
Seller is the Indemnitor, Buyer shall offset amounts against the principal
amount payable under the Indemnification Note. In the event that Buyer is the
Indemnitor, Buyer shall pay the indemnification liabilities to Seller in
immediately available funds. Any amounts not paid by Buyer when due under this
Section 12.4 shall bear interest from the due date thereof until the date paid
at a rate equal to the lesser of the Prime Rate plus three percent per annum or
the highest legal rate permitted by applicable law. For purpose of this Section
12.4, an indemnification liability becomes due on the earlier of (i) the entry
of a final order, judgment or decree of a court of competent jurisdiction with
respect to the related claim, (ii) the date of the effectiveness of the
settlement or compromise of such claim or (iii) the date upon which Buyer and
Seller agree in writing with respect to the amount of such indemnification
liability.
12.5 EXCLUSIVE REMEDY. Seller and Buyer covenant and
agree that, if the Closing occurs, the remedies of offset against the
Indemnification Note provided pursuant to the Indemnification Escrow Agreement
and this Section 12 shall be the exclusive remedies to which Buyer is entitled
for any breach of any representation, warranty, covenant or other term or
provision of this Agreement or any Exhibit, Certificate, Agreement, Schedule or
other doc-
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ument or instrument delivered in connection herewith or with the consummation of
the transactions contemplated hereby except as provided in the Non-Compete
Agreements and except for (i) in the case of a breach by Seller, any and all
claims relating to Pre-Closing Liabilities, Taxes or Partners' Disputes, and
(ii) in either case, any fraudulent or intentional misrepresentations of Buyer
or Seller, as the case may be, contained herein or therein, as to which, in the
case of both (i) and (ii), the time and dollar limitations set forth in this
Section 12 and in Section 15 shall expressly not apply and Seller and Buyer,
respectively, shall retain all of their rights and remedies at law and in
equity.
12.6 LIMITATIONS ON SELLER'S INDEMNITY OBLIGATION.
Buyer acknowledges and agrees that the maximum liability of Seller after the
Closing under this Section 12 is the amounts due and payable under the
Indemnification Note except for (i) any and all claims relating to Pre-Closing
Liabilities, Taxes or Partners' Disputes and (ii) fraudulent or intentional
misrepresentations of Seller contained herein, as to which, in the
case of both (i) and (ii), the time and dollar limitations set forth in this
Section 12 and Section 15 shall expressly not apply and Buyer shall retain all
of its rights and remedies at law and in equity. Buyer further agrees that,
except for (i) any and all claims relating to Pre-Closing Liabilities, Taxes or
Partners' Disputes and (ii) fraudulent or intentional misrepresentations of
Seller contained herein, Buyer shall not be entitled to indemnity under this
Section 12 unless and until the total amount claimed as indemnity equals or
exceeds $44,500 (the "Deductible"), and only to the extent greater than the
Deductible.
12.7 NON-RECOURSE TO SELLER'S PARTNERS. The Buyer
hereby acknowledges that the Seller is a limited partnership and agrees that,
for the payment or performance of any of Seller's obligations hereunder and
under all other Schedules, Exhibits, Agreements, Certificates and other
documents and instruments delivered in connection herewith or with the
consummation of the transactions contemplated hereby, or damages for the failure
of performance thereof, except for (i) any and all claims relating to Pre-
Closing Liabilities, Taxes or Partners' Disputes and (ii) fraudulent or
intentional misrepresentations of Seller contained herein or
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therein, as to which, in the case of both (i) and (ii), the time and dollar
limitations set forth in this Section 12 and in Section 15 shall expressly not
apply and Buyer shall retain all of its rights and remedies at law and in
equity, notwithstanding anything to the contrary in this Agreement or under
applicable law; Buyer shall have recourse only against the Indemnification Note;
and Buyer shall have no recourse whatsoever to the assets or person of any of
the partners in Seller, corporate or individual, general or limited, past,
present or future, and no such partner of Seller shall be liable for any such
payment or performance or for damages in respect of the failure thereof, all of
which recourse to the assets or person of any such partner is hereby waived and
released by Buyer.
13. PRESERVATION OF RECORDS. Buyer covenants that it will
preserve and make available (including the right to inspect and copy) to Seller,
its attorneys and accountants, for a reasonable period of time from and after
the Closing Date (and in no case for a period less than seven years) and during
normal business hours, such of the books, records, files, correspondence,
memoranda and other documents transferred pursuant to this Agreement as Seller
may reasonably require in connection with any legitimate purpose, including, but
not limited to, the defense or prosecution of any claims (whether brought by or
against Buyer or otherwise), the preparation of tax reports and returns and
audits thereof and the preparation of financial statements and, further, that
Buyer will preserve and make available to Seller during normal business hours
such books, records and other items as Seller may request for the purpose of
preparing an Objection Notice as contemplated by Section 2.4(b) hereof.
14. NON-ASSIGNABLE CONTRACTS. Nothing contained in this
Agreement shall be construed as an assignment or an attempted assignment of any
contract which is in law non-assignable without the consent of the other party
or parties thereto, unless such consent shall be given.
15. SURVIVAL OF OBLIGATIONS. All representations,
warranties, indemnities and other agreements made by Seller and Buyer in this
Agreement, or pursuant hereto, shall survive the Closing for a period commencing
on the Closing Date and ending at midnight on the date of
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the fifteen month anniversary of the Closing Date, regardless of any
investigation at any time made by or on behalf of Buyer or Seller, and shall not
be deemed merged in any document or instrument executed or delivered at the
Closing, PROVIDED, HOWEVER, that Buyer has complied with its obligations
pursuant to Section 6.3(f) hereof. Notwithstanding the previous sentence, the
agreements contained in Sections 2.2, 6.3(g), 6.4, Section 12 (except to the
extent that the survival of the representations and warranties is limited to 15
months pursuant to the previous sentence), 13, 15, 17.2, 17.8, and 17.14 shall
survive the Closing indefinitely.
16. TERMINATION. This Agreement may be terminated as
follows:
(a) This Agreement may be terminated at any time prior
to the Closing Date by mutual written agreement between Buyer and Seller;
(b) If the Closing shall not have occurred on or prior
to July 15, 1994, either Buyer or Seller shall have the right to terminate this
Agreement by giving written notice of termination to the other party; PROVIDED,
HOWEVER, that if the Closing has not occurred by July 15, 1994, because the
approval of the appropriate public regulatory agency has not been obtained or
has not yet become final and non-appealable, or for any reason related to or
arising out of obtaining the approval of the appropriate public regulatory
agency, neither party shall have the right to terminate this Agreement pursuant
to this Section; PROVIDED, FURTHER, HOWEVER, that a party may not terminate this
Agreement pursuant to this Section 16(b) if such party is in material breach of
its obligations under this Agreement;
[Paragraph (c) intentionally omitted.
(d) This Agreement may be terminated by Buyer, at its
sole option, by giving written notification to Seller of such termination, if
either (i) Buyer has terminated the Asset Purchase Agreement, dated as of
October 26, 1993, between Monmouth Cablevision Associates and Buyer pursuant to
Section 16(d) thereof, or (ii) Buyer has not received, at or prior to 2 p.m. on
Monday, November 15, 1993, a written notification signed by each of the
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general partners of the Seller to the effect that such general partners have
received all the consents required under Seller's Partnership Agreement (as in
effect on the date hereof), in connection with the transactions contemplated by
this Agreement.
Upon termination of this Agreement pursuant to this
Section 16, all filings, applications and other submissions relating to the
transactions contemplated hereby shall, to the extent practical, be withdrawn
from the agency or other person to which made.
17. MISCELLANEOUS.
17.1 LIABILITY OF BUYER. Seller and Buyer acknowledge
and agree that the sole liability of Buyer for its failure to consummate the
transactions contemplated hereby after satisfaction of the conditions set forth
in Section 7 hereof shall be as set forth in the Escrow Agreement.
17.2 INDULGENCES, ETC. Neither the failure nor any
delay on the part of either party to exercise any right, remedy, power or
privilege under this Agreement (a "Right") shall operate as a waiver thereof,
nor shall any single or partial exercise of any Right preclude any other or
further exercise of the same or of any other Right, nor shall any waiver of any
Right with respect to any occurrence be construed as a waiver of such Right with
respect to any other occurrence. No waiver shall be effective unless it is in
writing and is signed by the party asserted to have granted such waiver.
17.3 CONTROLLING LAW. This agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflict-of-laws.
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<PAGE>
17.4 NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
delivered personally, by courier service such as Federal Express, or by other
messenger, when deposited in the United States mails, registered or certified
mail, postage prepaid, return receipt requested or transmitted by facsimile
(followed promptly by a copy deposited in the United States mails), in each
case, addressed as set forth below or to such other address or other person as
any party may designate by written notice to the other parties hereto:
(i) If to Seller:
Framingham Cablevision Associates, Limited
Partnership
c/o Framingham Cablevision Inc.
1253 Worcester Road
Framingham, Massachusetts 01701
with a copy, given in the manner prescribed above, to:
Jonathan M. Wainwright, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Telecopy: (212) 504-6666
(ii) If to Buyer:
Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
ATTENTION: General Counsel
with a copy, given in the manner prescribed above, to:
George H. White, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
17.5 EXHIBITS AND SCHEDULES. All Exhibits and
Schedules attached hereto are hereby incorporated by reference into, and made a
part of, this Agreement.
17.6 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and
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<PAGE>
permitted assigns. No party may assign or transfer its rights or obligations
under this Agreement without the prior written consent of the other party
hereto; PROVIDED, HOWEVER, that Buyer may assign the Agreement to CSC or to a
direct or indirect wholly-owned subsidiary of CSC prior to the filing of a
petition or application with the appropriate public authorities to approve or
transfer any of the Authorizations.
17.7 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. In proving this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the signatures
of all of the parties reflected hereon as the signatories.
17.8 SEVERABILITY. If any provision of this Agreement
or the Ancillary Agreements is held illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall not affect any other provision
hereof. Such provision and the remainder of this Agreement or the Ancillary
Agreements shall, in such circumstances, be deemed modified to the extent
necessary to render enforceable the remaining provisions hereof, so long as such
modification does not affect the original intent of the parties hereto.
17.9 ENTIRE AGREEMENT. This Agreement, the Ancillary
Agreements, including the Schedules and Exhibits hereto, the Master Agreement
executed by Buyer and Seller as of the date hereof and other instruments and
documents referred to herein or delivered pursuant hereto, represent the entire
understanding among the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written
(including, without limitation, any documents or information given to Buyer),
except as herein contained. The express terms hereof control and supersede any
course of performance and/or usage of the
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<PAGE>
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing signed by each of the
parties hereto.
17.10 SECTION HEADINGS. The section headings in
this Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
17.11 NO THIRD PARTY RIGHTS. Nothing in this
Agreement, express or implied, shall be construed to confer upon any person,
other than the parties hereto, their successors and permitted assigns, any legal
or equitable rights, remedies, claims, obligations or liabilities under or by
reason of this Agreement.
17.12 EXPENSES. Except as otherwise expressly
provided herein, each party hereto shall pay its own expenses incident to this
Agreement and the transactions contemplated hereunder, including all legal and
accounting fees and disbursements, and costs of obtaining all necessary
consents.
17.13 FURTHER ASSURANCES. The parties hereto will
use their reasonable efforts to comply with all legal requirements imposed on
them with respect to the transactions contemplated by this Agreement. Each
party agrees to execute and deliver any and all further agreements, documents or
instruments reasonably necessary to effectuate this Agreement and the
transactions referred to herein, contemplated hereby or reasonably requested by
the other party to perfect or evidence its rights hereunder. Each of Seller and
Buyer will use its best efforts to effect an early transfer of the System Assets
contemplated by this Agreement and to complete the transactions contemplated by
this Agreement as promptly as practicable and will promptly notify the other
party of any information delivered to or obtained by such party concerning an
event that would prevent the consummation of the transactions contemplated by
this Agreement.
17.14 CONFIDENTIAL INFORMATION. In the event this
Agreement is terminated for any reason, Buyer shall keep and shall take
reasonable steps to cause its attorney's, accountants, lenders and lender's
attorney's to keep confidential any and all information obtained from Seller in
connection with this Agreement and the transactions contemplated hereby, will
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<PAGE>
not utilize such information for any purpose, and will promptly return to Seller
all documents, work papers and other written materials (and all documents
reflecting or incorporating such information) obtained by it in connection with
this Agreement or the transactions contemplated hereby.
17.15 BULK TRANSFER. Buyer acknowledges that
Seller has not and will not file any Notice of Bulk Transfer pursuant to the
Uniform Commercial Code, and Buyer hereby waives any and all rights it might
have under those provisions.
17.16 PUBLIC ANNOUNCEMENTS. The parties hereto
agree to cooperate in the making of any public announcements relating to the
execution of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
CABLEVISION MFR, INC.
By: /s/
Authorized Officer
FRAMINGHAM CABLEVISION ASSOCIATES, LIMITED
PARTNERSHIP
By: Framingham Cablevision, Inc.
General Partner
By: /s/
Authorized Officer
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<PAGE>
- - --------------------------------------------------------------------------------
CREDIT AGREEMENT
$285,000,000
CABLEVISION MFR, INC.
CABLEVISION OF MONMOUTH, INC.
CABLEVISION OF RIVERVIEW, INC.
NATIONSBANK OF TEXAS, N.A., AS
ADMINISTRATIVE LENDER
NATIONSBANK OF TEXAS, N.A.
CORESTATES BANK, N.A.
NATIONAL WESTMINSTER BANK USA
THE TORONTO-DOMINION BANK
PNC BANK, NATIONAL ASSOCIATION
THE BANK OF NOVA SCOTIA
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
THE BANK OF NEW YORK
- - --------------------------------------------------------------------------------
<PAGE>
CREDIT AGREEMENT
CABLEVISION MFR, INC.
CABLEVISION OF MONMOUTH, INC.
CABLEVISION OF RIVERVIEW, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting and Other Terms . . . . . . . . . . . . . . 20
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.01. Advances Under the Revolving Credit Loans . . . . . . . 21
SECTION 2.02. Making Advances . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.04. Reduction of Commitment . . . . . . . . . . . . . . . . 23
SECTION 2.05. Repayment of the Revolving Credit Loans . . . . . . . . 25
SECTION 2.06. Prepayments and Repayments . . . . . . . . . . . . . . 26
SECTION 2.07. Interest on Advances . . . . . . . . . . . . . . . . . 28
SECTION 2.08. Computations and Manner of Payments . . . . . . . . . . 28
SECTION 2.09. Yield Protection; Taxes . . . . . . . . . . . . . . . . 29
SECTION 2.10. Calculation of LIBOR Rate . . . . . . . . . . . . . . . 31
SECTION 2.11. Quotation of Rates . . . . . . . . . . . . . . . . . . 31
SECTION 2.12. Booking Loans . . . . . . . . . . . . . . . . . . . . . 31
SECTION 2.13. Collateral and Collateral Call . . . . . . . . . . . . 31
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.01. Letter of Credit Commitment . . . . . . . . . . . . . . 32
SECTION 3.02. Application for and Issuance of Letters of Credit . . . 32
SECTION 3.03. Commission; Payment of Drafts Drawn Under Letters of
Credit; Incorporation of Terms of the Applications . . 33
SECTION 3.04. Failure to Pay Draws on Letters of Credit . . . . . . . 33
(i)
<PAGE>
SECTION 3.05. Reimbursement Obligation of the Lenders . . . . . . . . 34
SECTION 3.06. Sharing of Payments . . . . . . . . . . . . . . . . . . 34
SECTION 3.07. Duties of the Administrative Lender . . . . . . . . . . 34
SECTION 3.08. Lenders, Generally . . . . . . . . . . . . . . . . . . 35
SECTION 3.09. General Provisions . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. Conditions Precedent to the Closing Date . . . . . . . 35
SECTION 4.02. Conditions Precedent to the Initial Advance or the
Initial Issuance of Letters of Credit . . . . . . . . . 36
SECTION 4.03. Conditions Precedent to All Advances (other than
Refinancing Advances) . . . . . . . . . . . . . . . . . 39
SECTION 4.04. Conditions Precedent to the Issuance of Each Letter of
Credit . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Organization, Qualification and Capitalization . . . . 41
SECTION 5.02. Due Authorization; Validity . . . . . . . . . . . . . . 41
SECTION 5.03. Conflicting Agreements and Other Matters . . . . . . . 42
SECTION 5.04. Financial Statements . . . . . . . . . . . . . . . . . 42
SECTION 5.05. Litigation . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.06. Compliance With Laws Regulating the Incurrence of Debt 43
SECTION 5.07. Authorizations, Title to Properties and Related
Matters . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.08. Outstanding Debt . . . . . . . . . . . . . . . . . . . 44
SECTION 5.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.11. Environmental Matters . . . . . . . . . . . . . . . . . 45
SECTION 5.12. Disclosure . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.13. Certain Agreements . . . . . . . . . . . . . . . . . . 45
SECTION 5.14. Valid Issuance of Securities . . . . . . . . . . . . . 46
SECTION 5.15. Certain Fees . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.16. Intellectual Property . . . . . . . . . . . . . . . . . 46
SECTION 5.17. Application of Representations and Warranties;
Survival . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.18. Acquisitions . . . . . . . . . . . . . . . . . . . . . 46
(ii)
<PAGE>
ARTICLE VI
AFFIRMATIVE COVENANTS
SECTION 6.01. Compliance with Laws . . . . . . . . . . . . . . . . . 47
SECTION 6.02. Insurance . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.03. Inspection Rights . . . . . . . . . . . . . . . . . . . 48
SECTION 6.04. Records and Books of Account; Changes in GAAP . . . . . 48
SECTION 6.05. Reporting Requirements . . . . . . . . . . . . . . . . 48
SECTION 6.06. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.07. Maintenance of Existence and Assets . . . . . . . . . . 51
SECTION 6.08. Payment of Taxes . . . . . . . . . . . . . . . . . . . 51
SECTION 6.09. Indemnity . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.10. Interest Rate Hedging . . . . . . . . . . . . . . . . . 53
SECTION 6.11. CMI and CRI . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.12. Maintenance of Assets . . . . . . . . . . . . . . . . . 53
SECTION 6.13. Authorizations and Material Agreements . . . . . . . . 53
SECTION 6.14. Post Closing Collateral Obligations of the Companies . 53
ARTICLE VII
NEGATIVE COVENANTS
SECTION 7.01. Financial Covenants . . . . . . . . . . . . . . . . . . 54
SECTION 7.02. Debt . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.03. Contingent Liabilities . . . . . . . . . . . . . . . . 55
SECTION 7.04. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.05. Management Fees . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.06. Dispositions of Assets . . . . . . . . . . . . . . . . 56
SECTION 7.07. Restricted Payments and Restricted Purchases . . . . . 56
SECTION 7.08. Merger; Consolidation; Investments . . . . . . . . . . 56
SECTION 7.09. Issuance of Capital Stock; Amendment of Charter or
Partnership Agreement . . . . . . . . . . . . . . . . . 56
SECTION 7.10. Business . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.11. Transactions with Affiliates . . . . . . . . . . . . . 56
SECTION 7.12. Sale or Discount of Receivables . . . . . . . . . . . . 57
SECTION 7.13. Non-Compete Agreements . . . . . . . . . . . . . . . . 57
SECTION 7.14. Sale and Leaseback . . . . . . . . . . . . . . . . . . 57
SECTION 7.15. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.16. Amendments and Waivers . . . . . . . . . . . . . . . . 57
SECTION 7.17. Employee Stock Incentive Program . . . . . . . . . . . 58
(iii)
<PAGE>
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. Events of Default . . . . . . . . . . . . . . . . . . . 58
SECTION 8.02. Remedies Upon Default . . . . . . . . . . . . . . . . . 63
SECTION 8.03. Cumulative Rights . . . . . . . . . . . . . . . . . . . 64
SECTION 8.04. Waivers . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.05. Control . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE IX
THE ADMINISTRATIVE LENDER
SECTION 9.01. Authorization and Action . . . . . . . . . . . . . . . 65
SECTION 9.02. Administrative Lender's Reliance, Etc. . . . . . . . . 65
SECTION 9.03. NationsBank of Texas, N.A. and Affiliates . . . . . . . 66
SECTION 9.04. Lender Credit Decision . . . . . . . . . . . . . . . . 66
SECTION 9.05. Indemnification by Lenders . . . . . . . . . . . . . . 66
SECTION 9.06. Successor Administrative Lender . . . . . . . . . . . . 67
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments and Waivers . . . . . . . . . . . . . . . . 67
SECTION 10.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.03. Parties in Interest . . . . . . . . . . . . . . . . . . 69
SECTION 10.04. Assignments and Participations . . . . . . . . . . . . 69
SECTION 10.05. Sharing of Payments . . . . . . . . . . . . . . . . . . 70
SECTION 10.06. Costs, Expenses, and Taxes . . . . . . . . . . . . . . 71
SECTION 10.07. Rate Provision . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.08. Severability . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.09. Exceptions to Covenants . . . . . . . . . . . . . . . . 72
SECTION 10.10. Counterparts . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.11. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.12. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . 73
SECTION 10.13. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . 73
SECTION 10.14. Joint and Several Obligations . . . . . . . . . . . . . 73
SECTION 10.15. Dissemination of Information . . . . . . . . . . . . . 73
SECTION 10.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.17. Release of CMFRI . . . . . . . . . . . . . . . . . . . 75
SECTION 10.18. Termination . . . . . . . . . . . . . . . . . . . . . . 75
(iv)
<PAGE>
$285,000,000
CABLEVISION MFR, INC.
CABLEVISION OF MONMOUTH, INC.
CABLEVISION OF RIVERVIEW, INC.
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of June 15, 1994, and is among
CABLEVISION MFR, INC., a Delaware corporation ("CMFRI"), CABLEVISION OF
MONMOUTH, INC., a Delaware corporation ("CMI") and CABLEVISION OF RIVERVIEW,
INC., a Delaware corporation ("CRI"), the Lenders from time to time party hereto
or to an Assignment and Acceptance, and NATIONSBANK OF TEXAS, N.A., a national
banking association, individually and as the Administrative Lender.
WITNESSETH:
WHEREAS, the Companies have requested a reducing revolving loan in the
maximum aggregate amount outstanding of $285,000,000 (of which $3,000,000 may be
used for Letters of Credit) from the Lenders, the proceeds of which will be used
in accordance with the terms of this Agreement, and the Lenders have agreed to
make such loans pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following terms
have the respective meanings indicated below (such meanings to be applicable
equally to both the singular and plural forms of such terms):
"ACQUISITIONS" means those certain acquisitions by CMFRI of the assets of
Riverview Cablevision Associates, L.P. and Monmouth Cablevision Associates
pursuant to the Acquisition Agreements.
"ACQUISITION AGREEMENTS" means that certain Asset Purchase Agreement, dated
as of October 26, 1993, between Riverview Cablevision Associates, L.P. and
CMFRI, and that certain Asset Purchase Agreement, dated as of October 26, 1993,
between Monmouth Cablevision Associates and CMFRI, as each such agreement may be
amended as permitted pursuant to Section 7.16 hereof.
<PAGE>
"ADMINISTRATIVE LENDER" means NationsBank of Texas, N.A., a national
banking association, in its capacity as the Administrative Lender hereunder, or
any successor Administrative Lender appointed pursuant to Section 9.06 hereof.
"ADVANCE" means an advance made by a Lender to any Company pursuant to
Section 2.01 or Section 3.03 hereof.
"AFFILIATE" of any Person means (i) any director (or Person holding the
equivalent position) or officer (or Person holding the equivalent position) of
such Person or of any Affiliate of such Person, (ii) any other Person which,
directly or indirectly through one or more intermediaries, controls or is
controlled by or under common control with such Person (excluding any trustee
under, or any committee with responsibility for administering, any Plan),
including, without limitation, if such other Person possesses, directly or
indirectly, power to vote 10% or more of the securities having ordinary voting
power, or if not having ordinary voting power, having at the time voting power,
for the election of directors of such Person or to direct or cause the direction
of management and policies of such Person whether by contract or otherwise,
including any general partner and (iii) any other Person who is a member of the
immediate family of such Person or is the executor, administrator or other
personal representative of such Person.
"AGGREGATE ADVANCE" means, collectively, each set of Advances made by the
Lenders on the same date made under the Revolving Credit Loans, bearing interest
at the same rate, and, with respect to LIBOR Advances, having the same Interest
Period.
"AGREEMENT" means this Credit Agreement, as hereafter amended, modified, or
supplemented in accordance with its terms.
"ANNUALIZED OPERATING CASH FLOW" means, as of any date of determination,
the product of (a) Operating Cash Flow for the Companies' most recently ended
three month period for which cash flow statements have been delivered to the
Administrative Lender times (b) four.
"APPLICABLE ENVIRONMENTAL LAWS" means any and all applicable federal,
state, local and foreign laws, rules or regulations, and any orders or decrees,
in each case as now or hereafter in effect, relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the environment,
including, without limitation, ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or toxic or hazardous substances
or wastes.
"APPLICABLE LAW" means in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, and all orders and decrees of all
courts and arbitrators in proceedings or actions
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<PAGE>
to which the Person in question is a party, including, without limitation,
Applicable Environmental Laws.
"APPLICABLE MARGIN" means (a) with respect to Base Rate Advances, 7/8ths of
1% per annum and (b) with respect to LIBOR Advances, 1 and 7/8% per annum.
Notwithstanding the foregoing, effective upon receipt by the Administrative
Lender from the Companies of a Compliance Certificate delivered to the Lenders
pursuant to Section 6.05(e) hereof and demonstrating a change in the Leverage
Ratio to an amount so that another Applicable Margin should be applied pursuant
to the table set forth below, the Applicable Margin for each type of Advance
shall mean the respective amount set forth below opposite such relevant Leverage
Ratio in Columns A and B below, until receipt by the Administrative Lender from
the Companies of a Compliance Certificate, demonstrating a change in the
Leverage Ratio to an amount so that another Applicable Margin shall be applied;
provided that if the Leverage Ratio shall at any time exceed or equal 6.00 to
1.00, the Applicable Margin shall again be the respective amounts first set
forth in this definition; provided, further, that in order to obtain an
adjustment to a lower Applicable Margin the Companies must request such
adjustment in writing; and provided further, that if any Company fails to
deliver any financial statements to the Administrative Lender within any
required time period set forth in Section 6.05(a), (b) or (c) hereof, the
Applicable Margin shall be adjusted retroactively, effective on the latest date
such financial statements should have been received to remain in compliance with
such Section.
