UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the Year Ended December 31, 1999
____Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period
Commission File Number: 0-16014
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2417713
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One North Main Street
Coudersport, PA 16915-1141
(Address of principal executive offices) (Zip code)
814-274-9830
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par value.
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 ____
Aggregate market value of outstanding Class A Common Stock par value $0.01, held
by non-affiliates of the registrant at March 29, 2000 was $4.64 billion based on
the closing sale price as computed by the NASDAQ National Market system as of
that date. For purposes of this calculation only, affiliates are deemed to be
directors and executive officers of the registrant.
At March 29, 2000, 113,051,118 shares of Class A Common Stock, par value $0.01,
and 16,735,998 shares of Class B Common Stock, par value $0.01, of the
registrant were outstanding.
Documents Incorporated by Reference: Portions of the Proxy Statement for the
2000 Annual Meeting of Stockholders are incorporated by reference into Part III
hereof.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to the
Form 10-K.
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
PART I
<S> <C>
ITEM 1. BUSINESS 3
ITEM 2. PROPERTIES 25
ITEM 3. LEGAL PROCEEDINGS 26
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 28
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 30
ITEM 6. SELECTED FINANCIAL DATA 31
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 34
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 49
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 50
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 81
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 81
ITEM 11. EXECUTIVE COMPENSATION 81
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 81
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 81
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 81
</TABLE>
<PAGE>
PART I
(Dollars in thousands, except subscriber rates and per share amounts)
ITEM 1. BUSINESS
Introduction
Adelphia Communications Corporation and subsidiaries ("Adelphia" or the
"Company") is a leader in the telecommunications industry with cable television
and local telephone operations. Adelphia's operations consist of providing
telecommunications services primarily over networks, which are commonly referred
to as broadband networks because they can transmit large quantities of voice,
video and data by way of digital or analog signals. As of December 31, 1999,
Adelphia owned or managed cable television systems ("Systems") with broadband
networks that passed in front of 7,902,707 homes and served 5,124,594 basic
subscribers. John J. Rigas, the Chairman, President, Chief Executive Officer and
founder of Adelphia, has owned and operated cable television systems since 1952.
On October 1, 1999, Adelphia acquired Century Communications Corp.
("Century") through a merger whereby Century was merged with and into a wholly
owned subsidiary of Adelphia, Arahova Communications, Inc. ("Arahova") pursuant
to an agreement and plan of merger, dated as of March 5, 1999, and as amended on
July 12, 1999 and as further amended on July 29, 1999. This transaction was
approved by Century and Adelphia stockholders at their respective stockholders'
meetings on October 1, 1999. As of October 1, 1999, Century had approximately
1,610,000 basic subscribers primarily in California, Puerto Rico, and throughout
the United States, after giving effect to Century's pending joint venture with
AT&T, which closed on December 7, 1999. At the effective time of the merger,
Adelphia also purchased Citizens Cable Company's 50% interest in the
Citizens/Century Cable Television Joint Venture, one of Century's 50% owned
joint ventures.
Also on October 1, 1999 Adelphia acquired FrontierVision Partners, L.P.
("FrontierVision") and Harron Communications Corp. ("Harron"). As of the date of
acquisition, FrontierVision had approximately 710,000 basic subscribers
primarily in Ohio, Kentucky, New England and Virginia and Harron had
approximately 296,000 basic subscribers primarily in Southeastern Pennsylvania,
Michigan, Massachusetts and New Hampshire.
Adelphia also owns 100% of the interests in Olympus Communications, L.P.
("Olympus"). On October 1, 1999, the redemption of the partnership interests in
Olympus held by Telesat Cablevision, Inc., a subsidiary of FPL Group, Inc. was
completed. Olympus is a limited partnership that operates a large cable system
in Florida. As of December 31, 1999, the broadband network for this system
passed in front of 974,861 homes and served 651,308 basic subscribers.
Cable systems owned by the Company (the "Company Systems") are located in
32 states and Puerto Rico, and are organized into 12 regional clusters: Florida,
Western New York, Virginia, Western Pennsylvania, New England, Eastern
Pennsylvania, Ohio, New Jersey, Los Angeles, Puerto Rico, Colorado and Other.