COLUMN A COLUMN B
LEVERAGE RATIO BASE RATE LIBOR
- - -------------- --------- -----
Greater than or equal
to 6.00 to 1.00 7/8 of 1% 1 and 7/8%
Greater than or equal
to 5.50 to 1.00 but less than
6.00 to 1.00 5/8 of 1% 1 and 5/8%
Greater than or equal to
5.00 to 1.00 but less
than 5.50 to 1.00 1/2 of 1% 1 and 1/2%
Greater than or equal to
4.50 to 1.00 but less
than 5.00 to 1.00 1/2 of 1% 1 and 1/4%
Greater than or equal to
4.00 to 1.00 but less than
4.50 to 1.00 0% 1%
Less than 4.00 to 1.00 0% 3/4 of 1%
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<PAGE>
"APPLICATION" shall mean any Application and Agreement for Letter of Credit
delivered to the Administrative Lender by the Notification Agent on behalf of
any Company pursuant to Article III and substantially in the form attached
hereto as EXHIBIT C.
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Administrative
Lender and each of the Companies, as applicable, in substantially the form
attached hereto as EXHIBIT A.
"ASSIGNOR" has the meaning ascribed thereto in Section 10.04(a) hereof.
"AUDITOR" means KPMG Peat Marwick or other independent certified public
accountants selected by the Companies and reasonably acceptable to the
Administrative Lender.
"AUTHORIZATIONS" means all filings, recordings and registrations with, and
all validations or exemptions, approvals, orders, authorizations, consents,
Licenses, certificates and permits from, the FCC, applicable public utilities
and other federal, state and local regulatory or governmental bodies and
authorities or any subdivision thereof, including, without limitation, CATV
Franchises.
"AUTHORIZED OFFICER" means the Chief Executive Officer, Vice Chairman,
Senior Vice President-Finance and Treasurer of each Company, and any other
officer authorized by the Companies from time to time and of which the
Administrative Lender has been notified in writing.
"BASE RATE" means a fluctuating rate per annum as shall be in effect from
time to time equal to the lesser of (a) the Applicable Margin plus the higher of
(i) the rate of interest as then in effect announced publicly by NationsBank of
Texas, N.A. in Dallas, Texas from time to time as its U.S. dollar prime
commercial lending rate (which rate may or may not be the lowest rate of
interest charged by NationsBank of Texas, N.A. from time to time) and (ii) the
sum of the Federal Funds Rate plus .50%, or (b) the Highest Lawful Rate. The
Base Rate shall be adjusted automatically as of the opening of business on the
effective date of each change in the prime rate to account for such change.
"BASE RATE ADVANCE" means an Advance bearing interest at the Base Rate.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in Dallas, Texas or New York, New York, and, if the
applicable Business Day relates to a LIBOR Advance, on which dealings are
carried on in the London Interbank Market.
"CAPITAL EXPENDITURES" means expenditures that are required to be
capitalized for financial reporting purposes in accordance with GAAP, and in any
event shall include the aggregate amount of items leased or acquired under
Capital Leases at the cost of the item, and the acquisition of realty, tools,
equipment, and fixed assets, and any deferred costs associated with any of the
foregoing (excluding deferred lease payments under Capital Leases).
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<PAGE>
"CAPITALIZED LEASE OBLIGATIONS" means, with respect to the Companies and
the Subsidiaries, the amount of the obligations of the Companies and the
Subsidiaries under Capital Leases which would be shown as a liability on a
balance sheet of the Companies prepared in accordance with GAAP.
"CAPITAL LEASES" means capital leases and subleases, as defined in the
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 13, dated November 1976, as amended.
"CAPITAL STOCK" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital stock
of any Person that is a corporation and each class of partnership interests
(including without limitation, general, limited and preference units) in any
Person that is a partnership.
"CASH EQUIVALENTS" means investments (directly or through a money market
fund) in (a) certificates of deposit, repurchase agreements, and other interest
bearing deposits or accounts with United States commercial banks having a
combined capital and surplus of at least $100,000,000, or with insurance
companies whose debt obligations have one of the two highest ratings obtainable
from Standard & Poor's Corporation or Moody's Investors Services, Inc., which
certificates, repurchase agreements, deposits, and accounts mature within one
year from the date of investment, (b) obligations issued or unconditionally
guaranteed by the United States government, or issued by an agency thereof and
backed by the full faith and credit of the United States government, which
obligations mature within one year from the date of investment, (c) direct
obligations issued by any state or political subdivision of the United States,
which mature within one year from the date of investment and have the two
highest rating obtainable from Standard & Poor's Corporation or Moody's
Investors Services, Inc. on the date of investment, and (d) commercial paper
which has one of the two highest ratings obtainable from Standard & Poor's
Corporation or Moody's Investors Services, Inc.
"CATV FRANCHISE" means, collectively, with respect to the Companies and the
Subsidiaries (a) any franchise, license, permit, or easement granted by any
political jurisdiction or unit or other local, state or federal franchising
authority pursuant to which a Person has the right to operate a CATV System,
including without limitation, FCC Licenses, (b) any Pole Agreement, and (c) any
legislation, regulation, bill, ordinance, agreement or other instrument or
document issued by a franchising authority setting forth all or any part of the
terms of any FCC License or franchise, license, permit, or easement described in
clause (a) of this definition.
"CATV SYSTEM" means any cable distribution system owned or acquired by any
Company or any Subsidiary which receives or when operational, will receive,
audio, video, digital or other broadcast signals or information by cable,
optical, antennae, microwave or satellite transmission and which amplifies and
transmits such signals to persons who pay to receive such signals.
"CLOSING DATE" means the date hereof.
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<PAGE>
"CMFRI" has the meaning ascribed to such term in the Preamble of this
Agreement.
"CMI" has the meaning ascribed to such term in the Preamble of this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COLLATERAL" has the meaning ascribed thereto in Section 2.13 hereof.
"COMMITMENT" means $285,000,000, as reduced from time to time pursuant to
Section 2.04 hereof.
"COMPANIES" means, subject to the terms of Section 10.17 hereof, CMFRI, CMI
and CRI.
"COMPLIANCE CERTIFICATE" means a certificate of an Authorized Officer,
substantially in the form of EXHIBIT D hereto and acceptable to the
Administrative Lender and the Lenders (a) certifying that no Default or Event of
Default has occurred and (b) setting forth detailed calculations with respect to
compliance by the Companies with the Leverage Ratio as it affects the Applicable
Margin and each of the covenants described in Section 7.01 hereof.
"CONTROL" or "CONTROLLED BY" or "UNDER COMMON CONTROL" shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); provided, however, that in any event any Person which
beneficially owns, directly or indirectly, 10% or more (in number of votes) of
the securities having ordinary voting power for the election of directors of a
corporation shall be conclusively presumed to control such corporation.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with any Company or any Subsidiary, are treated as a single
employer under Section 414(b) or 414(c) of the Code.
"CRI" has the meaning ascribed to such term in the Preamble of this
Agreement.
"CSC" means Cablevision Systems Corporation, a Delaware corporation.
"DEBT" means, as to any Person, Capitalized Lease Obligations of such
Person and other Indebtedness for borrowed money (whether by loan or the
issuance and sale of debt securities) or for the deferred purchase or
acquisition price of property or services other than accounts payable incurred
in the ordinary course of business of such Person (except those accounts payable
relating to borrowed money); provided that, without limiting the generality of
the foregoing and without duplication, "Debt" shall in each case when applicable
to any Company include (a) all obligations of each such Company under Interest
Hedge Agreements or other
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<PAGE>
interest rate swap, cap or hedge agreements, (b) the Reimbursement Obligations
and all contingent obligations under each Letter of Credit, (c) all Indebtedness
that has been Guaranteed by such Company, and (d) all Indebtedness secured by
any Lien on any Property, regardless of whether such secured liability is with
or without recourse, except any such Indebtedness secured by Liens that are
permitted by subsections (b) and (e) of the definition of "Permitted Liens" in
Article I of this Agreement.
"DEBTOR RELIEF LAWS" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"DEFAULT" means any event specified in Section 8.01 hereof, whether or not
any requirement in connection with such event for the giving of notice, lapse of
time, or happening of any further condition has been satisfied.
"DIVIDEND" means, as to any Person, (a) any declaration or payment of any
dividend or distribution (other than a stock dividend) on, or the making of any
pro rata distribution, loan, advance, or investment to or in any holder (in its
capacity as a shareholder) of, any partnership interests or any shares of
Capital Stock of such Person, or (b) any purchase, redemption, or other
acquisition or retirement for value of any partnership interests or any shares
of Capital Stock of such Person.
"DOLAN FAMILY INTERESTS" means Charles F. Dolan, his spouse, his
descendants, or any spouse of any such descendant, and trusts for the benefit
of, INTER ALIA, him, his spouse, his descendants, or any spouse of any such
descendants, and any estate, testamentary trust, or executor, administrator,
conservator or legal or personal representative of any of the foregoing.
"DOLLAR" or "$", means the lawful currency of the United States of America.
"EFFECTIVE DATE" shall mean the date of the Initial Advance.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having total assets in excess of
$1,000,000,000; (b) a savings and loan association or savings bank organized
under the laws of the United States, or any state thereof, having total assets
in excess of $500,000,000, and not in receivership or conservatorship; (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
$1,000,000,000, 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.
"EQUIVALENT BILLING UNIT SUBSCRIBER" means a number equal to the quotient
of (i) the aggregate monthly billings for broadcast basic and standard cable
service to bulk commercial
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<PAGE>
accounts, such as hotels, motels, hospitals, apartment houses, military bases
and similar multiple dwellings which are billed on a bulk basis (plus billings
for satellite service, which are directly billed to persons residing in any such
buildings) divided by (ii) the regular basic monthly subscription rate charged
to primary subscribers for standard cable service for the System.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued 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 any Company or any of the Subsidiaries,
or is under common control with any Company or any of the Subsidiaries, 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 provision by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA) which would constitute a termination under Section
4041(c) of ERISA, (c) the cessation of operations at a facility in the
circumstances described in Section 4062(c) of ERISA, (d) the withdrawal by any
Company, any Subsidiary, 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 any Company, any Subsidiary, 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.
"EVENT OF DEFAULT" means any of the events specified in Section 8.01 of
this Agreement, provided there has been satisfied any requirement in connection
therewith for the giving of notice, lapse of time, or happening of any further
condition or any combination thereof.
"FCC" means the Federal Communications Commission and any successor
thereto.
"FCC LICENSE" means any community antenna relay service, broadcast
auxiliary license, earth station, business radio, microwave or special safety
radio service license issued by the FCC pursuant to the Communications Act of
1934.
"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 as quoted by the computerized services of Dow Jones Telerate,
Incorporated, or, if such rate is not so quoted for any day which is a Business
Day,
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<PAGE>
the average of the quotations for such date on such transactions received by the
Administrative Lender from three federal funds brokers of recognized standing
selected by it.
"FEE LETTERS" means those certain letter agreements addressed to the
Companies and acknowledged and agreed to by the Companies, dated the Closing
Date, describing certain fees payable to the Administrative Lender and/or the
Lenders in connection with this Agreement and the credit facility, as such
letter agreements may be amended, modified, substituted or replaced with the
consent of the Companies and the Administrative Lender and/or the Lenders, as
appropriate.
"GAAP" means generally accepted accounting principles, as of December 31,
1993, applied on a consistent basis. Application on a consistent basis shall
mean that the accounting principles observed in a current period are comparable
in all material respects to those applied in a preceding period.
"GUARANTY" or "GUARANTIES" means, with respect to the CMFRI, the Companies,
or the Subsidiaries, without duplication, any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or obligation of any other Person in any manner,
whether directly or indirectly, and any agreement by which such Person 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 Solvency, net worth, equity or working capital
or other financial condition or ratio of any other Person, or otherwise assures
any creditor or such other Person against loss, including, without limitation,
any agreement which assures any creditor or such other Person payment or
performance of any obligation, or any take-or-pay contract and shall include
without limitation, the contingent liability of such Person in connection with
any application for a letter of credit (without duplication of any amount
already included in Debt).
"HAZARDOUS MATERIAL" means, collectively, (a) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form that
is or could become friable, insulation, transformers or other equipment that in
each case contains dielectric fluid containing polychlorinated biphenyls, (b)
any chemicals or other material or substances which are defined as or included
in the definition of "hazardous substances", "hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import under any Applicable Environmental Law
and (c) any other chemical or other material or substance, exposure to which is
prohibited, limited or regulated under any Applicable Environmental Law.
"HIGHEST LAWFUL RATE" means at the particular time in question the maximum
rate of interest which, under Applicable Law, any Lender is then permitted to
charge on the Obligation. If the maximum rate of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation shall change
after the date hereof, the Highest Lawful Rate shall be automatically increased
or decreased, as the case may be, from time to time as of the effective
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<PAGE>
time of each change in the Highest Lawful Rate without notice to any Company or
the Notification Agent.
"INCREASED COST" has the meaning set forth in Section 2.09(b) hereof.
"INDEBTEDNESS" means all obligations, contingent or otherwise, which in
accordance with GAAP should be classified on the balance sheet as liabilities,
and in any event including without limitation, all Debt and (a) every obligation
of such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade payables), and (b) all reimbursement obligations
relating to letters of credit.
"INDEMNITEES" has the meaning ascribed thereto in Section 6.09 hereof.
"INITIAL ADVANCE" means the initial Advance made in accordance with the
terms hereof.
"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.
"INTERCOMPANY NOTES" means those certain promissory notes among the
Companies set forth on SCHEDULE 1.01 hereto and any other promissory notes
executed among the Companies and the Subsidiaries from time to time.
"INTEREST HEDGE AGREEMENTS" shall mean any interest rate swap agreements,
interest cap agreements, interest rate collar agreements, or any similar
agreements or arrangements, or foreign currency hedge, exchange or similar
agreements, on terms and conditions, and pursuant to documentation acceptable to
Administrative Lender (provided that any market rate interest rate swaps entered
into pursuant to documentation prescribed by the most current edition of the
Code of Standard Wording, Assumptions and Provisions for Swaps, promulgated by
the International Swap Dealers Association, Inc., shall be deemed to be
acceptable for all purposes), as such agreements or arrangements may be
modified, supplemented, and in effect from time to time.
"INTEREST PERIOD" means, with respect to any LIBOR Advance, the period
beginning on the date the Advance is made or continued as a LIBOR Advance, and
ending at the election of the Notification Agent, one, two, three or six months
thereafter, or if each Lender determines that it is available in their
discretion, the period beginning on the date the Advance is made or continued as
a LIBOR Advance, and ending one year thereafter.
"INVESTMENT" means any acquisition of all or substantially all of the
assets of any Person, or any direct or indirect purchase or other acquisition
of, or a beneficial interest in, Capital Stock, partnership interests or other
securities of any other Person, or any direct or indirect loan, advance (other
than advances to employees for moving and travel expenses, drawing accounts, and
similar expenditures in the ordinary course of business), or capital
contribution to or investment in any other Person, including without limitation
the incurrence or sufferance
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<PAGE>
of Debt or accounts receivable of any other Person that are not current assets
or do not arise from sales to that other Person in the ordinary course of
business.
"LAW" means any statute, law, ordinance, regulation, rule, order, writ,
injunction, or decree of any Tribunal.
"LENDERS" means the Lenders listed on the signature pages hereof, and each
Eligible Assignee that hereafter becomes a party hereto pursuant to Section
10.04 hereof, for so long as such Lender is owed any portion of the Obligation.
"LETTERS OF CREDIT" means those letters of credit of NationsBank set forth
on SCHEDULE 1.02 hereto, and those Letters of Credit issued by the
Administrative Lender from time to time in accordance with the terms and
provisions of Article III hereof, as each may be amended, modified, renewed,
extended, replaced or substituted by any Lender.
"LETTER OF CREDIT COMMITMENT" means, on any date, an amount equal to the
lesser of the Unused Commitment or $3,000,000.
"LEVERAGE RATIO" means, as of any date of determination, the ratio of (a)
the difference between (i) Debt of the Companies and their Subsidiaries minus
(ii) Indebtedness of the Companies and their Subsidiaries incurred solely in
respect of Interest Hedge Agreements, to (b) Annualized Operating Cash Flow.
"LIBOR ADVANCE" means an Advance bearing interest at the LIBOR Rate.
"LIBOR BASE RATE" means a per annum rate equal to the average (as
determined by the Administrative Lender) of the rates per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) determined by the respective
Reference Lenders at approximately 11:00 a.m., London time (or as soon
thereafter as practicable) on the day two Business Days prior to the first day
of the Interest Period for any such Advance to be the rate quoted to the
Reference Lenders by at least two internationally recognized money market
brokers selected by the Reference Lenders for the offering to the Reference
Lenders in the London Interbank Market of Dollar deposits in an amount which
most closely approximates the principal amount of such Advance, and having a
term commonly found among such deposits which most closely approximates the term
of such Advance, such rate to be notified by the Reference Lenders to the
Administrative Lender; provided that, if any Reference Lender is not
participating in any LIBOR Advance for any reason, the LIBOR Base Rate for such
Advance for the Interest Period shall be determined by reference to the amount
of the Advance which such Reference Lender would have made had it been
participating in such Advance.
"LIBOR RATE" means, for any LIBOR Advance for any Interest Period therefor,
a rate per annum (rounded upwards, if necessary, to the nearest 100 of 1%) equal
to the sum of (a) the Applicable Margin plus (b) the rate determined by the
Administrative Lender pursuant to the following formula :
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LIBOR Base Rate
-------------------------------
100% - LIBOR Reserve Percentage
"LIBOR RESERVE PERCENTAGE" means the maximum reserve requirement including
any supplemental and emergency reserves (expressed as a percentage) to which the
Lenders are actually subject in respect of "eurocurrency liabilities" under
Regulation D of the Board of Governors of the Federal Reserve System, or any
substituted or amended reserve requirement to which the Lenders are actually
subject.
"LICENSE" means, as to any Person, any license, permit, certificate of
need, authorization, certification, accreditation, franchise, approval, or grant
of rights by any Tribunal or third person necessary or appropriate for such
Person to own, maintain, or operate its business or Property, including FCC
Licenses.
"LIEN" means any mortgage, pledge, security interest, encumbrance, lien, or
charge of any kind, including without limitation any agreement to give or not 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 or other similar form of public notice under the
Laws of any jurisdiction (except for the filing of a financing statement or
notice in connection with an operating lease).
"LITIGATION" means any proceeding, claim, lawsuit, arbitration, and/or
investigation conducted or threatened by or before any Tribunal, including
without limitation proceedings, claims, lawsuits, and/or investigations under or
pursuant to any environmental, occupational, safety and health, antitrust,
unfair competition, securities, Tax, or other Law, or under or pursuant to any
contract, agreement, or other instrument.
"LOAN PAPERS" means this Agreement, the Notes, the Security Documents, the
Safekeeping Agreement, all Letters of Credit, Fee Letters, all Applications, all
Interest Hedge Agreements between any one or more Companies and any one or more
Lenders, and all Assignment and Acceptance agreements, and all other written
agreements entered into from time to time among any Authorized Officer and the
Administrative Lender or Lenders in connection with this Agreement, as each such
document or instrument shall, with the consent of the Lenders pursuant to the
terms hereof, be amended, revised, substituted or replaced.
"LONDON INTERBANK MARKET" means the buying and selling of dollar deposits
payable by financial institutions located in London between the Reference
Lenders and other financial institutions in the ordinary course of the Reference
Lenders' business.
"MAJORITY LENDERS" means any combination of the Lenders having at least
60.00% of the aggregate amount of outstanding Advances under the Revolving
Credit Loans hereunder, provided, however, that if no Advances are outstanding,
such term means any combination of the Lenders having Specified Percentages
equal to at least 60.00%.
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"MANAGEMENT FEES" means all fees from time to time directly or indirectly
paid or payable by any Company or any Subsidiary to CSC or any Affiliate of any
Company or any Subsidiary for managerial services or otherwise, excluding any
out-of-pocket expenses actually incurred by any such entity on behalf of any
Company for which any such Company reimburses such entity and any allocated
expenses incurred by any Affiliate on behalf of any Company or any Subsidiary.
"MANAGEMENT AGREEMENT" means that certain Management Agreement, dated as of
the Effective Date, between each Company and CSC, relating solely to the
management of the Companies and the Subsidiaries, in the form of EXHIBIT L
hereto, as such agreements may be amended, modified and in effect from time to
time, in accordance with the terms of this Agreement.
"MATERIAL ADVERSE EFFECT" means a materially adverse effect upon (a) the
business, Properties, financial conditions or results of operations of the
Companies and the Subsidiaries taken as a whole, or (b) the ability of the
Companies and the Subsidiaries taken as a whole to perform the Obligation
hereunder, or (c) the validity or enforceability of any of the Loan Papers.
"MATURITY DATE" means June 30, 2003, or such earlier date the Obligation
becomes due and payable (whether by acceleration, prepayment in full, scheduled
reduction or otherwise).
"MAXIMUM AMOUNT" means the maximum amount of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Company, any Subsidiary, 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 with respect to which any Company, any Subsidiary or any
ERISA Affiliate could currently incur a liability, 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 any
Company, any Subsidiary, or any ERISA Affiliate and at least one Person other
than any Company, any Subsidiary, and any ERISA Affiliate, or (b) was so
maintained and in respect of which any Company, any Subsidiary, 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 PROCEEDS" means the gross proceeds received by any Company or any
Subsidiary in connection with or as a result of any disposition of any Property
of any Company or any Subsidiary, minus the reasonable out-of-pocket costs and
expenses incurred by such Company or such Subsidiary in connection with such
disposition.
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"NON-COMPETE AGREEMENTS" means any agreement under which any Company or any
Subsidiary agrees to pay money to Persons in installments in exchange for
agreements from such Persons to refrain from competing with any Company or any
Subsidiary in a certain line of business in a specific geographical area for a
certain time period, or pursuant to which any Person agrees to limit or restrict
its right to engage, directly or indirectly, in the cable industry for any
period of time for any geographic location, provided that, those certain
Non-Compete Agreements, delivered pursuant to each Acquisition Agreement as
Exhibit I to the Acquisition Agreements shall not be considered a Non-Compete
Agreement for purposes of this Agreement.
"NOTE" means each promissory note of the Companies to each Lender
evidencing Advances under the Revolving Credit Loans owing hereunder to such
Lender, in substantially the form attached hereto as EXHIBIT B, payable to the
order of such Lender and in a maximum principal amount equal to such Lender's
Specified Percentage of the Commitment, as each such note may be amended,
substituted, replaced, increased or decreased from time to time.
"NOTIFICATION AGENT" means, (a) with respect to notices from any Lender or
the Administrative Lender to any Company, the Chief Financial Officer and the
General Counsel of Cablevision of Monmouth, Inc. at the address for the
Notification Agent set forth in Section 10.02 hereof, and (b) with respect to
notices from any Company to any Lender or the Administrative Lender, any
Authorized Officer.
"OBLIGATION" means all present and future obligations, indebtedness and
liabilities (including, without limitation, the Reimbursement Obligation and all
obligations to any Lender under or in connection with any Interest Hedge
Agreements entered into by any Company and any Lender or Lenders), and all
renewals and extensions of all or any part thereof, of each Company and the
Subsidiaries to the Lenders arising from, by virtue of, or pursuant to (a) this
Agreement, (b) the Notes, (c) any of the other Loan Papers or (d) any other
document to instrument evidencing any obligation, indebtedness or liability of
any Company to the Administrative Lender or any or all Lenders executed or
delivered in connection with this Agreement, and any and all renewals and
extensions thereof or any part thereof, or under or in connection with any
future amendments thereto, all interest accruing on all or any part thereof,
whether such obligations, indebtedness and liabilities are direct, indirect,
fixed, contingent, joint, several or joint and several.
"OPERATING CASH FLOW" means, for any period of determination, the sum of
the Companies' and the Subsidiaries' operating revenues less operating expenses
(excluding operating expenses and compensation of the Companies and the
Subsidiaries related to CSC's employee stock incentive programs, not to exceed
either (a) in the aggregate for any calendar year 7% of the Operating Cash Flow
for the previous calendar year or (b) $3,000,000 in the aggregate throughout the
term of this Agreement (or $4,000,000 in the event that the Leverage Ratio is
less than 5.00 to 1.00)); provided, however, that for the period from the
Closing Date to June 29, 1994 only, the calculation of Operating Cash Flow shall
include (a) pro forma adjustments as set forth on SCHEDULE 1.03 not to exceed
$3,200,000 and (b) pro forma adjustments of an annualized amount not to exceed
$648,720. On and after June 30, 1994, it
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is understood that revenue derived from seasonal Subscribers will be spread over
a twelve-month period.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
agency or entity performing substantially the same functions.
"PERMITTED ACQUISITIONS" means acquisitions of cable properties located in
the United States by the Companies adjacent to any System in an amount in the
aggregate in any fiscal year during the term of this Agreement not in excess of
$500,000.
"PERMITTED LIENS" means:
(a) Liens arising under workmen's compensation Laws, unemployment
insurance Laws and old age pensions or other social security benefits or other
similar Laws;
(b) Liens securing the performance of bids, tenders, leases, contracts
(other than for the repayment of any portion of Debt), statutory obligations,
surety and appeal bonds, and other obligations of like nature, incurred in the
ordinary course of business;
(c) Liens imposed by Law, such as carriers', warehousemen's mechanics',
materialmen's and vendors' liens, incurred in good faith in the ordinary course
of business with respect to obligations not then delinquent, or that are being
contested in good faith by appropriate proceedings for which adequate reserves
have been established;
(d) Liens for Taxes to the extent nonpayment thereof shall be permitted by
Section 6.08 hereof;
(e) Liens incidental to the normal conduct of the business of any Company
or any Subsidiary or the ownership of its Property (including zoning
restrictions, easements, licenses, reservations, restrictions on the use of real
property or minor irregularities incident thereto and with respect to leasehold
interests, Liens that are incurred, created, assumed or permitted to exist and
arise by, through or under or are asserted by a landlord or owner of the leased
Property, with or without consent of the lessee) that are not incurred in
connection with the incurrence of any portion of Debt and which do not in the
aggregate materially impair the value or use of the Property used in the
business of the Company and the Subsidiaries taken as a whole, or the use of
such Property for the purpose for which such property is held;
(f) Liens existing on the date hereof described on SCHEDULE 7.04 attached
hereto, and any extension, renewal or replacement thereof but only if the
principal amount of Debt secured thereby is not increased and such Lien does not
extend to or cover any other Property; and
(g) Liens securing the Obligation.
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"PERSON" means any individual, partnership, joint venture, corporation,
trust, Tribunal or unincorporated organization.
"PLAN" means a Single Employer Plan or a Multiple Employer Plan.
"PLEDGE AGREEMENTS" means those certain Pledge Agreements in the form of
EXHIBIT F hereto whereby the Capital Stock of CMI, CRI and the Subsidiaries are
pledged to the Administrative Lender on behalf of the Lenders to secure the
Obligation, as such agreements shall be amended, extended, substituted or
replaced.
"PLEDGED INTERESTS" means 100% of the Capital Stock of each of CMI and CRI
and each Subsidiary to be pledged to the Administrative Lender on behalf of the
Lenders to secure the Obligation under the Pledge Agreement in accordance with
the terms of this Agreement.
"POLE AGREEMENT" means any pole attachment agreement or underground
conduit use agreement which was entered into in connection with the operation of
any CATV System.
"PRO FORMA DEBT SERVICE" means, on any date of determination for the
Companies and the Subsidiaries on a consolidated basis, the sum of Pro Forma
Interest Expense plus Required Scheduled Principal Payments for the twelve-month
period following the date of determination.
"PRO FORMA INTEREST EXPENSE" means, on any date of determination for the
Companies and the Subsidiaries on a consolidated basis, the sum of Total
Interest Expense for the twelve-month period following the date of
determination.
"PROHIBITED TRANSACTION" has the meaning specified therefor in Section 4975
of the Code, as amended, or Section 406 of Title I of ERISA.
"PROJECTIONS" means those certain projections prepared by the Companies,
labeled "Projections As of June 3, 1994" and attached hereto as SCHEDULE 1.05.
"PROPERTY" means all types of real, personal, tangible, intangible, or
mixed property, whether owned in fee simple or leased.
"QUARTERLY DATE" means the last day of each March, June, September and
December until and including the Maturity Date, commencing the first such date
after the Closing Date.
"RATABLE" means on any date of determination, and as to any Lender, its
ratable portion calculated by determining (a) such Lender's percentage of the
aggregate amount of outstanding Advances under the Revolving Credit Loans, as
compared to (b) the sum of all outstanding Advances, provided however, that if
no Advances are outstanding, such term means in accordance with such Lender's
Specified Percentage.
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"REFERENCE LENDERS" means NationsBank of Texas, N.A. and The
Toronto-Dominion Bank.
"REFINANCING ADVANCE" means an Advance that is used to pay the principal
amount of an existing Advance at the end of its Interest Period and which, after
giving effect to such application, does not result in an increase in the
aggregate amount of outstanding Advances.
"REGULATORY CHANGE" means any change after the date hereof in federal,
state, or foreign Laws (including the introduction of any new Law) or the
adoption or making after such date of any interpretations, directives, or
requests of or under any federal, state, or foreign Laws (whether or not having
the force of Law) by any Tribunal charged with the interpretation or
administration thereof, applying to a class of financial institutions that
includes any Lender, excluding, however, any such change which results in an
adjustment of the LIBOR Reserve Percentage and the effect of which is reflected
in a change in the LIBOR Rate as provided in the definition of such term.
"REIMBURSEMENT OBLIGATION" shall mean the obligation (whether or not
choate) of the Companies to reimburse the Administrative Lender for the account
of the Lenders in their Specified Percentages for draws under Letters of Credit.
"RELEASE" has the meaning ascribed thereto in Section 10.17 hereof.
"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.
"REQUIRED SCHEDULED PRINCIPAL PAYMENTS" means principal payments required
on each scheduled reduction date to lower the outstanding principal balance
hereunder in order to comply with Section 2.04(b)(i) hereof with respect to
mandatory reductions of the Commitment.
"RESTRICTED PAYMENTS" means (a) any Dividend, or direct or indirect
distribution, dividend or other payment on account of any shareholder, general
or limited partnership interest in (or the setting aside of funds for, or the
establishment of a sinking fund or analogous fund with respect to), or shares of
Capital Stock or other securities of, any Company or any Subsidiary; (b) any
payments of principal of, or interest on, or fees related to, or any other
payments and prepayments with respect to, or the establishment of, or any
payment to, any sinking fund or analogous fund for the purpose of making any
such payments on, Debt of any Company or any Subsidiary (excluding the
Obligation); (c) any Management Fee or any management, consulting or other
similar fees, or any interest thereon, payable by any Company or any of the
Subsidiaries to any Affiliate of any Company, or to any other Person, except
payments made
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in accordance with the terms of the Management Agreement; and (d) any payments
of amounts owing under any Non-Compete Agreements.
"RESTRICTED PURCHASE" means any payment (or the setting aside of funds for,
or the establishment of a sinking fund with respect to) on account of the
purchase, redemption or other acquisition or retirement of any shares of stock,
general or limited partnership interest in, or shares of Capital Stock or other
securities of, any Company or any of the Subsidiaries.
"REVOLVING CREDIT LOANS" means those certain revolving loans, made by the
Lenders to the Companies in accordance with the terms and provisions of Section
2.01 hereof.
"RIGHTS" means rights, remedies, powers, and privileges.
"SAFEKEEPING AGREEMENT" means that certain Safekeeping Agreement, dated the
Closing Date, executed by CSC and the Administrative Lender on behalf of the
Lenders, regarding the safekeeping of the Capital Stock of CMFRI, in
substantially the form of EXHIBIT H hereto, as such agreement may be amended,
modified, substituted or replaced by the parties from time to time.
"SECURITY AGREEMENTS" means those certain Security Agreements executed by
the Companies and the Administrative Lender on behalf of the Lenders,
substantially in the form of EXHIBIT K hereto, as such agreement may be amended,
modified, substituted or replaced by the parties from time to time.
"SECURITY DOCUMENTS" means all Pledge Agreements, Security Agreements,
mortgages, deeds of trust, financing statements, Guaranties of the Obligations
executed by any Subsidiary, pledges of Capital Stock, assignments, waivers,
estoppels and other documents and instruments executed or delivered to the
Administrative Lender or any Lender from time to time in connection with this
Agreement and relating to the grant, perfection or clarification of any Lien in
any Collateral and/or the transfer of any interest in any Collateral to the
Administrative Lender or any Lender in connection with this Agreement, together
with all amendments, modifications, substitutions, replacements or extensions of
each such document or instrument from time to time.
"SELLERS" means Monmouth Cablevision Associates and Riverview Cablevision
Associates, L.P., as the sellers under the Acquisition Agreements.
"SINGLE EMPLOYER PLAN" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, other than a Multiple Employer Plan.
"SOLVENT" or "SOLVENCY" means, with respect to any Person, that on such
date (a) the fair value of the Property of such Person is greater than the total
amount of liabilities, including without limitation Guaranties of such Person,
(b) the present fair salable value of the assets of such Person is not less than
the amount that will be required to pay the probable liability of such
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Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature, and
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's Property would
constitute an unreasonably small capital.
"SPECIAL COUNSEL" means the law firm of Donohoe, Jameson & Carroll, P.C. or
any other counsel selected from time to time by the Administrative Lender.
"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.
"SUBSCRIBER" means a Person who is connected to any Company's or any
Subsidiary's cable television system and is receiving at least the minimum
service package available from such Company's or such Subsidiary's cable
television system and the Equivalent Billing Unit Subscribers, provided that, no
Subscriber or Equivalent Billing Unit Subscriber shall be more than 60 calendar
days in arrears from the first day of the period to which an outstanding bill
relates with respect to payment of such monthly fees to such Company or such
Subsidiary.
"SUBSCRIBER REPORT" means a report in form and substance acceptable to the
Lenders, signed by an Authorized Officer, setting forth the number of
Subscribers, pay units, homes passed and, upon request, number of disconnects
for each CATV System.
"SUBSIDIARY" means any Person at least 50% of whose Capital Stock having
ordinary voting power (other than securities having such power only by reason of
the happening of a contingency) or any of whose general partnership interests
are owned by any Company, or one or more Subsidiaries of any Company or
combination of Companies, or a combination thereof.
"SUBORDINATED NOTES" means those Subordinated Notes Due 1998/2003, dated
the date of the Acquisition Agreement and in the aggregate face amount of
$141,267,900.00, executed by CMFRI in accordance with the terms of the
Acquisition Agreements, as each may be amended, modified, restated, extended,
substituted or replaced.
"SUBORDINATED NOTE AGREEMENTS" means the Subordinated Notes, the
Acquisition Agreements, those certain Guaranties executed by CSC and dated the
date of the Subordinated Notes, pursuant to which CSC guarantees payment and
performance by CMFRI of the Subordinated Notes, and any other documents or
instruments directly relating to the Subordinated Notes and the repayment
thereof, as such agreements may be amended, modified, restated, extended,
substituted or replaced.
"SYSTEM" or "SYSTEMS" means the CATV Systems listed on SCHEDULE 1.04, and
any and all other CATV Systems acquired or owned by any Company or any
Subsidiary.
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"TAXES" means all taxes, assessments, imposts, fees, or other charges at
any time imposed by any Laws or Tribunal.
"TOTAL INTEREST EXPENSE" means as of any date of determination for any
period of calculation, all of the Companies' and the Subsidiaries' consolidated
interest expense included in a consolidated income statement (without deduction
of interest income) of the Companies and their consolidated Subsidiaries for
such period calculated on a consolidated basis in accordance with GAAP,
excluding interest expense on Intercompany Notes, but including without
limitation or duplication (or, to the extent not so included, with the addition
of) (a) the amortization of Debt discounts; (b) all commitment fees and other
fees, and any payments or fees with respect to Letters of Credit, bankers'
acceptances or similar facilities; and (c) the excess, if any, of amounts
payable by the Companies arising under any interest rate swap or similar
agreements or foreign currency hedge, exchange or similar agreements during such
period over the amounts receivable by the Companies during such period (or
reduced by the excess, if any, of such amounts receivable over such amounts
payable), other than fees or charges related to the acquisition or termination
thereof which are not allocable to interest expense in accordance with GAAP.
"TRANSFEREE" has the meaning ascribed thereto in Section 10.15 hereof.
"TRIBUNAL" means any state, commonwealth, federal, foreign, territorial, or
other court or government body, subdivision, agency, department, commission,
board, bureau, or instrumentality of a governmental body.
"UNFUNDED LIABILITIES" means, (a) in the case of Single Employer Plans, the
amount (if any) by which the present value of all vested nonforfeitable benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plans based upon the most recent actuarial assumptions used by such Plans, and
(b) in the case of Multiemployer Plans, the withdrawal liability that would be
incurred by the Controlled Group if all members of the Controlled Group
completely withdrew from all Multiemployer Plans.
"UNUSED COMMITMENT" means the Commitment, minus the sum of (a) all
outstanding Advances made under the Revolving Credit Loans plus (b) the
aggregate face amount of all outstanding Letters of Credit, plus, (c) without
duplication, the aggregate amount of the Reimbursement Obligation.
"WITHDRAWAL LIABILITY" has the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. ACCOUNTING AND OTHER TERMS. All accounting terms used in
this Agreement which are not otherwise defined herein shall be construed and
determined in accordance with GAAP on a consolidated basis for the Companies and
the Subsidiaries, unless otherwise expressly stated herein, and all accounting
determinations and calculations made
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hereunder shall be made in accordance with GAAP, unless otherwise expressly
stated herein. References herein to one gender shall be deemed to include all
other genders.
ARTICLE II
AMOUNTS AND TERMS OF ADVANCES
SECTION 2.01. ADVANCES UNDER THE REVOLVING CREDIT LOANS. Each Lender
severally agrees, subject to the terms and conditions hereinafter set forth, to
make Advances under the Revolving Credit Loans to the Companies from time to
time until the Maturity Date in an aggregate outstanding amount not to exceed at
any time outstanding the difference between such Lender's Specified Percentage
of the Commitment, minus the sum of (a) such Lender's Specified Percentage of
the aggregate face amount of all outstanding Letters of Credit, plus (b) without
duplication, such Lender's Specified Percentage of the aggregate amount of
Reimbursement Obligations. Each Advance under the Revolving Credit Loans shall
be either a Base Rate Advance or a LIBOR Advance, as specified in the related
notice of conversion or request for Advance, as applicable, provided that, after
the occurrence and during the continuance of any Event of Default, LIBOR Rate
Advances shall not be available to the Companies. Subject to Section 2.02 and
the other terms and conditions of this Agreement, the Companies may convert a
Base Rate Advance made under the Revolving Credit Loans to a LIBOR Advance at
any time after the Effective Date, provided that the Companies, jointly and
severally, pay all accrued and unpaid interest on such Base Rate Advance
concurrently. Base Rate Advances and LIBOR Advances may be outstanding at the
same time, but no more than five Aggregate Advances bearing interest at the
LIBOR Rate may be outstanding under the Revolving Credit Loans at any time.
Each Aggregate Advance bearing interest at the Base Rate shall be in the amount
of $1,000,000 or an integral multiple of $100,000 in excess thereof; provided,
however, that an Aggregate Advance bearing interest at the Base Rate may be made
in an amount equal to the Unused Commitment. Each Aggregate Advance bearing
interest at the LIBOR Rate shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof. Subject to Sections 4.01,
4.02 and 4.03 hereof, the Companies may borrow, repay, and reborrow Advances
under the Revolving Credit Loans in accordance with this Agreement. On any date
of determination, the sum of all outstanding Advances under the Revolving Credit
Loans shall never exceed the difference between the Commitment minus the
aggregate face amount of all outstanding Letters of Credit.
SECTION 2.02. MAKING ADVANCES.
(a) The Notification Agent shall notify the Administrative Lender (if
telephonic, to be confirmed by telecopy or in writing before the date of
borrowing), not later than 12:00 p.m. (New York time) one Business Day before
any proposed Base Rate Advance, specifying the amount and date of the requested
Aggregate Advance. The Notification Agent shall notify the Administrative
Lender (if telephonic, to be confirmed by telecopy or in writing before the date
of borrowing), not later than 12:00 p.m. (New York time) three Business Days
before any
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proposed LIBOR Advance, specifying the amount, date, and Interest Period of the
requested Aggregate Advance. All such telephonic notices shall be made to
NationsBank of Texas, N.A., attn.: Molly Oxford, telephone (214) 508-3255, or
(800) 547-2005, facsimile (214) 508-2515, or such other person as the
Administrative Lender may from time to time specify. The Administrative Lender
shall promptly notify the Lenders of each such notice. Each Lender shall,
before 2:00 p.m. (New York time) on the date of each Advance hereunder, make
available to the Administrative Lender, at its office at 901 Main Street, 67th
Floor, Dallas, Texas 75202, such Lender's Specified Percentage of the requested
Aggregate Advance in immediately available funds. The Administrative Lender
shall promptly make available to the Companies the funds so received by
depositing such amount in the account of Companies as directed by the
Notification Agent in writing, or in any other such account as may be requested
by the Notification Agent in the notice to the Administrative Lender given in
accordance with the first two sentences of this Section 2.02(a).
(b) Each date of borrowing must be a Business Day. No Aggregate Advance
bearing interest at the LIBOR Rate shall be made if the last day of the
requested Interest Period would extend beyond any principal payment date that
requires payment thereof. If any notice to the Administrative Lender requesting
a LIBOR Advance fails to specify an Interest Period, the Interest Period shall
be one month. If any notice does not specifically request a LIBOR Advance, the
Companies shall be deemed to have requested a Base Rate Advance.
(c) Unless a Lender shall have notified the Administrative Lender prior to
the date of any Advance that is not a Refinancing Advance that it will not make
available its Specified Percentage of the Aggregate Advance, the Administrative
Lender may assume that such Lender has made the appropriate amount available in
accordance with subsection (a) above, and the Administrative Lender may, in
reliance upon such assumption, make available to the Companies a corresponding
amount. If and to the extent any Lender shall not have made such amount
available to the Administrative Lender, the Companies, jointly and severally,
and such Lender, severally, agree to repay to the Administrative Lender
forthwith on demand such corresponding amount together with interest thereon,
from the date such amount is made available to the Companies until the date such
amount is repaid to the Administrative Lender, at (i) in the case of the
Companies, the Base Rate, and (ii) in the case of such Lender, the Federal Funds
Rate.
(d) The failure by any Lender to make available its Specified Percentage
of an Aggregate Advance hereunder shall not relieve any other Lender of its
obligation, if any, to make available its Specified Percentage of any Aggregate
Advance. In no event, however, shall any Lender be responsible for the failure
of any other Lender to make available any portion of an Aggregate Advance.
SECTION 2.03. FEES.
(a) Subject to Section 10.07 hereof, the Companies agree, jointly and
severally, to pay to the Administrative Lender, for the Ratable account of the
Lenders, a commitment fee on the average daily amount of the Unused Commitment,
from May 15, 1994 through the Maturity
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Date, at the rate of 3/8ths of 1% per annum, payable quarterly in arrears on
each Quarterly Date after the Closing Date.
(b) Subject to Section 10.07 hereof, the Companies, jointly and severally,
agree to pay to the Administrative Lender and the Lenders, a one-time facility
fee as agreed to in writing among the Companies and the Lenders, payable on the
Closing Date in accordance with the terms of the Fee Letters.
(c) Subject to Section 10.07 hereof, the Companies, jointly and severally,
agree to pay to the Administrative Lender in its capacity as administrative
lender and to NationsBanc Capital Markets, Inc. as arranger hereunder, such
other fees as are set forth in the Fee Letters.
(d) Subject to Section 10.07 hereof, the Companies, jointly and severally,
agree to pay to the Administrative Lender in its capacity as issuer of the
Letters of Credit for the account of the Lenders, a fee equal to a percentage of
daily average undrawn face amount of each Letter of Credit, which percentage
shall equal the Applicable Margin with respect to the LIBOR Rate in effect from
time to time, such fee to be payable quarterly in arrears on each Quarterly Date
after the Closing Date.
(e) Subject to Section 10.07 hereof, the Companies, jointly and severally,
agree to pay to the Administrative Lender in its individual capacity as issuer
of the Letters of Credit, a $100 fee payable to the Administrative Lender for
each Letter of Credit, due and payable upon the issuance of each Letter of
Credit.
SECTION 2.04. REDUCTION OF COMMITMENT.
(a) VOLUNTARY REDUCTION. The Companies shall have the right from time to
time, upon notice by the Notification Agent to the Administrative Lender not
later than 2:00 p.m. (New York time), three Business Days in advance, to reduce
the Commitment, in whole or in part; provided, however, that the Companies
agree, jointly and severally, to pay the accrued commitment fee on the amount of
such reduction, if any, and any partial reduction shall be in an aggregate
amount which is not less than $5,000,000 and an integral multiple of $1,000,000.
Such notice shall specify the amount of such reduction and the proposed date of
such reduction. To the extent the sum of outstanding Advances under the
Revolving Credit Loans plus the aggregate face amount of all outstanding Letters
of Credit exceeds the Commitment after any reduction thereof, the Companies
shall, jointly and severally, immediately repay such excess amount on the date
of such reduction. Once reduced or terminated pursuant to this Section, the
Commitment may not be increased or reinstated. No reduction pursuant to this
Section 2.04(a) shall affect the scheduled reductions required by Section
2.04(b) hereof.
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(b) MANDATORY REDUCTION.
(i) The Commitment shall be permanently reduced on each date set forth
below, beginning March 31, 1996, in such amounts as set forth next to each such
date below:
<TABLE>
<CAPTION>
Amount of Reduction of the
Commitment As of each
Dates Date Below
- - ----- --------------------------
<S> <C>
March 31, 1996 $ 1,781,250
June 30, 1996 $ 1,781,250
September 30, 1996 $ 1,781,250
December 31, 1996 $ 1,781,250
March 31, 1997 $ 1,781,250
June 30, 1997 $ 1,781,250
September 30, 1997 $ 1,781,250
December 31, 1997 $ 1,781,250
March 31, 1998 $ 7,125,000
June 30, 1998 $ 7,125,000
September 30, 1998 $ 7,125,000
December 31, 1998 $ 7,125,000
March 31, 1999 $10,687,500
June 30, 1999 $10,687,500
September 30, 1999 $10,687,500
December 31, 1999 $10,687,500
March 31, 2000 $11,400,000
June 30, 2000 $11,400,000
September 30, 2000 $11,400,000
December 31, 2000 $11,400,000
March 31, 2001 $14,250,000
June 30, 2001 $14,250,000
September 30, 2001 $14,250,000
December 31, 2001 $14,250,000
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March 31, 2002 $17,100,000
June 30, 2002 $17,100,000
September 30, 2002 $17,100,000
December 31, 2002 $17,100,000
March 21, 2003 $14,250,000
June 30, 2003 $14,250,000 or, if different, the
remaining amount of the Commitment
</TABLE>
No reduction pursuant to Section 2.04(a) above or Sections 2.04(b)(ii), (iii) or
(iv) below shall affect the scheduled reductions required by this Section
2.04(b)(i).
(ii) If on June 30, 1997, the Unused Commitment is more than 15% of
the Commitment, then the Commitment shall be immediately and automatically
reduced to an amount such that the Unused Commitment equals or is less than 15%
of the Commitment.
(iii) On the date of any sale of any assets of the Companies or any of
the Subsidiaries (except sales or dispositions of assets in the ordinary course
of business) permitted by the Lenders, the Commitment shall be automatically
reduced by an amount equal to 100% of the Net Proceeds of such sale. As used in
this section, the term "sale" shall include, without limitation, any
disposition, transfer, mortgage, or pledge of an asset or an interest therein,
other than intercompany transfers among the Companies or any of the Subsidiaries
which have executed Loan Papers in compliance with Section 2.13 hereof, provided
that no Default or Event of Default exists or would result therefrom. On such
date, the Companies shall deliver a certificate of an Authorized Officer
certifying as to the amount of (including the calculation of) such Commitment
reduction and, with respect to the sale giving rise thereto, the gross proceeds
thereof and the costs and expenses payable as a result hereof which were
deducted in determining the amount of Net Proceeds.
(iv) To the extent the sum of outstanding Advances plus the aggregate face
amount of outstanding Letters of Credit exceed the Commitment after any
reduction thereof, the Companies agree, jointly and severally, that they shall
immediately repay on the date of such reduction, any such excess amount and all
accrued interest thereon, together with any amounts incurred in connection with
such repayment under Section 2.09(c) hereof. Once reduced or terminated
pursuant to this Section 2.04, the Commitment may not be increased or
reinstated.
SECTION 2.05. REPAYMENT OF THE REVOLVING CREDIT LOANS.
(a) INTEREST PERIODS. With respect to each Advance, unless the
Notification Agent shall otherwise notify the Administrative Lender (if
telephonic, to be confirmed by telecopy or in writing before the applicable
date), in accordance with the terms and provisions of Section 2.02 hereof, on
the last day of its Interest Period (but not on the Maturity Date and subject to
repayment and prepayment and other provisions of this Agreement), a Refinancing
Advance bearing interest at the Base Rate shall be made to the Companies on such
date in an amount
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equal to the lesser of the amount of such Advance and the difference between the
Unused Commitment (after giving effect to the repayment of the Advance) minus
the aggregate face amount of all outstanding Letters of Credit, which
Refinancing Advance will be deemed to repay the outstanding Advance in the
amount of such Refinancing Advance.
(b) FINAL MATURITIES.
(i) REVOLVING CREDIT LOANS. Notwithstanding anything in this
Agreement or in the Loan Papers to the contrary, and in addition to the payments
required to be made to keep the sum of the outstanding Advances plus the
aggregate face amount of all outstanding Letters of Credit below the Commitment
after the mandatory reductions set forth in Section 2.04(b) hereof are made, all
Advances outstanding under the Revolving Credit Loans and all other Obligation
shall be due and payable in full on the Maturity Date.
(ii) LETTERS OF CREDIT. The Reimbursement Obligation shall be due
and payable in accordance with the terms of Article III and each Application,
provided that, in any event, the Reimbursement Obligation shall be due and
payable in full on the Maturity Date. No Letter of Credit shall extend past the
Maturity Date.
(c) REPAYMENTS IN GENERAL. Any repayment made by the Companies which
causes costs and expenses to be incurred by any Lender under Section 2.09(c)
hereof shall include amounts necessary to reimburse each such Lender for such
costs and expenses in accordance with the terms of Section 2.09 hereof. Each
repayment hereunder shall be accompanied by all interest accrued on the
principal amount being repaid, any fees owing and any amounts incurred in
connection with the repayment under Section 2.09(c) hereof. To the extent any
such repayment is not otherwise designated, all repayments under Section 2.05(b)
shall be first used to repay Base Rate Advances and then to repay LIBOR
Advances. All telephonic notices under this Section shall be made to
NationsBank of Texas, N.A., attn.: Molly Oxford, telephone (214) 508-3255, or
(800) 547-2005, facsimile (214) 508-2515, or such other person as the
Administrative Lender may from time to time specify.
SECTION 2.06. PREPAYMENTS AND REPAYMENTS.