The Company Systems are located primarily in suburban areas of large and
medium-sized cities within the 50 largest television markets. As of December 31,
1999, the broadband networks for the Company Systems passed in front of
7,722,933 homes and served 4,990,092 basic subscribers.
See Note 1 to Adelphia's Consolidated Financial Statements included in
Item 8 of this Form 10-K for discussion of additional acquisitions during the
year ended December 31, 1999.
Adelphia also provides management and consulting services to other
partnerships, corporations and limited liability companies engaged in the
ownership and operation of cable television systems (the "Managed
Partnerships"). John J. Rigas and members of his immediate family (collectively,
the "Rigas family"), including entities they own or control, have controlling
ownership interests in these entities. As of December 31, 1999, the broadband
networks for cable systems owned by these Rigas family partnerships and
corporations passed in front of 179,774 homes and served 134,502 basic
subscribers.
On October 25, 1999, the shareholders of Hyperion Telecommunications, Inc.
("Hyperion"), a majority owned subsidiary of Adelphia, elected to change the
name of Hyperion to Adelphia Business Solutions, Inc. ("Adelphia Business
Solutions" or "ABIZ"). The name change was effective October 25, 1999.
Adelphia Business Solutions is a leading national provider of
facilities-based integrated communications services to customers that include
businesses, governmental and educational end users and other communications
service providers throughout the United States. This means that Adelphia
Business Solutions provides its customers with alternatives to the incumbent
local telephone company for local telephone and communications services.
Adelphia Business Solutions' telephone operations are referred to as being
facilities-based, which means it generally owns the local communications
networks and facilities it uses to deliver these services, rather than leasing
or renting the use of another party's networks to do so. Adelphia Business
Solutions currently offers a full range of communications services in 53 markets
and expects by the end of the year 2000 to be offering services in approximately
115 markets nationwide, including substantially all of the top 40 metropolitan
statistical areas in the United States.
On November 30, 1999, Adelphia Business Solutions issued and sold
8,750,000 shares of Class A common stock at a price to the public of $30.00 per
share. Simultaneously, Adelphia purchased 5,181,350 shares of Class B common
stock at a price equal to the public offering price less the underwriting
discount for the Class A common stock. These transactions raised approximately
$403,000 of net proceeds to continue to fund the expansion of Adelphia Business
Solutions' existing markets and to build new markets. At December 31, 1999,
Adelphia owned approximately 60% of the Adelphia Business Solutions' outstanding
common stock and held approximately 90% of the total voting power.
Adelphia Business Solutions, Olympus, Arahova and FrontierVision are also
Securities and Exchange Commission ("SEC") registrants due to filing
requirements for certain publicly held securities. Additional information
regarding these entities can be obtained by reviewing their separate company
filings with the SEC.
John J. Rigas, the Chairman, President, Chief Executive Officer and
controlling stockholder of Adelphia, is a pioneer in the cable television
industry, having built his first system in 1952 in Coudersport, Pennsylvania.
Adelphia was incorporated in Delaware on July 1, 1986 for the purpose of
reorganizing five cable television companies, then principally owned by the
Rigas family, into a holding company structure in connection with the initial
public offering of its Class A common stock. The Company's operations consist of
providing telecommunications services primarily over its broadband networks. The
Company did not have any material foreign operations or foreign sales in the
twelve months ended December 31, 1999.
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Annual Report on Form 10-K, including Management's Discussion and Analysis of
Financial Condition and Results of Operations, is forward-looking, such as
information relating to the effects of future regulation, future capital
commitments and the effects of competition. Such forward-looking information
involves important risks and uncertainties that could significantly affect
expected results in the future from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These "forward looking
statements" can be identified by the use of forward-looking terminology such as
"believes", "expects," "may," "will," "should," "intends" or "anticipates" or
the negative thereof or other variations thereon or comparable terminology, or
by discussions of strategy that involve risks and uncertainties. These risks and
uncertainties include, but are not limited to, uncertainties relating to
economic conditions, acquisitions and divestitures, the availability and cost of
capital, government and regulatory policies, the pricing and availability of
equipment, materials, inventories and programming, product acceptance,
developments and changes in the competitive environment in which the Company
operates. Persons reading this Annual Report on Form 10-K are cautioned that
forward-looking statements herein are only predictions, that no assurance can be
given that the future results will be achieved, and that actual events or
results may differ materially as a result of the risks and uncertainties facing
the Company. For further information regarding those risks and uncertainties and
their potential impact on the Company, see the prospectus and most recent
prospectus supplement filed under Registration Statement No. 333-78027, under
the caption "Risk Factors."