(a) OPTIONAL PREPAYMENTS OF THE REVOLVING CREDIT LOANS. The Companies may
from time to time repay Aggregate Advances, in whole or in part, outstanding
under the Revolving Credit Loans, without premium or penalty except as provided
in Section 2.09(c), provided that each such payment shall not be in an amount
less than $5,000,000 and must be in integral multiples of $1,000,000 (unless
such amount is the total remaining unpaid portion), upon notice to the
Administrative Lender (if telephonic, to be confirmed by telecopy or in writing
before the date of prepayment), not later than 11:00 a.m. (New York time) three
Business Days before the date of prepayment of LIBOR Advances, and by 11:00 a.m.
(New York time) one Business Day prior to prepayment of any Base Rate Advances,
which notice shall specify (i) that it is a prepayment, (ii) that the Aggregate
Advance being repaid was made under the Revolving Credit Loans, and
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(iii) the amount and date of prepayment. To the extent any such prepayment is
not otherwise designated, any such prepayment will be first applied to Base Rate
Advances and then to LIBOR Advances. Any prepayment made by any Company which
causes costs and expenses to be incurred by any Lender under Section 2.09(c)
hereof shall include amounts necessary to reimburse each such Lender for such
costs and expenses in accordance with the terms of Section 2.09 hereof. Each
prepayment hereunder shall be accompanied by all interest accrued on the
principal amount being repaid, and any accrued and unpaid fees and any amounts
incurred in connection with the prepayment under Section 2.09(c) hereof. All
telephonic notices under this Section shall be made to NationsBank of Texas,
N.A., attn.: Molly Oxford, telephone (214) 508-3255, or (800) 547-2005,
facsimile (214) 508-2515, or such other person as the Administrative Lender may
from time to time specify. Subject to Sections 4.01, 4.02 and 4.03 hereof,
amounts prepaid under the Revolving Credit Loans may be reborrowed so long as
the sum of Revolving Credit Loans plus the aggregate amount of all outstanding
Letters of Credit never exceeds the Commitment (as it may be reduced on any such
date).
(b) MANDATORY PREPAYMENTS.
(i) ASSET SALES. To the extent that any Company consummates an asset
sale, the Companies agree, jointly and severally, to use all Net Proceeds of
such sales to prepay the Obligation hereunder.
(ii) COMMITMENT REDUCTION. To the extent that the Commitment is reduced
for any reason in accordance with the terms of Section 2.04 hereof, the
Companies shall immediately prepay the Advances outstanding under the Revolving
Credit Loans to the extent that the sum of the outstanding Advances under the
Revolving Credit Loans plus the aggregate face amount of all outstanding Letters
of Credit exceeds the Commitment after each such reduction.
(iii) MANDATORY PREPAYMENTS IN GENERAL. Any prepayment made by any
Company which causes costs and expenses to be incurred by any Lender under
Section 2.09(c) hereof shall include amounts necessary to reimburse each such
Lender for such costs and expenses in accordance with the terms of Section 2.09
hereof. Each prepayment hereunder shall be accompanied by all interest accrued
on the principal amount being prepaid, any fees owing and any amounts incurred
in connection with the prepayment under Section 2.09(c) hereof. All prepayments
made by the Companies in accordance with this Section 2.06(b) hereof will be
applied to reduce outstandings under the Revolving Credit Loans until the
Revolving Credit Loans (including all principal and interest) have been repaid
in full and then to the Obligation until all amounts included in the Obligation
have been repaid in full, with a corresponding reduction in the Commitment as
required in Section 2.04 (in each case first applied to outstanding Base Rate
Advances and then to LIBOR Advances) . All telephonic notices under this
Section 2.06(b) shall be made to NationsBank of Texas, N.A., attn.: Molly
Oxford, telephone (214) 508-3255, or (800) 547-2005, facsimile (214) 508-2515,
or such other person as the Administrative Lender may from time to time specify.
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SECTION 2.07. INTEREST ON ADVANCES. (a) Subject to Section 10.07 hereof,
Base Rate Advances shall bear interest at the lesser of (i) the Highest Lawful
Rate and (ii) the Base Rate as in effect from time to time. Subject to Section
10.07 hereof, each LIBOR Advance shall bear interest at the lesser of (i) the
Highest Lawful Rate and (ii) the LIBOR Rate applicable thereto. Accrued
interest on each LIBOR Advance shall be due and payable on the last day of its
Interest Period and on each three month anniversary of the first day of its
Interest Period. Accrued interest on each Base Rate Advance shall be due and
payable on each Quarterly Date. If the amount of interest payable for the
account of any Lender on any interest payment date in respect of any Interest
Period for any Advance would exceed the Maximum Amount, the amount of interest
payable on such interest payment date shall be automatically reduced to the
Maximum Amount. If the amount of interest payable for the account of any Lender
in respect of any interest computation period is reduced pursuant to the
immediately preceding sentence and the amount of interest payable for its
account in respect of any subsequent interest computation period would be less
than the Maximum Amount, then the amount of interest payable for its account in
respect of such subsequent interest computation period shall be automatically
increased to such Maximum Amount; provided that at no time shall the aggregate
amount by which interest paid for the account of any Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid for
its account has theretofore been reduced pursuant to the immediately preceding
sentence.
(b) Subject to Applicable Law and Section 10.07 hereof, after the
occurrence and during the continuance of an Event of Default, all principal,
past due interest and other amounts owing under the Loan Papers shall bear
interest at a rate per annum equal to the lesser of (i) the Highest Lawful Rate
and (ii) the Base Rate plus 2% per annum (the "Post Default Rate"). All Post
Default Rate interest shall be due and payable on the earlier of (i) the first
day of each month after the occurrence of any such Event of Default and (ii)
demand by the Administrative Lender.
SECTION 2.08. COMPUTATIONS AND MANNER OF PAYMENTS.
(a) The Companies shall make each payment hereunder and under the other
Loan Papers not later than 2:00 p.m. (New York time) on the day when due in same
day funds to the Administrative Lender, for the Ratable account of the Lenders
unless otherwise specifically provided herein, at the Administrative Lender's
office at 901 Main Street, 67th Floor, Dallas, Texas 75202, #111000025 ABA for
further credit to the account of Companies as directed by the Notification Agent
in writing. No later than the end of each day when each payment hereunder is
made, the Companies shall notify NationsBank of Texas, N.A., attn.: Molly
Oxford, telephone (214) 508-3255, or (800) 547-2005, facsimile (214) 508-2515,
or such other person as the Administrative Lender may from time to time specify.
(b) Unless the Administrative Lender shall have received notice from the
Notification Agent prior to the date on which any payment is due hereunder that
the Companies will not make payment in full, the Administrative Lender may
assume that such payment is so made on such date and may, in reliance upon such
assumption, make distributions to the Lenders. If and
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to the extent the Companies shall not have made such payment in full, each
Lender shall repay to the Administrative Lender forthwith on demand the
applicable amount distributed, together with interest thereon at the Federal
Funds Rate, from the date of distribution until the date of repayment. The
Companies hereby authorize each Lender, if and to the extent payment is not made
when due hereunder, to charge the amount so due against any account of any
Company with such Lender.
(c) All computations of the Base Rate and fees hereunder (and the Highest
Lawful Rate) shall be determined on the basis of actual days elapsed on a year
of 365 or 366 days, as the case may be, and the LIBOR Rate shall be determined
on the basis of a year of 360 days, for the actual number of days (including the
first day but excluding the last day) occurring in the period for which the
LIBOR Advance is payable. All payments under the Loan Papers shall be made in
United States dollars, and without setoff, counterclaim, or other defense.
(d) Whenever any payment to be made hereunder or under any other Loan
Papers shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall be included in the computation of interest or fees, if applicable.
Notwithstanding the foregoing, if any payment relating to a LIBOR Advance falls
due on a day that is not a Business Day and no further Business Day occurs in
that calendar month, then the due date thereof shall be the preceding Business
Day.
SECTION 2.09. YIELD PROTECTION; TAXES.
(a) Notwithstanding anything in this Agreement to the contrary, if any
Lender shall have determined that (i) by reason of changes affecting the London
Interbank Market, adequate and fair means do not exist for ascertaining the
London Interbank Rate or the continuation of LIBOR Advances has been made
impracticable by the occurrence of a contingency which materially and adversely
effects the London Interbank Market, or (ii) any Regulatory Change shall make it
unlawful for any Lender to make or maintain any LIBOR Advances or to match
eurodollar liabilities thereto, such Lender shall forthwith give notice thereof
to the Notification Agent and the Administrative Lender. After said notice and
until such time as such Lender shall determine that said adverse conditions no
longer exist, (A) no additional LIBOR Advances shall be made by such Lender, and
all requests for LIBOR Advances shall be deemed to request a Base Rate Advance
from such Lender, and (B) each outstanding LIBOR Advance made by such Lender
shall be converted into a Base Rate Advance on the last day of its Interest
Period.
(b) If, as a result of any Regulatory Change,
(i) the basis of taxation of payments to any Lender of the principal
of or interest on any LIBOR Advance or any other amounts payable hereunder in
respect thereof (other than Taxes imposed on the overall net income of the
Lender) is changed;
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(ii) any reserve, special deposit, or similar requirements relating to
any extensions of credit or other assets of, or any deposits with or other
liabilities of, any Lender are imposed, modified, or deemed applicable; or
(iii) any other condition affecting this Agreement or LIBOR
Advances is imposed on any Lender;
and the Lender reasonably determines that, by reason thereof, the cost to it of
making, issuing, or maintaining any LIBOR Advance is increased by an amount
deemed by it to be material, or any amount receivable by such Lender in respect
of any LIBOR Advance is reduced by an amount deemed by it to be material (any
such increase in cost or reduction in amounts receivable being an "Increased
Cost"), then the Companies shall, jointly and severally, pay promptly upon
demand to such Lender such additional amounts as such Lender reasonably
determines will compensate it for such Increased Cost; provided, however, that
notwithstanding any provision herein to the contrary, the Companies shall have
the right to convert outstanding LIBOR Advances made by such Lender into Base
Rate Advances following such demand, so long as it pays such Lender all
Increased Costs associated therewith incurred prior to the date of such request
and any other amounts accruing as a result of such conversion under subsection
(c) hereof.
(c) Without prejudice to any provisions of this Section, the Companies
hereby agree, jointly and severally, to indemnify each Lender against any loss
or expense (but not lost profit) which it may incur as a result of (i) any
principal payment, prepayment, or conversion of a LIBOR Advance on a day other
than the last day of its Interest Period, (ii) any failure by any Company to
borrow or convert on a date specified therefor pursuant to Section 2.02 or 2.05
hereof, or (iii) any failure by any Company to comply with Section 2.05 hereof,
including failure to prepay following notice under Section 2.05(a) hereof.
(d) If any Lender determines that compliance with any Law (including
without limitation existing and future Laws), or any guideline or request from
any central bank or other Tribunal (whether or not having the force of Law)
affecting a class of banks that includes any such Lender, affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any of its Affiliates, and that the amount of such capital is
increased by or based upon the existence of any commitment, Advance (or similar
commitments, loans or letters of credit), then, upon demand by such Lender, the
Companies shall, jointly and severally, immediately pay to such Lender, from
time to time as specified, additional amounts sufficient to compensate it or any
of its Affiliates in the light of such circumstances, to the extent that such
Lender or Affiliate reasonably determines such increase in capital to be
allocable to the existence or maintenance of or any participation in any
commitment or Advance.
(e) Provided that notice shall have been given to the Notification Agent
of the reasons therefor and in reasonable detail, determinations by any Lender
for purposes of this Section shall be conclusive, absent manifest error,
provided that such determinations are made on a reasonable basis; and provided
further that the Companies shall not be obligated to pay any amounts
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pursuant to Sections 2.09(b), (c) or (d) hereof incurred more than six months
prior to the date the respective Lender requests the Notification Agent for such
compensation, except (i) for periods preceding such date but which are after
such date that the Lender notified the Companies of the possibility that such
costs might be incurred, and (ii) to the extent any such amounts incurred are
incurred retroactive according to the terms of the applicable provisions related
thereto.
(f) The obligations of the Companies under this Section 2.09 shall survive
the execution of this Agreement and/or the extinguishment of the Commitment, the
Letter of Credit Commitment, repayment of the Obligation and termination of the
Agreement.
SECTION 2.10. CALCULATION OF LIBOR RATE. The provisions of this Agreement
relating to calculation of 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. It is acknowledged that each Lender shall be entitled to
fund and maintain any LIBOR Advance as it sees fit. All determinations
hereunder, however, shall be made as if each Lender had actually funded and
maintained each LIBOR Advance through the purchase in the London Interbank
Market of one or more eurodollar deposits in an amount equal to the principal
amount of such Advance and having a maturity corresponding to its Interest
Period.
SECTION 2.11. QUOTATION OF RATES. It is hereby acknowledged that the
Companies may call the Administrative Lender on or before the date on which
notice of an elective interest rate is to be given by the Company in order to
receive an indication of the LIBOR Rate then in effect, but that such indication
shall not be binding upon the Administrative Lender and Lenders, nor affect the
rate of interest which is thereafter actually in effect when the election is
made.
SECTION 2.12. BOOKING LOANS. Each Lender may make, carry, or transfer
Advances at, to, or for the account of any of its branch offices or the office
of any Affiliate, provided that, if any Lender shall elect to transfer any
Advances from the original lending office, thereafter no such Lender shall be
entitled to request any payments, compensation or reimbursement available to
such Lender under Section 2.09 hereof if such costs, etc. would not have been
incurred by such Lender if the transfer had not occurred.
SECTION 2.13. COLLATERAL AND COLLATERAL CALL.
(a) COLLATERAL. Payment of the Obligation is secured by (i) a first
perfected security interest granted by CMFRI in 100% of the stock of CRI and
CMI, and a first perfected security interest granted by CRI and CMI in all of
the Capital Stock of the Subsidiaries, if any, (ii) subject to Permitted Liens,
a first perfected security interest in all of the accounts, equipment,
inventory, chattel paper, general intangibles, certain real property and other
tangible and intangible assets (both personal and real property) of CMI and CRI
and the Subsidiaries, (iii) a Guaranty of the Obligation in the form of EXHIBIT
E hereto of each Subsidiary (collectively, together with all other Properties or
assets of all CMI, CRI, the Subsidiaries and other Persons securing the
Obligation from time to time, the "Collateral"). The Companies agree that they
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will, and will cause the Subsidiaries to, execute and deliver, or cause to be
executed and delivered, such documents as the Administrative Lender may from
time to time reasonably request to create and perfect a first Lien for the
benefit of the Administrative Lender and the Lenders in the Collateral.
(b) COLLATERAL CALL. The Companies agree to cause each newly formed or
acquired Subsidiary from time to time to execute a Guaranty of the Obligation in
the form of EXHIBIT E hereto promptly upon becoming a Subsidiary of any Company.
Each Company agrees to cause any Person owning any interest in CMI, CRI or any
Subsidiary from time to time to immediately pledge such interest to secure the
Obligation, pursuant to a pledge agreement substantially in the form of EXHIBIT
F hereto. Each Company agrees to, and agrees to cause the Subsidiaries to,
grant the Administrative Lender and the Lenders from time to time at the request
of the Lenders a Lien on any of the Property of CMI, CRI or any Subsidiary not
already constituting Collateral. In that regard, each Company shall, and shall
cause the Subsidiaries to, use best efforts to assist the Administrative Lender
and the Lenders in creating and perfecting a first Lien, subject to Permitted
Liens, for the benefit of the Administrative Lender and Lenders securing the
Obligation in any such Property of CMI, CRI and the Subsidiaries, including,
without limitation, providing the Administrative Lender with title commitments,
appraisals, surveys (with flood plain certification), mortgagee title insurance,
evidence of insurance including flood hazard insurance, environmental audits,
UCC-11 searches, Tax and Lien searches, recorded real estate documents,
intellectual property documentation and registration and other similar types of
documents, consents, Authorizations, instruments and agreements relating to all
Property of each of CMI, CRI and the Subsidiaries as reasonably requested by the
Lenders from time to time.
ARTICLE III
LETTER OF CREDIT FACILITY
SECTION 3.01. LETTER OF CREDIT COMMITMENT. Subject to the terms and
conditions of this Agreement and each Application, and the satisfaction of each
of the conditions precedent set forth in Section 4.04 hereof, each Lender agrees
that the Administrative Lender shall, and the Administrative Lender agrees for
the Ratable account of the Lenders to, issue Letters of Credit as requested by
the Notification Agent on behalf of the Companies, provided that at no time
shall the aggregate face amount of all Letters of Credit exceed the Letter of
Credit Commitment. No Letter of Credit shall have an expiration date later than
the Maturity Date.
SECTION 3.02. APPLICATION FOR AND ISSUANCE OF LETTERS OF CREDIT. Each
Letter of Credit issued under this Article III (i) shall be in a form acceptable
to the Administrative Lender, (ii) shall be issued upon at least one Business
Day's notice on such date as the Notification Agent may designate, (iii) shall
be issued in a face amount not to exceed $1,000,000, (iv) shall be dated the
date of issuance and (v) shall expire on such date as may be requested by the
Notification Agent, but in no event later than the earlier of (a) 365 days after
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its issuance date or (b) the Maturity Date. The aggregate face amount of all
Letters of Credit shall not exceed the Letter of Credit Commitment. The
Notification Agent's request for each issuance of a Letter of Credit hereunder
shall be via a duly executed and completed Application. Notwithstanding
anything herein or in any other Loan Papers to the contrary, in no event shall
the Companies be entitled to request the issuance of a Letter of Credit if the
issuance of such Letter of Credit would cause the sum of (i) the aggregate face
amount of all Letters of Credit, plus (ii) without duplication, the aggregate
amount of Reimbursement Obligations, (iii) the aggregate amount of all Advances
outstanding, to exceed the Commitment.
SECTION 3.03. COMMISSION; PAYMENT OF DRAFTS DRAWN UNDER LETTERS OF CREDIT;
INCORPORATION OF TERMS OF THE APPLICATIONS. For the issuance of each Letter of
Credit, Companies shall, jointly and severally, pay the Administrative Lender
for the Ratable account of the Lenders, fees as provided in Sections 2.03(d) and
(e) hereof, such fees to be payable immediately upon receipt by the Notification
Agent of an invoice related thereto. All the terms and provisions of any and
all Applications under this Article III are incorporated herein by reference;
provided, however, that in the event of a conflict between the provisions of
this Agreement and any Application, the provisions of this Agreement shall
control. The Companies shall, jointly and severally, pay to the Administrative
Lender for the Ratable account of Lenders, on demand an amount equal to the face
amount of each draft drawn or purporting to be drawn under a Letter of Credit,
and otherwise in accordance with the terms of the Application. The
Administrative Lender may debit Companies' account(s) with the Administrative
Lender (up to the credit balance thereof) in order to pay each such draft, but
the Administrative Lender shall not be required to effect any such debit. If
Companies' account(s) have insufficient funds with which to pay such draft and
if payment thereof is not otherwise made or provided for on the maturity date of
the draft, the face amount of the maturing draft shall automatically be deemed
to be a Base Rate Advance so long as there exists no Default or Event of Default
and the total principal amount of all outstanding Advances (after treating the
face amount of the draft as an Advance) would not exceed the Commitment minus
the sum of the aggregate outstanding face amount of all Letters of Credit plus,
without duplication, the aggregate amount of the Reimbursement Obligation.
Administrative Lender shall promptly notify each other Lender of such Base Rate
Advance. If such notice given by Administrative Lender is prior to 12:00 noon
(New York time) such Lender shall, before 2:00 p.m. (New York time) on such date
(or, if such notice is after 12:00 noon (New York time) then by 2:00 p.m. (New
York time) on next following Business Day), make its Specified Percentage of
such Base Rate Advance available to the Administrative Lender in accordance with
the provisions of Section 2.02(a) hereof. Such Base Rate Advance shall be
evidenced by a Notice of Borrowing to be received by the Administrative Lender
not more than two Business Days following the date the draft matured. The
failure of the Notification Agent to transmit such Notice of Borrowing shall not
affect any Company's obligation to repay such amount.
SECTION 3.04. FAILURE TO PAY DRAWS ON LETTERS OF CREDIT. If the Companies
shall fail to pay the Administrative Lender the face amount of any draw on any
Letter of Credit as provided in Section 3.03 (whether by the making of an
Advance or otherwise), or if a Default or Event of Default shall exist at the
time of any draw on any Letter of Credit, then the face
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amount of such draft shall be payable upon demand and until payment shall bear
interest at the Highest Lawful Rate.
SECTION 3.05. REIMBURSEMENT OBLIGATION OF THE LENDERS. Each Lender
(including NationsBank of Texas, N.A. in its capacity as a Lender) agrees that
it shall be unconditionally and irrevocably liable, without regard to the
occurrence of any Default or Event of Default, to reimburse the Administrative
Lender on demand for such Lender's Specified Percentage of the amount of each
draft paid by the Administrative Lender in respect of any Letter of Credit, to
the extent that such amount is not reimbursed to the Administrative Lender by
the Companies. If the Administrative Lender is required at any time (whether
before or after the expiration date of any Letter of Credit) to return to any
Company or to a trustee, receiver, liquidator, custodian or other similar
official any portion of the payments made by or on behalf of any Company to the
Administrative Lender in reimbursement of payments made by the Administrative
Lender under any Letter of Credit and interest thereon, each Lender shall, upon
demand by the Administrative Lender, forthwith pay over to the Administrative
Lender, such Lender's Specified Percentage of such amount. All amounts payable
by any Lender under this Section 3.05 shall include interest thereon from the
day the applicable draw is made (or the date such Lender was to have made such
reimbursement payment, as appropriate), to but not including the date such
amount is paid by such Lender to the Administrative Lender, at a per annum rate
equal to the Federal Funds Rate. The obligations of the Lenders under this
Section 3.05 shall continue after the Maturity Date and survive any termination
of this Agreement.
SECTION 3.06. SHARING OF PAYMENTS. Each payment made by a Lender pursuant
to Section 3.06 shall be treated as the purchase by such Lender of a
participating interest in the Reimbursement Obligation in an amount equal to
such payment. Each Lender shall share in any interest which accrues and is paid
by the Companies according to such Lender's Specified Percentage. All amounts
recovered by the Administrative Lender or any Lender hereunder or under any
other Loan Papers and which are applied to the Reimbursement Obligation shall be
distributed to the Lenders according to their Specified Percentages.
SECTION 3.07. DUTIES OF THE ADMINISTRATIVE LENDER. The Administrative
Lender agrees with each Lender that it will exercise and give the same care and
attention to each Letter of Credit as it gives to its other letters of credit,
and the Administrative Lender's sole liability to each Lender shall be to
distribute promptly to each Lender, as and when received by the Administrative
Lender, each Lender's Specified Percentage of any payments made to the
Administrative Lender by any Company under this Article III. Each Lender and
each Company agrees that, in paying any draft, the Administrative Lender shall
not have any responsibility to obtain any document (other than the drafts,
certificates and other documents required by the Letter of Credit and/or this
Agreement) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the person delivering any such document. None of
the Administrative Lender or its respective representatives, directors,
officers, employees, attorneys or agents shall be liable to any Lender or any
Company for (i) any action taken or omitted in connection herewith at the
request or with the approval of any Lender in its capacity as the Administrative
Lender, (ii) any action taken or omitted in the absence of gross negligence and
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the absence of wilful misconduct, (iii) any recitals, statements,
representations or warranties contained in any document distributed to any
Lender, (iv) the creditworthiness of the Companies or (v) the execution,
effectiveness, genuineness, validity or enforceability of any Loan Papers or any
other document contemplated hereby or thereby. The Administrative Lender and
its officers, directors, employees, attorneys and agents shall be entitled to
rely and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation believed by it or
them to be genuine and correct and to have been signed or made by the proper
person and, with respect to legal matters, upon opinions of counsel selected by
the Administrative Lender.
SECTION 3.08. LENDERS, GENERALLY. No Lender shall be liable for the
performance or nonperformance of the obligations of any other Lender under this
Article III.
SECTION 3.09. GENERAL PROVISIONS. At no time shall the aggregate
outstanding face amount of all Letters of Credit exceed the lesser of (a) the
Letter of Credit Commitment and (b) the Commitment minus the sum of (i) the
total aggregate outstanding Advances, plus (ii) the aggregate Reimbursement
Obligation. No Letter of Credit shall have an expiration date later than the
Maturity Date.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. CONDITIONS PRECEDENT TO THE CLOSING DATE. The obligation of
each Lender to enter into this Agreement on the Closing Date shall be subject to
the conditions precedent that on the Closing Date:
(a) The making of the Commitment, the Letter of Credit Commitment, the
Revolving Credit Loans and the Letters of Credit shall not contravene any Law
applicable to the Administrative Lender or any Lender.
(b) There shall have occurred no material adverse change in the Companies'
business, assets or financial condition since June 3, 1994.
(c) The Companies shall have delivered to the Administrative Lender (i) an
executed copy of each Fee Letter, (ii) an executed copy for each Lender of the
Credit Agreement, the Security Agreement, each Pledge Agreement and the
Safekeeping Agreement, and (iii) an executed and completed Note for each Lender.
(d) The Companies shall have (i) paid accrued commitment fees through the
Closing Date in accordance with the terms and conditions of Section 2.03(a)
hereof, (ii) paid all other fees (including the facility fee) due and payable on
the Closing Date in accordance with the
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terms of the Fee Letters and (iii) reimbursed the Administrative Lender for all
legal fees incurred by the Administrative Lender in connection with this
transaction through the Closing Date.
SECTION 4.02. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE OR THE INITIAL
ISSUANCE OF LETTERS OF CREDIT. The obligation of each Lender to make the Initial
Advance or of the Administrative Lender to issue the first Letter of Credit
hereunder (if issued prior to the Initial Advance) shall be subject to the
further conditions precedent that on the Effective Date:
(a) The making of the Commitment, the Letter of Credit Commitment, the
Revolving Credit Loans and the Letters of Credit shall not contravene any Law
applicable to the Administrative Lender or any Lender.
(b) There shall have occurred no material adverse change in the Companies'
business, assets or financial condition since June 3, 1994.
(c) Each Company shall have delivered a Note for each Lender to each such
Lender, the Pledge Agreements granting the Lenders a first and prior security
interest in the Pledged Interests together with the stock certificates for all
of the Capital Stock with duly executed stock powers in blank, the stock
certificates for all of the Capital Stock of CMFRI and the Safekeeping Agreement
in form and substance satisfactory to the Administrative Lender with respect to
the Capital Stock of CMFRI, and all Security Documents, other Loan Papers and
other documents and instruments requested by the Administrative Lender and
Lenders granting and perfecting a first and prior security interest and Lien in
all Collateral.
(d) The Companies shall have delivered to each Lender a certificate, dated
as of the Effective Date, executed by an Authorized Officer, certifying that (i)
no Default or Event of Default has occurred and is continuing, (ii) the
representations and warranties set forth in Article V hereof are true and
correct, (iii) each of the Companies has complied with all agreements and
conditions to be complied with by it under the Loan Papers by such date, and
(iv) the Companies have received the proceeds from an aggregate equity
investment in the Companies in an amount not less than $12,000,000.
(e) Each Company shall have delivered to each Lender a certificate, dated
as of the Effective Date, executed by an Authorized Officer, certifying (i) that
attached copies of the certificates of organization certified by the Secretary
of States of the appropriate states for the Companies, and bylaws or partnership
agreements, as appropriate, delivered to each Lender for each of the Companies
are true and complete, and in full force and effect, without amendment except as
shown, (ii) that a copy of the resolutions for each of the Companies authorizing
execution and delivery of this Agreement and any Loan Papers, as appropriate,
are true and complete, and that such resolutions are in full force and effect,
were duly adopted, have not been amended, modified, or revoked, and constitute
all resolutions adopted with respect to this loan transaction, (iii) that copies
of certificates of good standing and certificates of existence for each of the
Companies, as appropriate, for each state in which any Company is operating,
have been
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issued within 30 days prior to the Effective Date and delivered to the Lenders
in accordance with Section 4.02(j) below, (iv) that none of the Companies has
any Non-Compete Agreements, (v) that a copy of each Management Agreement is
attached and it is true, complete and correct, (vi) that the copy of each
Acquisition Agreement delivered to each Lender in accordance with Section
4.02(f) below is true, complete and correct as of the Effective Date, (vii) that
the copy of the Subordinated Notes together with a list of payees delivered to
each Lender in accordance with Section 4.02(f) below is true, complete and
correct as of the Effective Date and that the copies delivered in accordance
with Section 4.02(f) below constitute all of the Subordinated Note Agreements,
(viii) that the Pledged Interests have been issued and are outstanding and (ix)
as to the incumbency, name, and signature of each officer of each Company
authorized to sign this Agreement and the Loan Papers, as applicable, and any
amendments to this Agreement and the Loan Papers on its behalf. The
Administrative Lender and the Lenders may conclusively rely on the certificate
delivered pursuant to this subsection until they receive notice in writing to
the contrary.
(f) The appropriate parties shall have executed and delivered each of the
Acquisition Agreements, the Subordinated Note Agreements and all related
documentation, and the Administrative Lender shall have received (i) copies of
all Acquisition Agreements and Subordinated Note Agreements, certified by an
Authorized Officer to be true and correct copies of such documents as of the
Effective Date and having been duly authorized with respect to each party
thereto, (ii) a certificate from an Authorized Officer that the Acquisitions
shall have been consummated in accordance with the terms of the Acquisition
Agreements, without amendment, supplement or waiver in any respect or failure to
satisfy any condition contained therein except those specifically consented to
by the Lenders in writing, (iii) a certificate from an Authorized Officer
stating that CSC owns, directly or indirectly, not less than 100% of CMFRI and
that CMFRI owns not less than 100% of each Company, and (iv) evidence that CSC,
CMFRI and each Company have received all final and unappealable Authorizations
(including without limitation, FCC License transfer approvals) required in
connection with the Acquisitions.
(g) Each Lender shall have received (i) the opinion of Sullivan &
Cromwell, counsel to CSC, the Companies and the Subsidiaries, dated the
Effective Date and substantially in the form of EXHIBIT I-1 hereto, (ii) the
opinion of Waters, McPherson, McNeill, P.A., special counsel to CSC, CMFRI, the
Companies and the Subsidiaries, dated the Effective Date and substantially in
the form of EXHIBIT I-2 hereto with regard to matters under the laws of the
State of New Jersey, and (iii) the opinion of Robert S. Lemle, Esq., General
Counsel of CSC, dated the Effective Date, in the form of EXHIBIT I-3 hereto.
(h) Each Lender shall have received an opinion of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., special counsel for FCC matters to CSC, CMFRI,
the Companies, and the Subsidiaries, dated the Effective Date and substantially
in the form of EXHIBIT J hereto.
(i) Each Lender shall have received, in form and substance satisfactory to
it, (i) certificates from the Secretary of State and other appropriate officials
of the applicable states of organization certifying that each Company is a
corporation duly organized, validly existing,
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and in good standing in their respective jurisdictions of organization as of the
respective dates thereof, and (ii) certificates of appropriate authorities of
all jurisdictions where each Company is required to be qualified to do business,
to the effect that it is in good standing and duly qualified to transact
business in such jurisdictions.
(j) Delivery to the Administrative Lender of this Agreement and all Loan
Papers required to be delivered prior to such date to the Lenders, all in form
and substance reasonably satisfactory to the Lenders and completed and executed
by each Company.
(k) Delivery to the Administrative Lender copies of all legal opinions
from counsel representing any Company or CSC rendered in connection with the
Acquisitions (FCC, corporate and otherwise) together with letters from each such
counsel authorizing the Administrative Lender, on behalf of the Lenders, to rely
on each such opinion.
(l) Each Lender shall have received each of the following, in form and
substance satisfactory to the Administrative Lender, the Lenders and Special
Counsel:
(i) the results of UCC and other Lien searches against the
assets of CMFRI, each Company, the Subsidiaries and the System showing
no Liens against any them and their properties and assets (including
the Collateral) except (A) those securing the Obligation, (B)
Permitted Liens, and (C) those Liens for which releases are being
delivered to the Administrative Lender on the Effective Date
concurrent with the consummation of the Acquisitions;
(ii) as of and for the calendar year ended December 31,
1993, income statements of the Systems for such period, in reasonable
detail and certified by an Authorized Officer to the best of his/her
knowledge to be complete and correct and prepared consistently with
past practices and substantially in accordance with generally accepted
accounting principles, subject to year-end adjustment;
(iii) a Compliance Certificate computed after giving
effect to the Initial Advance;
(iv) copies of all Authorizations and consents, waivers or
other evidence from all stockholders, Tribunals and other material
third parties of all approvals and waivers (including without
limitation FCC approvals and CATV Franchises) necessary or appropriate
to permit the Acquisition and the other transactions contemplated
hereby (including, without limitation, final and unappealable approval
from the State of New Jersey);
(v) in form reasonably satisfactory to the Lenders and
Special Counsel, certified copies of all Capital Leases of the
Companies and the Subsidiaries, amended or modified, together with
schedules listing all property leased thereunder and all other
information reasonably requested by any Lender with respect thereto;
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(vi) payment of all fees (including the facility fee and the
commitment fee through the Effective Date) and reimbursement to the
Administrative Lender of all legal fees incurred in connection with
this transaction through the Effective Date;
(vii) copies of insurance binders or certificates
covering the assets of the Companies and the Subsidiaries (including
the Systems) showing the Administrative Lender, on behalf of the
Lenders, as loss payee or additional insured where appropriate and
evidence of flood insurance on all real Property owned by the
Companies; and
(m) All Authorizations shall be in form and substance acceptable to the
Lenders and all such Authorizations, assignments, agreements, consents,
easements, leases, privileges and rights are, to the best knowledge of the
Companies after reasonable investigation, in full force and effect and are not
subject to any pending reversal or cancellation.
(n) The Companies shall have entered into a Management Agreement in form
and substance acceptable to the Lenders in the form of EXHIBIT L hereto.
(o) The Companies shall have delivered new and updated Schedules to this
Agreement, which such schedules shall reflect no changes that are material and
adverse to the interests of the Lenders.
(p) The System and all other assets acquired by CMFRI pursuant to or in
accordance with the Acquisition shall have been acquired by CMFRI, and CMFRI
shall have fully and irrevocably assigned and sold the System and such assets to
CMI and/or CRI.
(q) The Administrative Lender and each Lender shall have received copies
of all documents or other instruments that it may reasonably request in
connection with transactions contemplated hereby and by the Acquisition. All
such documents and instruments must be in form and substance reasonably
satisfactory to the Lenders. Since the Closing Date, none of CSC, CMFRI, any
Company or any Subsidiary has agreed to any amendment, waiver or consent of any
term or provision of the Acquisition Agreement or any document related thereto.
SECTION 4.03. CONDITIONS PRECEDENT TO ALL ADVANCES (OTHER THAN REFINANCING
ADVANCES). The obligation of each Lender to make each Advance (including the
Initial Advance but excepting any Refinancing Advance) shall be subject to the
further conditions precedent that on the date of such Advance the following
statements shall be true (and the delivery of each notice of borrowing under
Section 2.02(a) hereof or the failure to deliver a notice under Section 2.05(a)
hereof shall constitute a representation that on the disbursement date they are
true):
(a) The representations and warranties contained in Article V hereof
are true and correct on such date, as though made on and as of such date, except
to the extent expressly made only as of a prior date; and
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(b) No Default or Event of Default shall exist on any such date, and
no Default or Event of Default would result from such Advance (including the
intended application of the proceeds of such Advance); and
(c) There shall have occurred no material adverse change in the
Companies' business, assets or financial condition since June 3, 1994; and
(d) The sum of (i) all Advances outstanding on the date of such
Advance (after giving effect to the proposed Advance to be made on such date)
plus (ii) the aggregate face amount of all outstanding Letters of Credit, plus
(iii) the sum of the aggregate Reimbursement Obligation, shall not exceed the
Commitment.
SECTION 4.04. CONDITIONS PRECEDENT TO THE ISSUANCE OF EACH LETTER OF
CREDIT. The obligation of the Administrative Lender to issue any and each
Letter of Credit shall be subject to the further conditions precedent that on
the date of such Letter of Credit the following statements shall be true (and
the Notification Agent's request for a Letter of Credit hereunder shall
constitute a representation by the Companies that on such date they are true):
(a) The representations and warranties contained in Article V hereof
are true and correct on such date, as though made on and as of such date, except
to the extent expressly made only as of a prior date; and
(b) No Default or Event of Default shall exist on any such date, and
no Default or Event of Default would result from the issuance of such Letter of
Credit (including the intended use of such Letter of Credit); and
(c) There shall have occurred no material adverse change in the
Companies' business, assets or financial condition since June 3, 1994; and
(d) The sum of (i) all Advances outstanding on the date of such
Letter of Credit request plus (ii) the aggregate face amount of all outstanding
Letters of Credit (after giving effect to the proposed Letter of Credit to be
made on such date), plus (iii) the sum of the aggregate Reimbursement
Obligation, shall not exceed the Commitment; and
(e) A duly completed, executed and delivered Application (executed by
each Company) with respect to such Letter of Credit shall have been received by
the Administrative Lender.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Companies jointly and severally represent and warrant that the
following are true and correct:
SECTION 5.01. ORGANIZATION, QUALIFICATION AND CAPITALIZATION. CMFRI, each
Company and each Subsidiary that is a corporation is duly organized, validly
existing and in good standing under the Laws of its state of organization. Any
Subsidiary that is a partnership, is a partnership duly organized, validly
existing and in good standing under the Laws of the state of its organization.
CMFRI, each of the Companies and the Subsidiaries is qualified to do business in
all jurisdictions where the nature of its business or Properties require such
qualification, except where the failure to do so is not reasonably likely to
have a Material Adverse Effect. Set forth on SCHEDULE 5.01 attached hereto is a
complete and accurate listing, after the consummation of the Acquisitions,
showing CMFRI, each Company and each Subsidiary, (a) the jurisdiction of its
organization and its mailing address, which is the principal place of business
and executive offices of CMFRI, each Company and each such Subsidiary unless
otherwise indicated, (b) the classes of its Capital Stock and the numbers or
amounts of its Capital Stock authorized and outstanding, (c) each record and
beneficial owner of its outstanding Capital Stock on the date hereof, indicating
the ownership percentages, and (d) all outstanding options, rights, rights of
conversion, redemption, purchase or repurchase, rights of first refusal and
similar rights relating to the Capital Stock of CMFRI, each Company and each
such Subsidiary, as appropriate. CMFRI, each of the Companies and the
Subsidiaries has all requisite corporate or partnership power and authority to
own, operate and encumber its Property and to conduct its business as presently
conducted and as proposed to be conducted following the consummation of the
transactions contemplated by this Agreement. All of the outstanding Capital
Stock of each corporate Subsidiary is validly issued, fully paid and
nonassessable and all of the outstanding Capital Stock of CMFRI, each Company
has been duly authorized and validly issued. All of such Capital Stock is owned
free and clear of all Liens, including any restrictions on hypothecation or
transfer, except Liens described on SCHEDULE 7.04 attached hereto.
SECTION 5.02. DUE AUTHORIZATION; VALIDITY. (a) The Board of Directors of
CMFRI, each Company and each corporate Subsidiary and (b) the general partner of
each Subsidiary that is a partnership has duly authorized the execution,
delivery and performance of the Loan Papers to be executed by each such entity.
No consent of the shareholders of CMFRI, any Company or the shareholders of
partners of any Subsidiary (except any consent already obtained) is required as
a prerequisite to the validity and enforceability of any Loan Papers or any
other document contemplated hereby. Each of CMFRI, the Companies and each of
the Subsidiaries has full legal right, partnership or corporate power, as
appropriate, and authority to execute, deliver and perform its obligations under
the Loan Papers to be executed and delivered by it. The Loan Papers constitute
the legal, valid and binding respective obligations of CMFRI, the Companies and
the Subsidiaries, as appropriate, enforceable against such entities
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in accordance with their terms (subject as to enforcement of remedies to any
applicable bankruptcy, reorganization, moratorium or similar Laws or principles
of equity affecting the enforcement of creditors' rights generally).
SECTION 5.03. CONFLICTING AGREEMENTS AND OTHER MATTERS. There exists no
breach, default or event of default under any agreement, Authorization or other
relationship of CMFRI, any Company or any Subsidiary that is reasonably likely
to have a Material Adverse Effect. The execution or delivery of the Loan
Papers, and performance thereunder by CMFRI, the Companies and the Subsidiaries,
does not conflict with, or result in a material breach of the terms, conditions
or provisions of, or constitute a material default under, or result in any
material violation of, or result in the creation of any material Lien (other
than in favor of the Administrative Lender) upon any Property of CMFRI, any
Company or any Subsidiary under any Authorization or Law, or any material
agreement, document, instrument executed by such Person. The execution or
delivery of the Loan Papers, and performance thereunder by CMFRI, the Companies
and the Subsidiaries, does not require any consent (other than consents already
obtained), approval, or other action by, notice to, or filing with any Tribunal
or Person pursuant to any award of any arbitrator, or any agreement, instrument,
or Law to which CMFRI, any Company or any Subsidiary or any of their Property is
subject. The execution or delivery of the Loan Papers, and performance
thereunder by CMFRI, the Companies and the Subsidiaries, does not require any
consent (other than consents already obtained), approval, or other action by,
notice to, or filing with any Tribunal or Person pursuant to the articles of
organization or incorporation or partnership agreement, as appropriate, or
bylaws of CMFRI, the Companies and the Subsidiaries. No Authorization which has
not been obtained by CMFRI, the Companies or the Subsidiaries is required to
authorize, or is required in connection with, the execution, delivery and
performance of any of the Loan Papers or the operation of any CATV System.
SECTION 5.04. FINANCIAL STATEMENTS. The financial statements of the
Companies, the Subsidiaries and the Systems delivered to the Administrative
Lender and the Lenders fairly present in all material respects their financial
condition and the financial condition of the System and the results of
operations as of the dates and for the periods shown for the Companies and the
System, all in accordance with GAAP, subject to customary year end adjustments
and accruals. The latest of such financial statements reflects all material
liabilities, direct and contingent, of CMFRI, each Company and Subsidiary that
are required to be disclosed in accordance with GAAP. As of the date of the
latest of such financial statements, there were no Guaranties, liabilities for
Taxes, forward or long-term commitments or unrealized or anticipated losses from
any unfavorable commitments that are substantial in amount and that are not
reflected on such financial statements or otherwise disclosed in writing to the
Administrative Lender. Since the date of the Projections, there has been no
event or circumstance which is reasonably likely to have a Material Adverse
Effect. CMFRI, each Company and each Subsidiary is Solvent. The Projections
delivered to the Administrative Lender and the Lenders were prepared in good
faith and management believes them to be based on reasonable assumptions and to
fairly present the projected financial condition of CMFRI, the Companies and the
System and the projected results of operations as of the dates and for the
periods shown for CMFRI, the Companies and the Systems.
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SECTION 5.05. LITIGATION. Shown on SCHEDULE 5.05 attached hereto is all
Litigation that is pending or, to the best of any of the Companies' knowledge,
threatened against CMFRI, any Company or any Subsidiary on the date of this
Agreement. There is no pending or, to the best of any of the Companies'
knowledge, threatened Litigation against CMFRI, any Company or any Subsidiary
that is reasonably likely to have a Material Adverse Effect.
SECTION 5.06. COMPLIANCE WITH LAWS REGULATING THE INCURRENCE OF DEBT. No
proceeds of any Advance will be used directly or indirectly by any Company to
acquire any security in any transaction which is subject to Sections 13 and 14
of the Securities Exchange Act of 1934, as amended. No Company or Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of any Advance will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock. Following the Companies'
intended use of the proceeds of each Advance, no assets of any of the Companies
or any of the Subsidiaries, will be "margin stock" within the meaning of
Regulation U. None of the Companies or Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (as any of the
preceding acts have been amended), or any other Law that the incurring of Debt
by the Companies or Subsidiaries would violate in any material respect,
including without limitation Laws relating to common or contract carriers or the
sale of electricity, gas, steam, water or other public utility services.
SECTION 5.07. AUTHORIZATIONS, TITLE TO PROPERTIES AND RELATED MATTERS.
CMFRI, the Companies and the Subsidiaries possess all Authorizations necessary
and appropriate to own, operate and construct the CATV Systems or otherwise for
the operation of their businesses and are not in violation thereof in any
material respect. All such Authorizations are in full force and effect, all
such material Authorizations are listed on SCHEDULE 5.07 hereto, and no event
has occurred that permits, or after notice or lapse of time could permit, the
revocation, termination or modification of any Authorization which is necessary
or appropriate to own, operate and construct the CATV Systems or otherwise
material for the operation of any such business, which is reasonably likely to
have a Material Adverse Effect. None of CMFRI or any Company is in violation of
any material duty or obligation required by the Communications Act of 1934, as
amended, or any material FCC rule or regulation applicable to the operation of
any portion of any of the Systems, except as disclosed on SCHEDULE 5.07 hereto.
There is not pending or, or to the best knowledge of any Company, threatened,
any action by the FCC to modify, revoke, cancel, suspend or refuse to renew any
Authorization. There is not now issued or outstanding or, to the best knowledge
of any Company, threatened, any notice of any hearing, violation or material
complaint against any Company or any Subsidiary with respect to the operation of
any portion of the System and no Company has any knowledge that any Person
intends to contest renewal of any Authorization, except as disclosed on SCHEDULE
5.07 hereto. Each Company and each Subsidiary has full partnership or corporate
power (as appropriate), authority and legal right to own and operate its
Property and to conduct its business. Each has good title to its Property,
subject to no Lien of any kind, except Permitted Liens. No Company or any
Subsidiary is in
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violation of its respective articles of organization or incorporation or
partnership agreement (as applicable) or bylaws. None of the Companies or the
Subsidiaries is in violation of any Law, or material agreement or instrument
binding on or affecting it or any of its Properties, the effect of which could
reasonably be expected to have a Material Adverse Effect. No business or
Properties of any Company or Subsidiary is presently affected by any strike,
lock-out or other labor dispute, drought, storm, earthquake, embargo, act of God
or public enemy, or other casualty, except any such event that is not reasonably
likely to have a Material Adverse Effect.
SECTION 5.08. OUTSTANDING DEBT. None of CMFRI, the Companies or the
Subsidiaries have any outstanding Debt, Guaranties or Liens, except Permitted
Liens and as otherwise shown on SCHEDULES 5.08, 7.03 AND 7.04 attached hereto.
No breach, default or event of default exists under any document, instrument or
agreement evidencing or otherwise relating to any Debt.
SECTION 5.09. TAXES. Each of CMFRI, each Company and each Subsidiary has
filed all federal, state and other Tax returns which are required to be filed,
and has paid all Taxes as shown on said returns, as well as all other Taxes, to
the extent due and payable. All Tax liabilities of each of the Companies and
each of the Subsidiaries are adequately provided for on their books, including
interest and penalties, and adequate reserves have been established therefor in
accordance with GAAP. No income Tax liability has been asserted by taxing
authorities for Taxes in excess of those already paid, and no taxing authority
has notified any Company or any of the Subsidiaries of any deficiency in any Tax
return, other than those that are being diligently contested by a Company in
good faith and for which adequate reserves have been established in accordance
with GAAP. There are no tax agreements in effect among or with respect to any
Company or any Subsidiary, except those tax agreements described on SCHEDULE
5.09 hereto, a copy of each of which has been delivered to the Administrative
Lender, or if such tax agreement is executed after the Closing Date, those tax
agreements an executed copy of which have been delivered each Lender.
SECTION 5.10. ERISA. Each Plan of any Company or any Subsidiary has, to
the extent applicable, satisfied the minimum funding standards under all Laws
applicable thereto, and no Unfunded Liabilities exist, except as set forth on
SCHEDULE 5.10 hereto. None of the Companies or the Subsidiaries have incurred
any material liability to the PBGC with respect to any Plan. No ERISA Event has
occurred with respect to any Plan of any Company or any Subsidiary. No Company
has participated in any non-exempt Prohibited Transaction with respect to any
Plan or trust created thereunder, and the consummation of the transactions
contemplated hereby will not involve any non-exempt Prohibited Transaction,
assuming the amounts being loaned to the Companies (a) do not (i) constitute
assets allocated to any separate account maintained by the Lenders in which an
employee benefit plan has an interest or (ii) plan assets as defined in 29
C.F.R. Section 2510.3-101 or (b) are from a bank collective investment fund and
the transactions satisfy Prohibited Transaction Class Exemption 91-38. None of
the Companies, the Subsidiaries or any ERISA Affiliate has incurred any
Withdrawal Liability to any Multiemployer Plan or currently contributes or is
required to contribute to a Multiemployer
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Plan. No event has occurred which could result in the Companies', the
Subsidiaries' or any ERISA Affiliates' incurring any Withdrawal Liability to any
Multiemployer Plan.
SECTION 5.11. ENVIRONMENTAL MATTERS. Each of the Companies and the
Subsidiaries has obtained all environmental, health and safety permits, licenses
and other authorizations required to carry on its business as being conducted
under all Applicable Environmental Laws in effect on the date such
representation is being made. Each of such permits, licenses and authorizations
is in full force and effect and each of the Companies and the Subsidiaries is in
compliance with the terms and conditions thereof, and is also in compliance with
all other material limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any Applicable Environmental Law in effect on the date such representation is
being made or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, other than those requirements that are being diligently contested in
good faith by a Company and for which adequate reserves have been established in
accordance with GAAP. In addition, no written notice, notification, demand,
request for information, citation, summons or order has been issued, no written
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or, to the knowledge of any Company or any Subsidiary,
threatened by any Tribunal with respect to any alleged failure by any Company or
any Subsidiary to have any environmental, health or safety permit, license or
other authorization required under any Applicable Environmental Law in
connection with the conduct of the business of any Company or any Subsidiary or
with respect to any generation, treatment, storage, recycling, transportation,
discharge, disposal or release of any Hazardous Materials by any Company or any
Subsidiary. On the Closing Date and on the Effective Date, there are no
material liabilities resulting from a violation of any Applicable Environmental
Law. After the Effective Date, there are no environmental liabilities of any
Company or any Subsidiary except as disclosed to the Lenders in writing. None
of the Companies, CMFRI or, to the best of each Company's knowledge, the Seller,
have conducted any environmental studies and/or reports in connection with the
real Property to be acquired by the Companies pursuant to the Acquisition. No
Hazardous Materials are generated or produced at or in connection with the
Properties and operations of any of the Companies or any of the Subsidiaries.
No Hazardous Materials have been disposed of or otherwise released on or to any
Property on which any operations of any Company or any Subsidiary are conducted,
except in compliance with Applicable Environmental Laws or to the extent that
such disposal or release is not likely to have a Material Adverse Effect.
SECTION 5.12. DISCLOSURE. None of the Companies or the Subsidiaries has
made a material misstatement of fact, or failed to disclose any fact necessary
to make the facts disclosed taken as a whole not misleading, to the
Administrative Lender or any Lender during the course of application for and
negotiation of any Loan Papers or otherwise in connection with any Advances.
SECTION 5.13. CERTAIN AGREEMENTS. The Capitalized Lease Obligations have
been duly authorized, executed and delivered by the respective Company or
Subsidiary, as appropriate, and (to the best of the Companies' knowledge) the
other parties thereto. There is no litigation, or claim of breach or default,
pending or threatened with respect to any Capitalized
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Lease Obligations, or, to the best of knowledge of the Companies, any basis for
any such litigation or claim. The Companies have provided, or caused to be
provided, to the Administrative Lender complete and correct copies of or access
to the Capitalized Lease Obligations, all as amended to date, together with all
exhibits and schedules thereto.