Cable Television Operations
Products and Services
Video Services
Systems receive a variety of television, radio and data signals
transmitted to receiving sites ("headends") by way of off-air antennas,
microwave relay systems and satellite earth stations. Signals are then
modulated, amplified and distributed primarily through fiber optic and coaxial
cable to subscribers, who pay fees for the service. Cable television systems are
generally constructed and operated pursuant to non-exclusive franchises awarded
by state or local government authorities for specified periods of time.
Systems typically offer subscribers a package of basic video services
consisting of local and distant television broadcast signals,
satellite-delivered non-broadcast channels (which offer programming such as
news, sports, family entertainment, music, weather, shopping, etc.) and public,
governmental and educational access channels.
In addition, premium service channels, which provide movies, live and
taped concerts, sports events and other programming, are offered for an extra
monthly charge. Systems also offer pay-per-view programming, which allows the
subscriber to order special events or movies and to pay on a per event basis.
Local, regional and national advertising time is sold in the majority of the
Systems, with commercial advertisements inserted on certain satellite-delivered
non-broadcast channels.
Digital video services are available to Adelphia subscribers who lease or
purchase a digital converter. Digital TV is a computerized method of defining,
transmitting and storing information that makes up a television signal. Since
digital signals can be "compressed," Adelphia can transmit up to 12 channels in
the space currently used to transmit just one analog channel. Adelphia's digital
TV subscribers may also receive "multichannel" premium services, such as HBO 1,
2, 3 and 4 from east and west coast satellite feeds, enhanced pay-per-view
options with 18 movie channels, up to 40 channels of CD-quality music from Music
Choice and an interactive on-screen program guide to help them navigate the new
digital choices.
Adelphia also sells advertising to various entities for local and national
advertising on certain channels carried by Adelphia, as well as mailings and
other media.
High-Speed Data Services and Internet Access
Power Link, the Company's high-speed data service provided through cable
modems, which includes residential, institutional, and business service
offerings, constitutes an alternative to the traditional slower speed data
offerings available through Internet Service Providers ("ISPs"). Power Link
offers customers speeds comparable to those available through a T1 line, at
costs that compare to a typical ISP plus a second telephone line. Also, as a
result of the acquisition of Century on October 1, 1999, Adelphia offers high
speed data services through @Home in certain systems in Arahova.
The Company's deep fiber design allows the use of the expanded bandwidth
potential of digital compression technology for cable data and video services.
High speed cable data services are now available at speeds far in excess of that
which is currently available via a 28.8 kilobit or 56 kilobit per second
telephone modem. In addition, using a high speed cable modem and special
ethernet card allows the user to bypass telephone lines, does not require the
user to log on, and allows for multiple sessions or connections to multiple
services simultaneously.
The Company also offers high speed Internet access through the use of one
way cable modems, which provide the high speeds of broadband on the data
downstream and utilize a telephone line return path. One way cable modems enable
the Company to offer the high speed data service to the bulk of its customers,
while completing the system buildout of two way broadband plant.
The Company also offers traditional dial up Internet access for those
customers who initially prefer this method of Internet access to the higher
speeds of our broadband network. This establishes the Company as a full service
Internet provider and creates a customer base which can be upgraded to the high
speed service in the future.
Other Services
Adelphia offers wireless messaging services through its wholly owned
subsidiary, Page Time, Inc. ("Page Time"). Page Time provides one-way messaging
services to the Company's Systems via resale arrangements with existing paging
network operators.
Adelphia also offers long distance telephone service on a resale basis.