SECTION 5.14. VALID ISSUANCE OF SECURITIES. The Capital Stock of CMFRI,
each Company and each Subsidiary when issued and sold was exempt from
registration or qualification under applicable federal or state securities laws.
SECTION 5.15. CERTAIN FEES. No broker's, finder's, management fee or
other fee or commission will be payable by CMFRI, any Company or any Subsidiary
(other than to the Lenders hereunder) with respect to the making of Advances
hereunder.
SECTION 5.16. INTELLECTUAL PROPERTY. The Companies and the Subsidiaries
have obtained all material patents, trademarks, service-marks, trade names,
copyrights, licenses and other rights, free from material restrictions, which
are necessary for the operation of their respective businesses as presently
conducted and as proposed to be conducted. Nothing has come to the attention of
any Company to the effect that (a) any process, method, part or other material
presently contemplated to be employed by any Company may infringe any material
patent, trademark, service-mark, trade name, copyright, license or other right
owned by any other Person, or (b) except as shown as SCHEDULE 5.05 attached
hereto, there is pending or overtly threatened any material claim or litigation
against or affecting any Company contesting its right to sell or use any such
material process, method, part or other material.
SECTION 5.17. APPLICATION OF REPRESENTATIONS AND WARRANTIES; SURVIVAL. To
the extent any Company has any Subsidiaries, the representations and warranties
made under this Agreement shall be deemed applicable to each of them as of the
formation or acquisition of such Subsidiary and at and as of each date the
representations and warranties are remade pursuant to this provision. All
representations and warranties made under this Agreement shall survive, and not
be waived by, the execution hereof by the Administrative Lender and the Lenders,
any investigation or inquiry by the Administrative Lender or any Lender, or by
the making of any Advance under this Agreement.
SECTION 5.18. ACQUISITIONS. (a) The execution, delivery and performance
by Sellers, CMFRI and the Companies of the respective Acquisition Agreements to
which each is a party, the consummation of the Acquisitions in accordance
therewith and the execution and delivery of the Subordinated Note Agreements,
are within the corporate or individual powers of each signatory thereto, require
no action by or in respect of, or registration or filing with, or exemption from
any governmental body, agency or official that will not have been taken as of
the Effective Date and, with respect to each that is a corporation have been
duly authorized by all necessary corporate action, provided that, with respect
to the Sellers only, any dispute, breach or alleged breach of the above
representation and warranty among the partners of the Sellers that does not
affect any Company or CMFRI shall not constitute a breach of this representation
and warranty. The execution, delivery and performance by Sellers, CMFRI and
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the Companies of the respective Acquisition Agreements, the consummation of the
Acquisitions in accordance therewith and the execution and delivery of the
Subordinated Notes and the Subordinated Note Agreements by CMFRI, will not
contravene or conflict with or constitute (with or without the giving of notice
or lapse of time or both) a default or breach under, or result in a termination
event or an acceleration of any obligation arising, existing or created by or
under, or result in the creation or imposition or material modification of (or
obligation to create or impose) any Lien (other than the Liens created by the
Loan Papers and Permitted Liens) on any of the assets or properties of any
Company or any Subsidiary of any Company or on any of the Capital Stock of any
Company under any provision of any Applicable Law or regulation or charter
document of any of CMFRI, any Company or any Subsidiary of any Company or of any
agreement or instrument evidencing or governing Debt of any Company or any
Subsidiary of any Company or CMFRI or of any judgment, injunction, order,
decree, agreement or other instrument binding upon any Company, any Subsidiary
or CMFRI.
(b) CSC is the legal and beneficial owner of 100% of the Capital Stock of
CMFRI, and CMFRI is the legal and beneficial owner of 100% of the Capital Stock
of CMI and CRI. No Company, CSC, or CMFRI has granted or issued, or agreed to
grant or issue, any options, warrants or similar rights to any Person to acquire
any Capital Stock of CMFRI, any Company or any Subsidiary. None of the
Companies, CSC, CMFRI nor any Subsidiary has granted or issued, or agreed to
grant or issue, any options, warrants or similar rights to any Person to acquire
any Capital Stock of any Subsidiary.
(c) The Companies have previously delivered to the Lenders a true and
correct copy of each Acquisition Agreement as executed and delivered by the
respective parties thereto. Each of the representations and warranties
contained in each Acquisition Agreement is true and correct in all material
respects on the date(s) when made. No rights of cancellation or rescission and
no material defaults exist with respect to any of the Acquisition Agreements.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as the Commitment, the Letter of Credit Commitment, any Letter of
Credit, any Advance or any portion of the Obligation is outstanding, or the
Companies owe any other amount hereunder:
SECTION 6.01. COMPLIANCE WITH LAWS. The Companies shall, and shall cause
the Subsidiaries to, comply in all material respects with all Applicable Laws,
including without limitation compliance with ERISA and all applicable federal
and state securities Laws, other than any such Laws the noncompliance with which
is not reasonably likely to have a Material Adverse Effect, or which is being
diligently contested in good faith by a Company and for which adequate reserves
have been established in accordance with GAAP.
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SECTION 6.02. INSURANCE. Each Company shall, and shall cause each
Subsidiary to, (a) keep its towers, head-end sites and offices and other
insurable Properties adequately insured at all times by reputable insurers to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies similarly situated
and in the same or similar businesses, (b) maintain in full force and effect
public liability (including liability insurance for all vehicles and other
insurable Property) and worker's compensation insurance, in amounts customary
for such similar companies to cover normal risks, (c) maintain business
interruption insurance for each CATV System in amounts customary for similar
companies, and (d) maintain such other insurance as may be required by Law or as
is customary for similar companies, provided that such insurance policies will
show the Administrative Lender, on behalf of the Lenders, as loss payee or
additional insured, where appropriate. The Companies shall deliver evidence of
renewal of each insurance policy on or before the date of its expiration, and
from time to time shall deliver to the Administrative Lender, upon demand,
certificates or binders evidencing the maintenance of such insurance.
SECTION 6.03. INSPECTION RIGHTS. Each Company shall, and shall cause each
Subsidiary to, permit the Administrative Lender or any Lender, upon two days
notice or such lesser notice as is reasonable under the circumstances, to
examine and make copies of and abstracts from their records and books of
account, to visit and inspect their Properties.
SECTION 6.04. RECORDS AND BOOKS OF ACCOUNT; CHANGES IN GAAP. Each Company
shall, and shall cause each Subsidiary to, keep adequate records and books of
account in conformity with GAAP. No Company shall, nor shall any Company permit
any Subsidiary to, change its method of financial accounting, except as required
or permitted by GAAP.
SECTION 6.05. REPORTING REQUIREMENTS. The Companies shall furnish to each
Lender and the Administrative Lender:
(a) As soon as available and in any event within 30 days after the end of
each month, consolidated and consolidating cash flow statements, and certified
by an Authorized Officer (without personal liability) as prepared in accordance
with GAAP, and fairly presenting the financial condition and results of
operations of the Companies and the Subsidiaries;
(b) As soon as available and in any event within 60 days after the end of
each of the Companies' fiscal quarters, (i) consolidated and combining balance
sheets of the Companies and the Subsidiaries as of the end of such quarter, and
consolidated and combining statements of income, and a consolidated and
combining statement of changes in cash flow of the Companies for such quarter
and for the portion of the fiscal year ending with such quarter, setting forth,
in comparative form, figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, and certified by an Authorized Officer as
prepared in accordance with GAAP, and fairly presenting the financial condition
and results of operations of the Companies and the Subsidiaries, and (ii)
detailed reports of Capital Expenditures for each such quarter together with a
detailed reconciliation of Capital Expenditures for each such quarter against
the projected quarterly budgeted Capital Expenditures previously delivered to
the Lenders;
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(c) As soon as available and in any event within 120 days after the end of
each fiscal year of the Companies, a consolidated and consolidating (and
combined and combining) balance sheet of the Companies and the Subsidiaries as
of the end of such fiscal year, and consolidated and consolidating (and combined
and combining) statements of income and changes in cash flow of the Companies
and the Subsidiaries for such fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an unqualified opinion of the Auditor,
which opinion shall state that (i) such financial statements were prepared in
accordance with GAAP, (ii) the examination by the Auditor in connection with
such financial statements was made in accordance with generally accepted
auditing standards, (iii) such financial statements present fairly the financial
condition and results of operations of the Companies and the Subsidiaries, and
(iv) in making the examination necessary for such opinion, they obtained no
knowledge, except as specifically stated, of any failure by any Company or any
Subsidiary to perform or observe any of its covenants relating to financial
matters in this Agreement or in the Loan Papers;
(d) Promptly upon receipt thereof, copies of all material reports or
material letters submitted to any Company or any Subsidiary by the Auditor or
any other accountants in connection with any annual, interim, or special audit,
including without limitation the comment letter submitted to management in
connection with any such audit;
(e) Together with each set of financial statements delivered pursuant to
subsections (b) and (c) above, a Compliance Certificate;
(f) As soon as available within 60 days after the end of each fiscal year
of the Companies, (i) the annual operating and Capital Expenditure budgets of
the Companies and the Subsidiaries for the following year, and (ii) a statement
of changes in any Company's basic and pay rates instituted in the fiscal year
most recently ended in reasonable detail;
(g) Immediately upon knowledge by any Authorized Officer of any Company of
(i) the occurrence of any Default or Event of Default, a notice from an
Authorized Officer, setting forth the details of such Default or Event of
Default, and the action being taken or proposed to be taken with respect
thereto; or (ii) the occurrence of any default, breach or failure to comply with
any term or provision of any Subordinated Note, Subordinated Note Agreement, any
Non-Compete Agreement, or any Acquisition Agreement;
(h) As soon as possible and in any event within five Business Days after
knowledge thereof by any Authorized Officer of any Company, notice of any
Litigation pending or threatened in writing against any Company or any
Subsidiary which, if determined adversely, could result in judgment, penalties,
or damages in excess of $500,000 in the aggregate for all related Litigation or
would otherwise be likely to have a Material Adverse Effect, together with a
statement of an Authorized Officer describing the allegations of such
Litigation, and the action being taken or proposed to be taken with respect
thereto;
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(i) Promptly following notice or knowledge thereof by any Authorized
Officer of any Company, notice of any actual or threatened loss or termination
of any FCC License of any Company or any Subsidiary or any other material
Authorization of any Company or any Subsidiary, together with a statement of an
Authorized Officer describing the circumstances surrounding the same, and the
action being taken or proposed to be taken with respect thereto;
(j) Promptly after filing or receipt thereof by an Authorized Officer of
any Company, copies of all material reports and material notices that any
Company or any Subsidiary (i) files or receives in respect of any Plan with or
from the Internal Revenue Service, the PBGC, or the United States Department of
Labor, or (ii) furnishes to or receives from any holders of any Debt or
Guaranty;
(k) Within 30 days after renewal or issuance of any hazard, public
liability, or other insurance policy maintained by any Company or any
Subsidiary, a summary of such policy in form and substance satisfactory to the
Administrative Lender (showing Administrative Lender, on behalf of the Company,
as loss payee or additional insured, where appropriate);
(l) Within 30 days after the close of each calendar month, a Subscriber
Report for such calendar month;
(m) Promptly upon a request therefor from the Administrative Lender or any
Lender, copies of all amendments or renewals of Authorizations and of all other
material communications between the FCC (or any state or local regulatory body)
and any Company or any Subsidiary;
(n) Within 270 days after the close of each Plan year, or if later,
promptly following the filing of the Form 5500 with the Internal Revenue Service
for such Plan year, a statement of the Unfunded Liabilities (if in excess of
$500,000) of each Plan, if any, certified as correct by an actuary enrolled
under ERISA or as set forth on a copy of Schedule B to the Form 5500 for such
Plan;
(o) As soon as possible and in any event within 10 days after any Company
knows that any Reportable Event has occurred with respect to any Plan, a
statement, signed by an Authorized Officer, describing said Reportable Event and
the action which such Company proposes to take with respect thereto;
(p) As soon as possible, and in any event within 10 days after receipt by
any Authorized Officer of any Company, a copy of (a) any notice or claim to the
effect that any Company or any Subsidiary is or may be liable to any Person as a
result of the release by any Company, any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal, state or local
environmental, health or safety law or regulation by any Company or any
Subsidiary, which is, in either case, reasonably likely to have a Material
Adverse Effect or cause an Event of Default;
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(q) Promptly upon request, evidence requested by Lenders that each Company
is the rightful owner and has good title to its Collateral, as applicable; and
(r) Promptly upon request, such other information concerning the condition
or operations of any Company, any Subsidiary, and any of their Affiliates,
financial or otherwise, as the Administrative Lender or any Lender may from time
to time reasonably request.
SECTION 6.06. USE OF PROCEEDS. The Companies shall use the proceeds of
Advances under the Revolving Credit Loans to consummate the Acquisitions in
accordance with the Acquisition Agreements, to fund Capital Expenditures, to
fund Permitted Acquisitions, and for other general corporate purposes.
SECTION 6.07. MAINTENANCE OF EXISTENCE AND ASSETS. Each Company shall
maintain, and shall cause each Subsidiary to maintain, its partnership or
corporate existence, as applicable. Each Company shall maintain, and shall
cause each Subsidiary to maintain, (a) its authority to do business in all
jurisdictions where the nature of its business makes it necessary to do so, and
(b) all FCC Licenses and other material Authorizations, where the failure to so
maintain is reasonably likely to have a Material Adverse Effect. Each Company
shall maintain, and shall cause each Subsidiary to maintain, the assets owned by
their respective businesses in good repair, working order and condition, and
make all such repairs, renewals and replacements thereof as may be required,
except where the failure to do so is not reasonably likely to have a Material
Adverse Effect.
SECTION 6.08. PAYMENT OF TAXES. Each Company will and will cause each
Subsidiary to, promptly pay and discharge all lawful Taxes imposed upon it or
upon its income or profit or upon any Property belonging to it, unless such Tax
shall not at the time be due and payable, or if the validity thereof shall
currently be contested on a timely basis in good faith by appropriate
proceedings (provided that the enforcement of any Liens arising out of any such
nonpayment shall be stayed or bonded during the proceedings) and adequate
reserves with respect to such Tax shall have been established.
SECTION 6.09. INDEMNITY.
(A) EACH COMPANY AGREES, JOINTLY AND SEVERALLY, TO DEFEND, PROTECT,
INDEMNIFY AND HOLD HARMLESS THE ADMINISTRATIVE LENDER AND EACH LENDER, EACH OF
THEIR RESPECTIVE AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH
AFFILIATES') OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS, SHAREHOLDERS AND
CONSULTANTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH
THE SATISFACTION OR ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH
HEREIN) OF EACH OF THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL FOR SUCH INDEMNITEES IN CONNECTION WITH ANY
INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDING, WHETHER OR NOT SUCH
INDEMNITEES SHALL BE DESIGNATED A PARTY THERETO OR SUCH PROCEEDING
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SHALL HAVE ACTUALLY BEEN INSTITUTED), IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST SUCH INDEMNITEES (WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL AND WHETHER
BASED ON ANY FEDERAL, STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR
AT EQUITABLE CAUSE, OR ON CONTRACT, TORT OR OTHERWISE), ARISING FROM OR
CONNECTED WITH THE PAST, PRESENT OR FUTURE OPERATIONS OF ANY COMPANY, ANY
SUBSIDIARY, ANY AFFILIATE OR ANY PREDECESSORS IN INTEREST, OR THE PAST, PRESENT
OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF ANY COMPANY, ANY SUBSIDIARY,
ANY AFFILIATE OR ANY PREDECESSORS IN INTEREST, IN EACH CASE RELATING TO OR
ARISING OUT OF THIS AGREEMENT, THE LOAN PAPERS, ANY OTHER DOCUMENT OR INSTRUMENT
EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, OR ANY ACT, EVENT OR
TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION RELATING OR ATTENDANT THERETO,
THE MAKING OF ANY PARTICIPATIONS IN THE ADVANCES AND THE MANAGEMENT OF THE
ADVANCES BY THE ADMINISTRATIVE LENDER, INCLUDING IN CONNECTION WITH, OR AS A
RESULT, IN WHOLE OR IN PART, OF ANY NEGLIGENCE OF THE ADMINISTRATIVE LENDER OR
ANY LENDER (OTHER THAN THOSE MATTERS INVOLVING A CLAIM BY A PARTICIPANT
PURCHASER AGAINST ANY LENDER AND NOT ANY COMPANY), OR THE USE OR INTENDED USE OF
THE PROCEEDS OF THE ADVANCES HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION
OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING ANY CLAIM OR LIABILITY
THAT ARISES AS THE RESULT OF (I) THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, AND (II) THE ACT, OMISSION, EVENT OR CIRCUMSTANCE (INCLUDING,
WITHOUT LIMITATION, A VIOLATION OF ANY APPLICABLE ENVIRONMENTAL LAW) TAKEN, OR
CAUSED, SOLELY BY ANY LENDER AT ANY TIME AFTER ANY LENDER TAKES POSSESSION OF,
OR OTHERWISE FORECLOSES UPON, ANY COLLATERAL, AND EXCLUDING MATTERS RAISED BY
ONE LENDER AGAINST ANOTHER LENDER OR BY ANY SHAREHOLDERS OF A LENDER AGAINST A
LENDER OR ITS MANAGEMENT (COLLECTIVELY, "INDEMNIFIED MATTERS").
(B) IN ADDITION, EACH COMPANY SHALL, JOINTLY AND SEVERALLY, PERIODICALLY,
UPON REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE LEGAL AND OTHER
ACTUAL REASONABLE EXPENSES (INCLUDING THE COST OF ANY INVESTIGATION AND
PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED MATTER. IF FOR ANY
REASON THE FOREGOING INDEMNIFICATION IS UNAVAILABLE TO ANY INDEMNITEE OR
INSUFFICIENT TO HOLD ANY INDEMNITEE HARMLESS WITH RESPECT TO INDEMNIFIED
MATTERS, THEN EACH COMPANY SHALL, JOINTLY AND SEVERALLY, CONTRIBUTE TO THE
AMOUNT PAID OR PAYABLE BY SUCH INDEMNITEE AS A RESULT OF SUCH LOSS, CLAIM,
DAMAGE OR LIABILITY IN SUCH PROPORTION AS IS APPROPRIATE TO REFLECT NOT ONLY THE
RELATIVE BENEFITS RECEIVED BY THE COMPANIES AND THE HOLDERS OF THE CAPITAL STOCK
OF THE COMPANIES ON THE ONE HAND AND SUCH INDEMNITEE ON THE OTHER HAND BUT ALSO
THE RELATIVE FAULT OF THE COMPANIES AND SUCH INDEMNITEE, AS WELL AS ANY OTHER
RELEVANT EQUITABLE CONSIDERATIONS. THE REIMBURSEMENT, INDEMNITY AND
CONTRIBUTION OBLIGATIONS UNDER THIS SECTION SHALL BE IN ADDITION TO ANY
LIABILITY WHICH ANY COMPANY MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS
AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO THE
BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE
COMPANIES, THE ADMINISTRATIVE LENDER, THE LENDERS AND ALL OTHER INDEMNITEES.
THE OBLIGATION OF THE COMPANIES UNDER THIS SECTION 6.09 SHALL SURVIVE (I) THE
EXECUTION OF THIS AGREEMENT AND (II) ANY TERMINATION OF THIS AGREEMENT AND
PAYMENT OF THE OBLIGATION.
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SECTION 6.10. INTEREST RATE HEDGING. Within 90 days after the Effective
Date, the Companies agree to consummate a floating rate to fixed rate interest
rate protection agreement designed to hedge the risk of variable interest rate
volatility, in an amount equal to one-half of the outstanding Advances at all
times (but not in excess of an amount equal to the aggregate outstanding
Advances on the date of consummation) for a period of not less than three years,
pursuant to and in accordance with Interest Hedge Agreements, provided that, if
the Companies enter into an interest rate cap agreement within 90 days after the
Effective Date to satisfy this Section 6.10, the interest rate related thereto
shall not exceed 2% per annum in excess of the then current treasury rate for
the applicable hedge period. Interest Hedge Agreements which provide for
three-year protection as provided in this Section may be deferred for one year
and satisfy the requirements of this Section.
SECTION 6.11. CMI AND CRI. Immediately upon the consummation of the
Acquisitions, CMFRI shall cause CMI and CRI to immediately become parties to
this Agreement and all other Loan Papers applicable to CMI and CRI.
SECTION 6.12. MAINTENANCE OF ASSETS. The Companies shall maintain, and
shall cause each Subsidiary to maintain, the assets necessary for their
respective businesses in good repair, working order and condition, and make all
such repairs, renewals and replacements thereof as may be required, except where
the failure to do so is not reasonably likely to have a Material Adverse Effect.
SECTION 6.13. AUTHORIZATIONS AND MATERIAL AGREEMENTS. The Companies
shall, and shall cause the Subsidiaries to, obtain and comply in all material
respects with all material Authorizations. The Companies shall, and shall cause
all the Subsidiaries to, maintain and comply in all material respects with all
agreements necessary or appropriate for any of them to own, maintain, or operate
any of their businesses or Properties.
SECTION 6.14. POST CLOSING COLLATERAL OBLIGATIONS OF THE COMPANIES.
Within 60 days after the Closing Date, the Companies shall have (a) used its
best efforts to provide to the Administrative Lender and each Lender estoppel
and attornment agreements from lessors under Capitalized Lease Obligations, in
form and substance satisfactory to the Lenders, and (b) used its best efforts to
provide to the Administrative Lender and each Lender landlord estoppel and
attornment agreements from lessors under leasehold real property leased by each
Company and Subsidiary, in form and substance satisfactory to the Lenders.
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ARTICLE VII
NEGATIVE COVENANTS
So long as the Commitment, the Letter of Credit Commitment, any Letter of
Credit, any Advance or any portion of the Obligation is outstanding, or the
Companies owe any other amount hereunder:
SECTION 7.01. FINANCIAL COVENANTS. The Companies and the Subsidiaries
shall comply with the following covenants, calculated on a consolidated basis:
(a) LEVERAGE RATIO: On any date of determination during the term hereof,
the Leverage Ratio shall not be more than the ratio set forth below during each
period described below:
<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
Closing Date through 6/30/94 6.30 to 1.00
7/1/94 through 12/31/94 6.25 to 1.00
1/1/95 through 3/31/95 6.00 to 1.00
4/1/95 through 3/31/96 5.75 to 1.00
4/1/96 through 3/31/97 5.50 to 1.00
4/1/97 through 3/31/98 4.75 to 1.00
4/1/98 and thereafter 4.00 to 1.00
</TABLE>
(b) ANNUALIZED OPERATING CASH FLOW LESS TAXES PAID IN CASH TO PRO FORMA
INTEREST EXPENSE: On any date of determination during the term hereof, the
ratio of (i) Annualized Operating Cash Flow minus Taxes paid by the Companies
and the Subsidiaries in cash during the twelve-month period immediately
preceding the date of determination to (ii) Pro Forma Interest Expense, shall
not be less than 2.00 to 1.00; provided however, that in the event of a failure
to meet the ratios required by this Section 7.01(b), so long as no other Default
or Event of Default exists hereunder, CSC may, prior to the delivery by the
Companies of their Compliance Certificate evidencing such breach, make a cash
capital contribution to the Companies to enable them to reduce the outstanding
principal amount of Advances hereunder in an amount sufficient to cure the
breach under this Section 7.01(b). In the event that CSC makes such capital
contribution, the Companies may demonstrate their compliance with the financial
covenant in this Section 7.01(b) by calculating such covenant (A) after such
contribution has been made, and (B) after the Obligation has been reduced by
such contribution.
(c) ANNUALIZED OPERATING CASH FLOW LESS TAXES PAID IN CASH TO PRO FORMA
DEBT SERVICE: On any date of determination during the term hereof, the ratio of
(i) Annualized
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Operating Cash Flow minus Taxes paid by the Companies and the Subsidiaries in
cash during the twelve-month period immediately preceding the date of
determination to (ii) Pro Forma Debt Service, shall not be less than the ratio
set forth below during each period described below:
<TABLE>
<CAPTION>
PERIOD RATIO
------ -----
<S> <C>
Closing Date through 12/31/95 1.75 to 1.00
1/1/96 through 12/31/96 1.25 to 1.00
1/1/97 through 12/31/99 1.15 to 1.00
1/01/00 and thereafter 1.25 to 1.00
</TABLE>
provided however, that in the event of a failure to meet the ratios required by
this Section 7.01(c), so long as no other Default or Event of Default exists
hereunder, CSC may, prior to the delivery by the Companies of their Compliance
Certificate evidencing such breach, make a cash capital contribution to the
Companies to enable them to reduce the outstanding principal amount of Advances
hereunder in an amount sufficient to cure the breach under this Section 7.01(c).
In the event that CSC makes such capital contribution, the Companies may
demonstrate their compliance with the financial covenant in this Section 7.01(c)
by calculating such covenant (A) after such contribution has been made, and (B)
after the Obligation has been reduced by such contribution.
SECTION 7.02. DEBT. The Companies shall not, and shall not permit any of
the Subsidiaries to, create, incur, assume, become or be liable in any manner in
respect of, or suffer to exist, any Debt, except the Companies may incur, (i)
Debt under the Loan Papers, (ii) unsecured Debt constituting overdrafts with any
Lender in an amount not to exceed $4,000,000 in the aggregate for all Companies
in existence at any time, (iii) Debt existing on the date hereof and scheduled
on SCHEDULE 5.08 attached hereto, (iv) Capitalized Lease Obligations in an
amount which, when added to the amount of Debt described on SCHEDULE 5.08
hereto, does not exceed Debt in the aggregate for all Companies at any one time
outstanding hereunder of $15,000,000.
SECTION 7.03. CONTINGENT LIABILITIES. The Companies shall not, and shall
not permit any of the Subsidiaries to, create, incur, assume, become or be
liable in any manner in respect of, or suffer to exist, any Guaranties, except
(a) Guaranties under or relating to the Loan Papers, (b) Guaranties in existence
on the date hereof, as shown on SCHEDULE 7.03 hereto, and (c) Guaranties by a
Company resulting from the endorsement of negotiable instruments for collection
in the ordinary course of business.
SECTION 7.04. LIENS. The Companies shall not, and shall not permit any of
the Subsidiaries to, create or suffer to exist any Lien upon any of their
Properties, except Permitted Liens. It is specifically acknowledged and agreed
that the Companies shall not, and shall not permit the Subsidiaries to,
hereafter agree with any Person (other than the Lenders) not to grant a Lien on
any of their assets or not to pledge any of their Capital Stock.
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SECTION 7.05. MANAGEMENT FEES. No Company nor any Subsidiary shall, at
any time, accrue Management Fees under any circumstances except in accordance
with the terms of the Management Agreement. No Company nor any Subsidiary shall
pay any Management Fees at any time, except in accordance with the terms of the
Management Agreement.
SECTION 7.06. DISPOSITIONS OF ASSETS. The Companies shall not, and shall
not permit any of the Subsidiaries to, sell, lease, assign, or otherwise dispose
of any assets of the Companies and the Subsidiaries, except sales or
dispositions of assets in the ordinary course of business, including
dispositions of obsolete or useless assets.
SECTION 7.07. RESTRICTED PAYMENTS AND RESTRICTED PURCHASES. The Companies
shall not, and shall not permit any of the Subsidiaries to, declare or pay or
make any Restricted Payments or Restricted Purchases.
SECTION 7.08. MERGER; CONSOLIDATION; INVESTMENTS. The Companies shall
not, and shall not permit any of the Subsidiaries to, liquidate or dissolve
itself, or suffer any liquidation or dissolution, or otherwise wind up, or merge
into, consolidate with, or make any Investment in, any Person, permit any other
Person to merge into or consolidate with it, or form or acquire any Subsidiary,
except (a) the merger or consolidation of wholly-owned Subsidiaries of the
Companies between themselves or into any Company, (b) Investments in existence
or pending on the Closing Date, as shown on SCHEDULE 7.08 hereto, (c)
Investments in Cash Equivalents, and (d) so long as (i) there exists no Default
or Event of Default prior to and after giving effect to the acquisition, and
(ii) the Companies' deliver to each Lender a Compliance Certificate computed
after giving effect to such acquisition, Investments in the form of Permitted
Acquisitions, for the Companies and the Subsidiaries in any fiscal year during
the term of this Agreement.
SECTION 7.09. ISSUANCE OF CAPITAL STOCK; AMENDMENT OF CHARTER OR
PARTNERSHIP AGREEMENT. The Companies shall not, and shall not permit any of the
Subsidiaries issue, sell or otherwise dispose of any Capital Stock in any
Company or Subsidiary, or any options or rights to acquire such Capital Stock.
No Company shall amend its articles of organization, bylaws or partnership
agreement, as applicable, and no Company shall permit any of the Subsidiaries
to, materially amend its articles of organization, bylaws or partnership
agreement, as applicable.
SECTION 7.10. BUSINESS. None of the Companies nor any of the Subsidiaries
shall conduct any business except the business of operating CATV Systems,
telecommunications services or other services related thereto.
SECTION 7.11. TRANSACTIONS WITH AFFILIATES. Except as permitted herein,
the Companies shall not, and shall not permit any of the Subsidiaries to, enter
into or be party to a transaction with any Affiliate, on terms no less favorable
than could be obtained on an arm's-length basis with a Person that is not an
Affiliate.
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SECTION 7.12. SALE OR DISCOUNT OF RECEIVABLES. The Companies shall not,
nor shall any Subsidiary, directly or indirectly, sell with or without recourse,
for discount or otherwise, any notes or accounts receivable, except settlement
of accounts receivable in the ordinary course of business.
SECTION 7.13. NON-COMPETE AGREEMENTS. None of the Companies nor any of
the Subsidiaries shall (a) enter into any Non-Compete Agreements or similar
agreements other than those in existence on the Closing Date and scheduled on
SCHEDULE 7.13 attached hereto, or (b) terminate any Non-Compete Agreement,
except at the end of the term set forth therein.
SECTION 7.14. SALE AND LEASEBACK. None of the Companies nor any of the
Subsidiaries shall enter into any arrangement whereby such Company or any
Subsidiary shall sell or transfer all or any part of its assets then owned by it
to any Person (other than to any Company or any wholly-owned Subsidiary), and
thereafter rent or lease such assets sold or transferred.
SECTION 7.15. FISCAL YEAR. No Company or Subsidiary shall change its
fiscal year.
SECTION 7.16. AMENDMENTS AND WAIVERS. None of the Companies shall, nor
shall the Companies permit any of the Subsidiaries to, amend or change any Loan
Paper or other written agreement with the Lenders or the Administrative Lender
executed or delivered in connection with this Agreement, other than with the
prior written consent of the requisite Lenders determined pursuant to Section
10.01 hereof, nor shall any Company or any of the Subsidiaries change or amend
(or take any action or fail to take any action the result of which is an
effective amendment or change) or accept any waiver or consent with respect to,
(a) the Certificate of Incorporation and By-laws of any Company, (b) any
Management Agreement, (c) any Non-Compete Agreement, or (d) any Acquisition
Agreement or any material agreement related to either Acquisition, without the
prior written consent of the requisite Lenders determined pursuant to Section
10.01 hereof. None of the Companies nor any of the Subsidiaries shall permit
any Company or Subsidiary to, amend or change (or take any action or fail to
take any action the result of which is an effective amendment or change) or
accept any waiver or consent with respect to, the Subordinated Notes and the
Subordinated Note Agreements, or any other document or instrument in connection
with either of them that would result in (a) an increase in the outstanding
principal amount of the Subordinated Notes, (b) a change in any principal,
interest, fees, or other amounts payable under the Subordinated Notes or the
Subordinated Note Agreements (including without limitation a waiver or action
that results in the waiver of any payment default under the Subordinated Notes
or Subordinated Note Agreements), (c) a change in any date fixed for any payment
of principal, interest, fees, penalties, redemptions, defeasance or other
amounts payable under the Subordinated Notes or Subordinated Note Agreements
(including, without limitation, as a result of any redemption), (d) a change in
any percentage of holders of the Subordinated Notes or Subordinated Note
Agreements required under the terms of the Subordinated Notes and the
Subordinated Note Agreements to take (or refrain from taking) any action, (e) a
change in any financial covenant,
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(f) a change in any remedy or right of the holders of the Subordinated Notes,
(g) a change in the definition of "Change in Control" as defined in the
Subordinated Note Agreements, (h) a change in any covenant, term or provision
which would result in such term or provision being more restrictive than the
terms of this Agreement and the Loan Papers, (i) a change the guaranty executed
by CSC or any change in any of the Subordinated Note Agreements that grants or
permits the granting of any security interest or Lien on any asset or property
of CMFRI or any Company or Subsidiary to secure the Subordinated Notes, or (j) a
change in any other term or provision of the Subordinated Notes, Subordinated
Note Agreements or other document or instrument in connection with the
Subordinated Notes that could have, in any material respect, an adverse effect
on the interests of the Lenders.
SECTION 7.17. EMPLOYEE STOCK INCENTIVE PROGRAM. None of the Companies and
the Subsidiaries may make any cash payments related to CSC's and/or the
Companies' stock incentive programs, provided that, if there exists no Default
or Event of Default on any such date of payment and none shall be caused
thereby, the Companies' and the Subsidiaries' may make cash payments during any
year related to CSC's employee stock incentive programs so long as the aggregate
of such cash payments does not exceed either (a) 7% of the Operating Cash Flow
for the previous calendar year or (b) $3,000,000 in the aggregate throughout the
term of this Agreement (or $4,000,000 in the event that the Leverage Ratio is
less than 5.00 to 1.00).
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. Any one or more of the following shall
be an "Event of Default" hereunder, if the same shall occur for any reason
whatsoever, whether voluntary or involuntary, by operation of Law, or otherwise:
(a) Any Company shall fail to pay any principal when due, or any Company
shall fail to pay any interest, fees, or other amounts payable under any Loan
Papers and such failure shall remain unremedied for two Business Days after such
due date (including, without limitation, the failure of any Company to repay
Advances on any date to the extent the aggregate outstanding Advances plus the
aggregate outstanding Letters of Credit exceed the Commitment (as reduced) on
such date);
(b) Any representation or warranty made or deemed made by CMFRI, any
Company or any Subsidiary (or any Authorized Officer on behalf of any such
Person) under Article V hereof or under or in connection with any Loan Paper or
any certificate, statement or other document or instrument furnished to the
Administrative Lender or any Lender in connection with this Agreement
(including, without limitation, any amendment to any of the foregoing), or any
certification made or deemed to have been made by any Company to any Lender
hereunder, shall have been incorrect, or shall be breached in any material
respect when made or deemed made;
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(c) CMFRI, any Company or any Subsidiary shall fail to perform or observe
any term or covenant contained in Article VII hereof or in Section 6.05(g)
hereof;
(d) CMFRI, any Company or any Subsidiary shall fail to perform or observe
any other term or covenant contained in any Loan Papers to which it is a party,
other than those described in subsections (a) and (c) above, and such failure
shall not be remedied within 30 days following the earlier of knowledge thereof
by an Authorized Officer of any Company or any Subsidiary, or of written notice
by the Administrative Lender to the Notification Agent;
(e) Any Loan Paper or any material provision thereof shall, for any reason
(except as a result of any action or omission to act by any Lender), not be
valid and binding on CMFRI, any Company or any Subsidiary (the applicable
signatory thereto); or any Management Agreement shall not be enforceable against
CSC; or any of the above shall not be in full force and effect, or shall be
declared to be null and void; or the validity or enforceability of any Loan
Paper shall be contested by CMFRI, any Company or any Subsidiary prior to
payment in full of the Obligation; or CMFRI, any Company or any Subsidiary shall
deny that it has any or further liability or obligation under its respective
Loan Papers prior to payment in full of the Obligation;
(f) Any of the following shall occur: (i) CSC, CMFRI, any Company or any
Subsidiary shall make an assignment for the benefit of creditors or admit in
writing its inability to pay its debts generally as they become due; (ii) CSC,
CMFRI, any Company or any Subsidiary shall petition or apply to any Tribunal for
the appointment of a trustee, receiver, or liquidator of it, or of any
substantial part of its assets, or shall commence any proceedings relating to
CSC, CMFRI, any Company or any Subsidiary under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debts, conservatorship,
moratorium, dissolution, liquidation, or other Debtor Relief Laws of any
jurisdiction, whether now or hereafter in effect; (iii) any such petition or
application shall be filed, or any such proceedings shall be commenced, against
CSC, CMFRI, any Company, or any Subsidiary and the same is not contested by such
entity or not dismissed or otherwise discharged within 30 days, or an order,
judgment or decree shall be entered appointing any such trustee, receiver, or
liquidator, or approving the petition in any such proceedings; (iv) any final
order, judgment, or decree shall be entered in any proceedings against CSC,
CMFRI, any Company or any Subsidiary decreeing its dissolution; or (v) any final
order, judgment, or decree shall be entered in any proceedings against CSC,
CMFRI, any Company or any Subsidiary decreeing its split-up which requires the
divestiture of a substantial part of its assets;
(g) CMFRI, any Company or any Subsidiary shall fail to perform or observe
any term or covenant contained in any agreement or instrument relating to any
Debt aggregating $2,000,000 or more, when required to be performed or observed,
and such failure shall continue after the applicable grace period, if any,
specified in such agreement or instrument and be continuing, or can result in
acceleration of the maturity of such Debt; or any such Debt shall be declared to
be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;
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(h) There shall be entered judgments or fines (including, without
limitation, pursuant to any civil or criminal action brought by any governmental
authority) against the Companies and the Subsidiaries in the aggregate in excess
of $5,000,000, and such judgments or fines shall remain unsatisfied and in
effect for any period of 60 consecutive days without a stay of execution or (if
a stay is not provided for by Applicable Law), without having been fully bonded;
(i) Any Authorization necessary for the ownership or essential for the
operation by any Company or any Subsidiary of the System or any CATV System or
systems which service ten percent (10%) or more of the Subscribers ("Significant
CATV Systems") shall expire and the same shall not have been renewed; or (i) any
Company shall not have applied for renewal of any such Authorization prior to 30
days before its scheduled expiration; or (ii) any Authorization necessary for
the ownership or essential for the operation of any Significant CATV System
shall be canceled, revoked, terminated, rescinded, annulled, suspended or
modified in a materially adverse respect, or shall no longer be in full force
and effect, or the grant or the effectiveness thereof shall have been stayed,
vacated, reversed or set aside, and such action shall be no longer subject to
further administrative or judicial review;
(j) Any Property (whether leased or owned) of any Company or any
Subsidiary, or the operations conducted thereon by any of them, shall violate or
have violated any Applicable Environmental Law, if such violation is reasonably
likely to have a Material Adverse Effect; or any Company or any Subsidiary shall
not obtain or maintain any Authorization required to be obtained or filed under
any Applicable Environmental Law in connection with the use of such Property and
assets, including without limitation past or present treatment, storage,
disposal, or release of Hazardous Materials into the environment, if the failure
to obtain or maintain the same could reasonably be expected to have a Material
Adverse Effect;
(k) All or any material portion of the Collateral shall be the subject of
any litigation or proceeding instituted by any Person which is reasonably likely
to be determined adversely to the Company and which, after giving effect to any
remedy reasonably likely to be imposed as a result of such adverse
determination, would cause the Lenders to cease to have a perfected security
interest in all or any material portion of the Collateral that is prior to all
other security interests in such Collateral, and such litigation or proceeding
shall continue undismissed, or unstayed and in effect, for any period of 60
consecutive days; or any Company or any Subsidiary or any Affiliate of any
Company shall challenge in any manner whatsoever the validity or enforceability
of all or any portion of the Collateral, the Pledged Interests or the Pledge
Agreement; or there shall exist any material default or breach by any Company of
any material term or provision of any document evidencing or relating to the
Acquisition; or the holder of any Subordinated Note shall institute a proceeding
of any type against (i) any Lender related to this Agreement, or (ii) any
portion of the Collateral, which such proceeding in either case is (A) not in
connection with any default covered by Section 8.01(o) below and (B) reasonably
likely to have a Material Adverse Effect; or any document or instrument creating
or granting a security interest or Lien in any Collateral shall for any reason
(other than any action or failure to act by the Administrative Lender or any
Lender) fail to create or maintain
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a valid and perfected first priority security interest (subject to Permitted
Liens) in any Collateral purported to be covered thereby;
(l) The termination or the cessation of effectiveness of any lease of any
Company or of any Subsidiary which is likely to have a Material Adverse Effect;
(m) There shall be a material default or breach of any material term or
provision (after the expiration of any applicable grace period) in any
Non-Compete Agreement by any Person or party thereto, and such default is
reasonably likely to have a Material Adverse Effect;
(n) (i) CSC shall (A) cease to own, directly or indirectly, 100% of the
Capital Stock of CMFRI, CRI or CMI; or (B) cease to Control the Companies and
the Subsidiaries; or (ii) the Dolan Family Interests shall cease to own and
control over 51% of the voting control of CSC;
(o) There shall exist any default, breach or failure to comply with any
term or provision of the Subordinated Notes or the Subordinated Note Agreements
which permits any holder of a Subordinated Note to accelerate the maturity
thereof or demand prepayment or redemption;
(p) Any material portion of the Collateral shall be subject to attachment,
levy or replenishment, unless such attachment, levy or replenishment shall be
stayed, or bonded in an amount substantially equal to the fair market value of
such Property and only for so long as such stay or bond exists;
(q) At any time, less than 100% of the Capital Stock of the Companies and
the Subsidiaries shall be pledged to the Lenders to secure the Obligation
pursuant to a first and prior perfected Lien; or at any time, less than 100% of
the Capital Stock of each Subsidiary shall be pledged to the Lenders to secure
the Obligation pursuant to a first and prior perfected Lien; or
(r)(i) Any ERISA Event shall have occurred with respect to a Plan, and the
sum of the Insufficiency of such Plan and liabilities relating thereto, when
added to the sum of (A) the Insufficiency of and liabilities relating to all
other Plans with respect to which an ERISA Event has occurred during the most
recently completed 24 month period, and (B) all amounts of all Companies not in
compliance with Sections 8.01(r)(ii), (iii) and (iv) below during the most
recently completed 24 month period, is equal to or greater than $5,000,000 in
the aggregate; or any Company, any Subsidiary, 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 plus all amounts of all Companies
not in compliance with Sections 8.01(r)(ii), (iii) and (iv) below during the
most recently completed 24 month period, is equal to or greater than $5,000,000
in the aggregate;
(ii) Any Company or any Subsidiary or any ERISA Affiliate shall have
been notified by the sponsor of a Multiemployer Plan that (A) it has incurred
Withdrawal Liability to such Plan in an amount that, when aggregated with (I)
all other amounts required to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities plus (II) all
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amounts of all Companies not in compliance with Sections 8.01(r)(i), (iii)
and (iv) hereof during the most recently completed 24 month period, exceeds
$5,000,000 in the aggregate, or (B) such Plan is in reorganization or is being
terminated, within the meaning of Title IV of ERISA, if as a result thereof the
aggregate annual contributions to all Multiemployer Plans in reorganization or
being terminated is increased over the amounts contributed to such Plans for the
preceding Plan year by an amount, when added to all amounts of all Companies not
in compliance with Sections 8.01(r)(i), (ii), (iii), and (iv) hereof during the
most recently completed 24 month period, is equal to or greater than $5,000,000
in the aggregate;
(iii) Any Company or any Subsidiary shall be required under any
Applicable Environmental Law (A) to implement any remedial, neutralization, or
stabilization process or program, the cost of which, when added to all amounts
of all Companies not in compliance with Sections 8.01(r)(i), (ii), (iii)(B), and
(iv) hereof during the most recently completed 24 month period, is equal to or
greater than $5,000,000 in the aggregate, or (B) to pay any penalty, fine, or
damages in an aggregate amount equal to an amount, when added to all amounts of
all Companies not in compliance with Sections 8.01(r)(i), (ii), (iii)(A) and
(iv) hereof during the most recently completed 24 month period, is equal to or
greater than $5,000,000 in the aggregate;
(iv) (A) A petition or complaint is filed before or by the Federal Trade
Commission, the United States Justice Department, or any other Tribunal, seeking
to cause any Company or any Subsidiary, to divest a significant portion of its
assets or the Capital Stock of any Company or any Subsidiary, pursuant to any
antitrust, restraint of trade, unfair competition or similar Laws, and such
petition or complaint is not dismissed or discharged within 60 days of the
filing thereof, which such divestiture when added to all amounts of all
Companies not in compliance with Sections 8.01(r)(i), (ii) and (iii) hereof
during the most recently completed 24 month period, is equal to or greater than
$5,000,000 in the aggregate, or could reasonably be expected to have a Material
Adverse Effect;
(B) A warrant of attachment or execution or similar process shall be
issued or levied against Property of any Company or any Subsidiary which,
together with all other such Property of the Companies and the Subsidiaries
subject to other such process, exceeds in value an amount, when added to all
amounts of all Companies not in compliance with Sections 8.01(r)(i), (ii) and
(iv) hereof during the most recently completed 24 month period, is equal to or
greater than $5,000,000 in the aggregate, if such judgment or award is not
insured or, within 30 days after the entry, issue or levy thereof, such
judgment, warrant or process shall not have been paid or discharged, bonded or
stayed pending appeal, or if, after the expiration of any such stay, such
judgment, warrant or process shall not have been paid or discharged;
(v) Any civil action, suit or proceeding shall be commenced against any
Company or any Subsidiary under any federal or state racketeering statute
(including, without
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limitation, the Racketeer Influenced and Corrupt Organization Act of
1970)("RICO") and such suit shall be adversely determined by a court of
applicable jurisdiction resulting in a judgment against such entity in excess of
an amount, when added to all amounts of all Companies not in compliance with
Sections 8.01(r)(i), (ii) and (iii) above during the most recently completed 24
month period, is equal to or greater than $5,000,000 in the aggregate; or any
criminal action or proceeding shall be commenced against any Company or any
Subsidiary under any federal or state racketeering statute (including, without
limitation, RICO); and
(s) Any one of the following events shall occur or circumstances exist:
CMFRI shall create, incur, assume, become or be liable in any manner in respect
of, or suffer to exist, any Debt, except Debt incurred pursuant to the
Subordinated Notes; or CSC shall pledge all or any portion of the Capital Stock
of CMFRI to any Person (except to the Administrative Lender on behalf of the
Lenders to secure the Obligation); or CSC shall issue, sell or otherwise dispose
of any Capital Stock of CMFRI, or any options or rights to acquire such Capital
Stock; or any representation or warranty made or deemed made by CSC under or in
connection with the Safekeeping Agreement or any certificate, statement or other
document or instrument furnished to the Administrative Lender or any Lender in
connection with the Safekeeping Agreement (including, without limitation, any
amendment to any of the foregoing), or any certification made or deemed to have
been made by CSC to any Lender under the Safekeeping Agreement, shall have been
incorrect or shall be breached when made or deemed made, in any material
respect; or CSC shall fail to perform or observe any other term or covenant
contained in the Safekeeping Agreement, and such failure shall not be remedied
within 30 days following the earlier of knowledge thereof by an Authorized
Officer of any Company or any Subsidiary or written notice by the Administrative
Lender to the Notification Agent; or CMFRI shall amend or change the
Subordinated Notes or the Subordinated Note Agreements (or take any action or
fail to take any action the result of which is an effective amendment or change
to the Subordinated Notes or the Subordinated Note Agreements) which neither of
the Companies would be permitted to do under Section 7.16 of this Agreement; or
the Safekeeping Agreement or any material provision thereof shall, for any
reason (except as a result of any action or omission to act by any Lender), not
be valid and binding on CSC; or the Safekeeping Agreement shall not be in full
force and effect, or shall be declared to be null and void; or the validity or
enforceability of the Safekeeping Agreement shall be contested by CSC prior to
payment in full of the Obligation; or CSC shall deny that it has any or further
liability or obligation under the Safekeeping Agreement prior to payment in full
of the Obligation.
SECTION 8.02. REMEDIES UPON DEFAULT. If an Event of Default described in
Section 8.01(f) hereof shall occur with respect to any Company, then no LIBOR
Advances shall be available to the Companies, the Commitment and the Letter of
Credit Commitment shall automatically terminate, and the aggregate unpaid
principal balance of, and accrued interest on, all Advances together with any
other amounts constituting part of the Obligation, shall, to the extent
permitted by Applicable Law, thereupon become due and payable concurrently
therewith, without any action by the Administrative Lender or any Lender, and
without diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other
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kind, all of which are hereby expressly waived. Subject to the foregoing
sentence, if any Event of Default shall occur and be continuing, then no LIBOR
Advances shall be available to the Companies, and the Administrative Lender may
at its election, and shall upon the request of the Majority Lenders, do any one
or more of the following:
(a) Declare the entire unpaid balance of all Advances and the Obligation
immediately due and payable, whereupon it shall be due and payable without
diligence, presentment, demand, protest, notice of protest or intent to
accelerate, or notice of any other kind (except notices specifically provided
for under Section 8.01 hereof), all of which are hereby expressly waived (except
to the extent waiver of the foregoing is not permitted by Applicable Law);
(b) Terminate the Commitment and/or the Letter of Credit Commitment;
(c) Reduce any claim of the Administrative Lender or the Lenders to
judgment;
(d) Demand immediate payment in cash of an amount equal to the sum of (or
any portion thereof) the aggregate outstanding amounts of all Letters of Credit
to retain as collateral against payment of such amounts by the Companies; demand
presentation of draws on the Letters of Credit by the beneficiaries thereof;
and/or retain, as collateral for the payment of the Obligation with respect to
the Letters of Credit, any amounts received upon foreclosure, or in lieu of
foreclosure, through offset, as proceeds of any Collateral or otherwise; and
(e) Exercise any Rights afforded under any Loan Papers, by Law, at equity,
or otherwise.
SECTION 8.03. CUMULATIVE RIGHTS. All Rights available to the
Administrative Lender and the Lenders under the Loan Papers shall be cumulative
of and in addition to all other Rights granted thereto at Law or in equity,
whether or not amounts owing thereunder shall be due and payable, and whether or
not the Administrative Lender or any Lender shall have instituted any suit for
collection or other action in connection with the Loan Papers.
SECTION 8.04. WAIVERS. The acceptance by the Administrative Lender or any
Lender at any time and from time to time of partial payment of any amount owing
under any Loan Papers shall not be deemed to be a waiver of any Event of Default
then existing. No waiver by the Administrative Lender or any Lender of any
Event of Default shall be deemed to be a waiver of any Event of Default other
than such Event of Default. No delay or omission by the Administrative Lender
or any Lender in exercising any Right under the Loan Papers shall impair such
Right or be construed as a waiver thereof or an 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.
SECTION 8.05. CONTROL. None of the covenants or other provisions
contained in this Agreement shall, or shall be deemed to, give the
Administrative Lender or any Lender Rights to exercise control over the affairs
and/or management of any Company or any
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Subsidiary, the power of the Administrative Lender and any Lender being limited
to the Rights to exercise the remedies provided in this Article; provided,
however, that if the Administrative Lender or any Lender becomes the owner of
any stock or other equity interest in any Person, whether through foreclosure or
otherwise, it shall be entitled to exercise such legal Rights as it may have by
being an owner of such stock or other equity interest in such Person.
ARTICLE IX
THE ADMINISTRATIVE LENDER
SECTION 9.01. AUTHORIZATION AND ACTION. Each of the Lenders hereby
appoints and authorizes the Administrative Lender to take such action as the
Administrative Lender on its behalf and to exercise such powers under this
Agreement and the other Loan Papers as are delegated to the Administrative
Lender by the terms hereof, 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), the Administrative Lender 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 the Majority Lenders (or all Lenders, if
required under Section 10.01 hereof), and such instructions shall be binding
upon all Lenders; provided, however, that the Administrative Lender shall not be
required to take any action which exposes the Administrative Lender to personal
liability or which is contrary to any Loan Papers or Applicable Law. The
Administrative Lender agrees to distribute to each applicable Lender in like
funds all amounts delivered to the Administrative Lender by the Company for the
Ratable or individual account of any Lender.
SECTION 9.02. ADMINISTRATIVE LENDER'S RELIANCE, ETC. Neither the
Administrative Lender, 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 Papers,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Administrative Lender (a) may
treat the payee of any Note as the holder thereof until the Administrative
Lender receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to the Administrative Lender; (b) may
consult with legal counsel (including counsel for any Company or any
Subsidiary), 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 or in
other documents, instruments, certificates or other information furnished by any
of the Companies; (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 any Company or any
Subsidiary or to inspect the Property (including the
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books and records) of any Company or any Subsidiary; (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, any Letter of Credit, any draft or draw on any Letter of Credit or
any of the documents or instruments delivered in connection with any draft or
draw on any Letter of Credit, 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 (which may be by telegram, cable,
telex, or telecopy) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 9.03. NATIONSBANK OF TEXAS, N.A. AND AFFILIATES. With respect to
its Commitment, its Letter of Credit Commitment, its Advances, its Letters of
Credit and any other Loan Papers, NationsBank of Texas, N.A. shall have the same
Rights under this Agreement as any other Lender and may exercise the same as
though it were not the Administrative Lender. NationsBank of Texas, N.A. 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, any Company,
any Subsidiary, any Affiliate thereof, and any Person who may do business
therewith, all as if NationsBank of Texas, N.A. were not the Administrative
Lender and without any duty to account therefor to any Lender.
SECTION 9.04. LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Lender or any
other Lender, and based on the financial statements referred to in Sections 5.04
and 6.05 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 the Administrative Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Papers.
SECTION 9.05. INDEMNIFICATION BY LENDERS. THE LENDERS, IN THEIR RATABLE
PARTS, TO INDEMNIFY THE ADMINISTRATIVE LENDER, 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 THE ADMINISTRATIVE LENDER IN ANY
WAY RELATING TO OR ARISING OUT OF ANY LOAN PAPERS OR ANY OTHER DOCUMENTS OR
INSTRUMENTS EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT, OR ANY
ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE LENDER THEREUNDER, INCLUDING ANY
NEGLIGENCE OF THE ADMINISTRATIVE LENDER; 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 THE ADMINISTRATIVE LENDER'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, THE LENDERS AGREE TO REIMBURSE
THE ADMINISTRATIVE LENDER, IN EACH SUCH LENDER'S RATABLE PORTION, PROMPTLY UPON
DEMAND FOR ANY REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES)
INCURRED BY THE ADMINISTRATIVE LENDER IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR
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ENFORCEMENT (WHETHER THROUGH NEGOTIATION, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR
LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN PAPERS.
THE INDEMNITY PROVIDED IN THIS SECTION SHALL SURVIVE THE TERMINATION OF THIS
AGREEMENT.
SECTION 9.06. SUCCESSOR ADMINISTRATIVE LENDER. The Administrative Lender
may resign at any time by giving written notice thereof to the Lenders and the
Notification Agent, and may be removed at any time with or without cause by the
action of all Lenders (other than the Administrative Lender). Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Lender, which such appointment shall, so long as there
exists no Event of Default, require the consent of the Companies (which such
consent shall not be unreasonably withheld). If no successor Administrative
Lender shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Administrative Lender's giving of notice of
resignation or the Lenders' removal of the retiring Administrative Lender, then
the retiring Administrative Lender may, on behalf of the Lenders, appoint a
successor Administrative Lender, 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. Upon the
acceptance of any appointment as the Administrative Lender hereunder by a
successor Administrative Lender, such successor Administrative Lender shall
thereupon succeed to and become vested with all the Rights and duties of the
retiring Administrative Lender, and the retiring Administrative Lender shall be
discharged from its duties and obligations under the Loan Papers, provided that
if the retiring or removed Administrative Lender is unable to appoint a
successor Administrative Lender, the Administrative Lender shall, after the
expiration of a 60 day period from the date of notice, be relieved of all
obligations as Administrative Lender hereunder. Notwithstanding any
Administrative Lender's resignation or removal hereunder, the provisions of this
Article shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Administrative Lender under this
Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Papers, which may be amended or
modified in accordance with their terms, nor consent to any departure by any
Company or any Subsidiary therefrom, shall be effective unless the same shall be
in writing and signed by the Administrative Lender with the consent of or at the
direction of the Majority Lenders (which may or may not include the
Administrative Lender), 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 the Lenders, (a) increase the Commitment or the Letter of Credit
Commitment, (b) reduce any principal, interest, fees, or other amounts payable
hereunder, or waive or result in the waiver of any Event of Default under
Section 8.01(a) hereof,
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(c) postpone or change any date fixed for any payment of principal, interest,
fees, or other amounts payable hereunder or change the amount or date of any
scheduled reduction in the Commitment, (d) release any Collateral or Guaranties
securing any Company's obligations hereunder, other than releases contemplated
hereby and by the Loan Papers, (e) change the meaning of "Specified Percentage",
"Ratable", "Majority Lenders" or the number of the Lenders required to take any
action hereunder, or (f) amend this Section. No amendment, waiver, or consent
shall affect the Rights or duties of the Administrative Lender in such capacity
under any Loan Papers, unless it is in writing and signed by the Administrative
Lender in addition to the requisite number of the Lenders.
SECTION 10.02. NOTICES. Each Company hereby appoints the Notification
Agent, as agent on its behalf, to receive all notices and other communications
delivered or required to be delivered to such Company in accordance with the
terms and provisions of this Agreement and the Loan Papers. Unless otherwise
provided herein, all notices, requests, consents, demands, and other
communications shall be in writing and shall be personally delivered, sent by
telecopy or telex (answerback received), or mailed, by certified mail, postage
prepaid, to the following addresses:
(a) If to any Company, to the Notification Agent:
c\o Cablevision Systems Corporation
One Media Crossways
Woodbury, New York 11797
Telephone Number: (516) 364-8450
Telecopy Number: (516) 496-1780
Attention: Barry J. O'Leary
With a Copy to General Counsel
(b) If to the Administrative Lender:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone: (214) 508-0996
Telecopy: (214) 508-0980
Attention: W. Hutchinson McClendon, IV
Vice President
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with a copy to:
Donohoe, Jameson & Carroll, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
Telephone: (214) 698-3814
Telecopy: (214) 744-0231
Attention: Melissa Ruman Stewart
(c) If to any Lender, to its address shown on the signature pages hereto
or to such other address as any party may designate in written notice to the
other parties hereto. All notices, requests, consents, demands, and other
communications to any party hereunder will be effective when so personally
delivered or sent by telecopy or telex, or five days after being so mailed;
provided, however, that notices to the Administrative Lender pursuant to Article
II hereof shall be effective when received.
SECTION 10.03. PARTIES IN INTEREST. The Lenders may from time to time
assign or transfer their interests hereunder but only to the extent permitted by
Section 10.04 hereof. The Companies may not assign or transfer their Rights or
obligations hereunder without the prior written consent of all Lenders. All
covenants and agreements contained in this Agreement and all other Loan Papers
shall bind and inure to the benefit of the respective successors and assigns of
the parties hereto.
SECTION 10.04. ASSIGNMENTS AND PARTICIPATIONS.
(a) The Administrative Lender may assign its Rights and obligations as a
Lender under the Loan Papers, provided that, the Administrative Lender shall
retain at least $10,000,000 of its original committed amount. Each Lender (an
"Assignor") may assign its Rights and obligations as a Lender under the Loan
Papers to one or more Eligible Assignees pursuant to an Assignment and
Acceptance, so long as (i) each assignment shall be of a constant, and not a
varying percentage of all Rights and obligations thereunder, (ii) each Assignor
shall obtain in each case the prior written consent of the Companies, such
consent not to be unreasonably withheld (provided that, if there exists an Event
of Default, no consent of the Companies shall be required) and the prior written
consent of the Administrative Lender, such consent not to be unreasonably
withheld, (iii) each Assignor shall in each case pay a $3,500 processing fee to
the Administrative Lender, (iv) no such assignment is for an amount of any such
Assignor's portion of the Commitment that is less than $10,000,000, unless such
assignment is for the entire remaining amount of any such Assignor's portion of
the Commitment, and (v) no Assignor shall assign any portion of its Commitment
which results in such Assignor's Specified Percentage of the Commitment being
greater than zero but less than $10,000,000. Within five Business Days after
the Administrative Lender and the Notification Agent receive notice of any such
assignment, the Companies agree to execute and deliver to the Administrative
Lender, in exchange for the Notes issued to the Assignor,
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new Notes to the order of such Assignor and its assignee in amounts equal to
their respective Specified Percentages of the Commitment. Such new Notes shall
be dated the effective date of the assignment. It is specifically acknowledged
and agreed that on and after the effective date of each assignment, the assignee
shall be a party hereto and shall have the Rights and obligations of a Lender
under the Loan Papers.
(b) Each Lender may, with the prior written consent of the Companies, sell
participations to one or more banks or other entities in all or any of its
Rights and obligations under the Loan Papers; provided, however, that (i) such
Lender's obligations under the Loan Papers shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
its Note for all purposes of the Loan Papers, (iv) the participant shall be
granted the Right to consent only to those matters described in subsections (a)
through (d) of Section 10.01 hereof, and (v) the Companies, the Administrative
Lender, and other Lenders shall continue to deal solely and directly with such
Lender in connection with its Rights and obligations under the Loan Papers. All
amounts payable by the Companies to any Lender pursuant to Section 2.09(b), (c)
and (d) hereof shall be determined as if such Lender had not sold any such
participation and as if such Lender were funding all of its Specified Percentage
of the Commitment and the Advances in the same way that it is funding its
Specified Percentage of the Commitment the Advances in which no participations
have been sold.
(c) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time create a security interest in all or any portion of its
rights under this Agreement (including, without limitation, the Advances owing
to it and the Note or Notes held by it) in favor of any Federal Reserve Bank in
accordance with Regulation A of the Board of Governors of the Federal Reserve
System.
SECTION 10.05. 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 Advances or the Reimbursement Obligation in
excess of its Ratable share of payments made by the Companies, such Lender shall
forthwith purchase participations in Advances made by the other Lenders as shall
be necessary to share a Ratable portion of the excess payment with each of them;
provided, however, that if any of such excess payment is thereafter recovered
from the purchasing Lender, its purchase from each other Lender shall be
rescinded and each other Lender shall repay the purchase price to the extent of
such recovery together with a Ratable share of any interest or other amount paid
or payable by the purchasing Lender in respect of the total amount so recovered.
The Companies agree that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent permitted by Law,
exercise all its Rights of payment (including any Right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Companies in the amount of such participation.
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SECTION 10.06. COSTS, EXPENSES, AND TAXES.
(a) The Companies agree, jointly and severally, to pay on demand (i) all
reasonable costs and expenses of the Administrative Lender in connection with
the preparation, negotiation, and administration of any Loan Papers, including
without limitation the reasonable fees and out-of-pocket expenses of Special
Counsel, (ii) all reasonable costs and expenses (including reasonable attorneys'
fees and expenses) of the Administrative Lender in connection with the
administration, interpretation, modification, amendment, waiver, or release of
any Loan Papers, in connection with the issuance and handling of any Letter of
Credit or draft or draw against any Letter of Credit and (iii) all reasonable
costs and expenses (including reasonable attorneys' fees and expenses) of the
Administrative Lender and each Lender in connection with any restructuring,
refinancing, work-out, or collection of any portion of the Obligation or the
enforcement of any Loan Papers.
(b) In addition, the Companies shall, jointly and severally, pay any and
all transfer, stamp, and other similar Taxes payable or determined to be payable
in connection with the execution, delivery, or recordation of any Loan Papers,
and agrees to save the Administrative Lender and the Lenders harmless from and
against any and all liabilities with respect to, or resulting from any delay by
any Company in paying or the omission to pay any such Taxes in accordance with
this Section, including any penalty, interest, and expenses relating thereto.
All payments by the Companies or any Subsidiary under any Loan Papers shall be
made free and clear of and without deduction for any present or future Taxes
(other than Taxes on the overall net income of the Administrative Lender or any
Lender) of any nature now or hereafter existing, levied, or withheld, including
all interest, penalties, or similar liabilities relating thereto. If the
Companies or any Subsidiary shall be required by Law to deduct or to withhold
any Taxes from or in respect of any amount payable hereunder, (i) the amount so
payable shall be increased to the extent necessary so that, after making all
required deductions and withholdings (including Taxes on amounts payable to the
Administrative Lender or any Lender pursuant to this sentence), the payee
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) such Company or such Subsidiary shall
make such deductions or withholdings, and (iii) such Company or such Subsidiary
shall pay the full amount deducted or withheld to the relevant taxing authority
in accordance with applicable Law.
(c) The obligations of the Companies under this Section 10.06 shall
survive the execution of this Agreement and/or the extinguishment of the
Commitment, the Letter of Credit Commitment, repayment of the Obligation and
termination of the Agreement.
SECTION 10.07. RATE PROVISION. It is not the intention of any party to any
Loan Papers to make an agreement violative of the Laws of any applicable
jurisdiction relating to usury. Regardless of any provision in any of the Loan
Papers, no Lender shall ever be entitled to receive, collect or apply, as
interest on the Obligation, any amount in excess of the Maximum Amount. If any
Lender ever receives, collects or applies, as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial repayment of
principal and treated hereunder as such; and if principal is paid in full, any
remaining excess shall be paid to the Companies. In
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determining whether or not the interest paid or payable, under any specific
contingency, exceeds the Maximum Amount, the Companies and the Lenders shall, to
the maximum extent permitted under Applicable Laws, (i) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (ii)
exclude voluntary prepayments and the effect thereof, and (iii) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligation so that the interest
rate is uniform throughout the entire 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, the Lenders shall refund to the
Companies the amount of such excess or credit the amount of such excess against
the total principal amount owing, and, in such event, to the extent permitted by
Law, no Lender shall be subject to any penalties provided by any Laws for
contracting for, charging or receiving interest in excess of the Maximum Amount.
This Section 10.07 shall control every other provision of all agreements among
the parties to this Agreement pertaining to the transactions contemplated by or
contained in the Loan Papers.
SECTION 10.08. SEVERABILITY. If any provision of any Loan Papers is held
to be illegal, invalid, or unenforceable under present or future Laws during the
term thereof, such provision shall be ineffective to the extent of such
illegality, invalidity or unenforceability, and fully severable, the appropriate
Loan Paper shall be construed and enforced as if such illegal, invalid, or
unenforceable 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 the illegal, invalid, or unenforceable provision or by its severance
therefrom.
SECTION 10.09. EXCEPTIONS TO COVENANTS. Neither the Companies nor any of
the Subsidiaries shall be deemed to be permitted to take any action or to fail
to take any action that is permitted as an exception to any covenant in any Loan
Papers, or that is within the permissible limits of any covenant, if such action
or omission is expressly prohibited in any other covenant in any Loan Papers.
SECTION 10.10. COUNTERPARTS. This Agreement and the other Loan Papers may
be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument. In making proof of any such agreement,
it shall not be necessary to produce or account for any counterpart other than
one signed by the party against which enforcement is sought.
SECTION 10.11. GOVERNING LAW. (A) THIS AGREEMENT AND ALL LOAN PAPERS
SHALL BE DEEMED CONTRACTS MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH COMPANY AND EACH LENDER AGREES THAT ANY FEDERAL COURT
IN NEW YORK CITY WILL HAVE EXCLUSIVE JURISDICTION OVER ANY SUIT, ACTION,
PROCEEDING OR JUDGMENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY OTHER LOAN PAPERS, AND HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS
PROPERTY TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT FOR THE PURPOSE OF ANY
SUIT, ACTION, PROCEEDING OR
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JUDGMENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER
LOAN PAPERS, PROVIDED THAT, THE PARTIES HERETO AGREE THAT IF JURISDICTION BY THE
FEDERAL COURTS IN THE CITY OF NEW YORK IS NOT AVAILABLE, THEN THE STATE COURTS
IN NEW YORK CITY WILL HAVE EXCLUSIVE JURISDICTION. THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVE ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS THAT ANY OF
THE PARTIES MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING IN NEW YORK CITY.
(B) EACH COMPANY AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE NOTIFICATION AGENT AT
ITS ADDRESS DESIGNATED FOR NOTICE UNDER THIS AGREEMENT AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED UPON RECEIPT BY SUCH NOTIFICATION AGENT. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 10.12. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN PAPERS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
SECTION 10.13. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
LAW, EACH LENDER AND EACH COMPANY HEREBY WAIVES ANY RIGHT THAT IT MAY HAVE TO A
TRIAL BY JURY OF ANY DISPUTE (WHETHER A CLAIM IN TORT, CONTRACT, EQUITY, OR
OTHERWISE) ARISING UNDER OR RELATING TO THIS AGREEMENT, THE OTHER LOAN PAPERS,
OR ANY RELATED MATTERS, AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A
JUDGE SITTING WITHOUT A JURY.
SECTION 10.14. JOINT AND SEVERAL OBLIGATIONS. Subject to Section 10.17
hereof, the obligations and duties of the Companies hereunder and under the
other Loan Papers shall be joint and several in all instances.
SECTION 10.15. DISSEMINATION OF INFORMATION. Each Company hereby
authorizes each Lender to disclose to any participant or assignee (or
prospective participant or assignee) in accordance with the terms of Section
10.04 hereof, or any other Person acquiring an interest in the Loan Papers by
operation of law or otherwise (each a "Transferee"), and any prospective
Transferee any and all information in such Lender's possession concerning the
creditworthiness of any Company and/or any Subsidiary; provided, however, that
prior to any such disclosure, the Transferee or prospective Transferee shall
agree to preserve the confidentiality of any confidential information relating
to any Company received by it from such Lender.
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SECTION 10.16. TAXES. (a) Each Lender that is not incorporated under the
laws of the United States of America or a state thereof agrees that it will
deliver to the Notification Agent and the Administrative Lender, on or prior to
the Effective Date or the date such financial institution becomes a Lender, (i)
two valid, duly completed copies of United States Internal Revenue Service Form
1001 or 4224 or successor applicable form, as the case may be, and (ii) a valid,
duly completed Internal Revenue Service Form W-8 or W-9 or successor applicable
form. Each such Lender also agrees to deliver to the Notification Agent and the
Administrative Lender two further copies of the said Form 1001 or 4224 and Form
W-8 or W-9, or successor applicable forms or other manner of certification, as
the case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Notification Agent, and such
extensions or renewals thereof as may reasonably be requested by the
Notification Agent or the Administrative Lender, unless in any such case an
event (including, without limitation, any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender so advises the Notification Agent and the Administrative Lender.
Such Lender shall certify (i) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (ii) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax.
(b) If any Taxes for which any Company would be required to make payment
under Section 2.09(b)(i) or Section 10.06(b) hereof are imposed, any such Lender
shall use its reasonable efforts to avoid or reduce such Taxes by taking any
appropriate action (including, without limitation, assigning its rights
hereunder to a related entity or a different office) which would not, in the
sole opinion of such Lender, be otherwise disadvantageous to such Lender.
(c) If any interest in any Loan Paper is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States or any State thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Lender (for the benefit of the transferor Lender, the Administrative
Lender and the Companies) that under Applicable Law and treaties no Taxes will
be required to be withheld by the Administrative Lender, any Company or the
transferor Lender with respect to any payments to be made to such Transferee in
respect of the Advances or any other Obligation, (ii) to furnish to the
transferor Lender, the Administrative Lender and the Companies either U.S.
Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001
(wherein such Transferee claims entitlement to complete exemption from U.S.
federal withholding tax on all interest payments hereunder), and (iii) to agree
(for the benefit of the transferor Lender, the Administrative Lender and the
Companies) to deliver to the transferor Lender, the Administrative Lender and
the Companies a new Form 4224 or Form 1001 upon the obsolescence of any
previously delivered form and comparable statements in accordance with
applicable U.S. laws and regulations and amendments duly executed and completed
by such Transferee, and to comply from time to time with all applicable U.S.
laws and regulations with regard to such withholding tax exemption.
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<PAGE>
SECTION 10.17. RELEASE OF CMFRI. The parties hereto agree on behalf of
themselves and their successors, assigns and participants, that upon the
satisfaction of the following conditions:
(a) the consummation of both of the Acquisitions in accordance with the
Acquisition Agreements,
(b) the making of the Initial Advance hereunder,
(c) the proper execution and delivery by CMI and CRI of this Agreement,
the Notes and all other Loan Papers required to be executed by them prior to the
Closing Date and prior to the Effective Date pursuant to this Agreement,
(d) the Systems and all assets and Properties acquired by CMFRI pursuant
to or in connection with the Acquisition shall have been fully and irrevocably
assigned and sold to CMI and/or CRI, and CMFRI has not merged or consolidated
with any other Company,
(e) the receipt by the Administrative Lender of the legal opinions
referred to in Section 4.02(g), (h) and (i) hereof, and
(f) the delivery to the Administrative Lender of 100% of the Capital
Stock of CMFRI, CMI and CRI,
CMFRI shall be released from its obligations under this Agreement, the Notes and
the other Loan Papers (except for the pledge by CMFRI of CMI and CRI's Capital
Stock to secure the Obligation which the parties hereto expressly agree shall
remain in full force and effect until the Obligation has been paid in full and
the Commitment and the Letter of Credit Commitment hereunder have been
terminated) pursuant to the release attached hereto as EXHIBIT G (the
"Release"). In accordance with the terms of the Release, CMFRI shall, after the
execution and delivery of the Release, not be defined as a "Company" or
included in the definition of "Companies" hereunder, provided, however, that
terms referring to "CMFRI" shall not be affected by the Release.
SECTION 10.18. TERMINATION. The Commitment will be reduced to zero
automatically, and this Agreement shall terminate, on September 30, 1994 if the
Initial Advance has not been made by such date, provided that, even if the
Initial Advance is never made and the Agreement terminates, the Companies shall,
jointly and severally, pay all fees (including the commitment fee) and costs and
expenses of Lenders as set forth in the Fee Letters, Sections 2.03(a) (until the
date this Agreement is terminated pursuant to this Section 10.18), 2.09, 6.09
and 10.06 hereof, provided that, in the event that this Agreement is terminated
prior to the Initial Advance in accordance with the terms of this Section 10.18,
the Company shall not be obligated to pay the Administrative Lender or any
Lender the facility fees set forth in the Fee Letters that were due and payable
prior to the Initial Advance but after the Closing Date. Companies and Lenders
agree that this provision shall survive the termination of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first set
forth above.
THE COMPANIES: CABLEVISION MFR, INC.
By: /s/ Barry J. O'Leary
-------------------------------------
Its: Senior Vice President,
Finance and Treasurer
------------------------------------
CABLEVISION OF RIVERVIEW, INC.
By:
-------------------------------------
Its:
------------------------------------
CABLEVISION OF MONMOUTH, INC.
By:
-------------------------------------
Its:
------------------------------------
LENDERS:
Specified Percentage: 17.543860% NATIONSBANK OF TEXAS, N.A., as the
Administrative Lender and Individually
as a Lender
Address: /s/ W. Hutchinson McClendon, IV
901 Main Street, 67th Floor --------------------------------------
Dallas, Texas 75202 By: W. Hutchinson McClendon, IV
Attn: W. Hutchinson McClendon, IV Its: Vice President
Vice President
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<PAGE>
Specified Percentage: 14.035088% CORESTATES BANK, N.A., as a Lender
Address: /s/ Edward L. Kittrell
FC-1-3-18-8 --------------------------------------------
Centre Square Bldg. By: Edward L. Kittrell
1500 Market Street - West Tower Its: Senior Vice President
Philadelphia, PA 19101-7618
Attn: Mr. Ed Kittrell
Specified Percentage: 14.035088% NATIONAL WESTMINSTER BANK USA, as a
Lender
Address: /s/ Edward S. Meyer
175 Water Street ---------------------------------------------
27th Floor By: Edward S. Meyer
Attn: Mr. Eric Meyer -----------------------------------------
Its: Vice President
------------------------------
New York, New York 10038
Specified Percentage: 14.035088% THE TORONTO-DOMINION BANK, as a Lender
Address: /s/ David G. Parker
Attn: Mr. David G. Parker --------------------------------------------
909 Fannin, Suite 1700 By: David G. Parker
Houston, TX 77010 Its: Manager of Credit Administration
With a copy to:
31 West 52nd Street
New York, New York 10019-6101
Attn: Mr. Michael Bloom
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<PAGE>
Specified Percentage: 12.280702% PNC BANK, NATIONAL ASSOCIATION, as a
Lender
Address: /s/ Scott C. Meres
Land Title Bldg. - 9th Floor ---------------------------------------------
Broad and Chestnut Streets By: Scott C. Meres
Philadelphia, PA 19101 -----------------------------------------
Attn: Mr. Scott Meves Its: Vice President
------------------------------
Specified Percentage: 10.526316% THE BANK OF NOVA SCOTIA, as a Lender
Address: /s/ Mark Vigil
One Liberty Plaza, 26th Floor ---------------------------------------------
New York, New York 10006 By: Mark Vigil
Attn: Mr. Mark Vigil Its: Relationship Manager
Specified Percentage: 10.526316% CREDIT LYONNAIS CAYMAN ISLAND BRANCH, as
a Lender
Address: /s/ Bernadette Collins
1301 Avenue of the Americas _____________________________________________
New York, New York 10019 By: Bernadette Collins
Attn: Ms. Bernadette Collins Its: Vice President
Specified Percentage: 7.017544% THE BANK OF NEW YORK, as a Lender
Address: /s/ Bart J. Partington
One Wall Street, 16th Floor _____________________________________________
New York, New York 10005 By: Bart J. Partington
Attn: Mr. Bart J. Partington Its: Vice President
With a copy to:
One Wall Street, 16th Floor
New York, New York 10005
Attn: Ms. Zoraida Dougherty
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