Services offered include state-to-state and in-state long distance, as well as
800 service, international calling, calling card services and debit card
services. The Company's sales effort is focused on the consumer market and
emphasizes the simplicity and savings of one low usage fee available 24 hours a
day, 7 days a week with no monthly fee.
Operating Strategy
The Company's cable television operations strategy is to construct and
operate a broadband network capable of offering a broad range of
telecommunications services and providing superior customer service while
maximizing operating efficiencies. The Company intends to build on its expertise
as a cable television service provider, as well as to become a provider of
bundled communications services. It intends to combine its cable television
service with high speed data and internet access, paging and telephony services.
By acquiring and developing systems in geographic proximity, the Company
has been able to realize significant operating efficiencies through the
consolidation of many managerial, administrative and technical functions. The
Systems have consolidated virtually all of their administrative operations,
including customer service, service call dispatching, marketing, human
resources, advertising sales and government relations into regional offices.
Each regional office has a related technical center which contains the
facilities necessary for the Systems' technical functions, including
construction, installation and system maintenance and monitoring. Consolidating
customer service functions into regional offices allows the Company to provide
customer service through better training and staffing of customer service
representatives, and by providing more advanced telecommunications and computer
equipment and software to its customer service representatives than would
otherwise be economically feasible in smaller systems. To this end, Adelphia has
completed several cable system swaps in order to further cluster systems in
close geographic proximity. Adelphia has entered into a significant cable system
swap with Comcast that is expected to close in 2000. (See "Recent Development of
Systems").
The Company considers technological innovation to be an important
component of its service offerings and customer satisfaction. The Company
intends to continue the upgrade of its network infrastructure to add channel
capacity, increase digital transmission capabilities and further improve system
reliability. These improvements will enable the Company to continue its
introduction of additional services, such as digital video, high speed data and
internet service and impulse-ordered pay-per-view programming, which expand
customer choices and are expected to increase Company revenues. Management
believes that the Company is among the leaders of the cable industry in the
deployment of fiber optic cable with one of the most advanced broadband network
infrastructures.
Adelphia Business Solutions
Products and Services
Adelphia Business Solutions products and services are designed to appeal
to the sophisticated communications needs of its business, governmental and
educational customers. Adelphia and Adelphia Business Solutions are not in
competition for the same customer base. Adelphia concentrates on residential
customers, while Adelphia Business Solutions concentrates on business,
governmental and educational customers.
Local Services
Adelphia Business Solutions provides local dial-tone services to
customers, which allows them to complete calls in its calling area and to access
a long distance calling area. Local services and long distance services can be
bundled together using the same transport facility. Adelphia Business Solutions'
networks are designed to allow a customer to easily increase or decrease
capacity and alter enhanced services as the communications requirements of the
business change. In addition to its core local services, Adelphia Business
Solutions also provides public payphone services, access to third party
directory assistance and operator services.
Long Distance Services
Adelphia Business Solutions provides domestic and international long
distance services for completing intrastate, interstate and international calls.
Long distance service is offered as an additional service to Adelphia Business
Solutions local exchange customers. Long distance calls which do not terminate
on Adelphia Business Solutions' networks (which are currently the bulk of such
calls) are passed to long distance carriers which route the remaining portion of
the call.
<PAGE>
Enhanced Services
In addition to providing typical enhanced services such as voicemail, call
transfer and conference calling, Adelphia Business Solutions offers additional
value-added enhanced services to complement its core local and long distance
services. These enhanced service offerings include:
Access to Internet Services--Enables customers to use its available
capacity for access to ISPs.
Data Networking Services--Adelphia Business Solutions can provide
high-speed, broadband services to use for data and Internet
access such as Integrated Services Digital Network ("ISDN") and
Primary Rate Interface ("PRI").
Specialized Application Services--Adelphia Business Solutions can
create products and services that are tailored for target
industries with special communications needs such as the
hospitality industry. These services typically include
non-measured rate local calling, expanded local calling area,
discounted long distance rates and tailored trunking
configurations.
Internet Support Services--Adelphia Business Solutions can
provide web hosting solutions for commercial and non-profit
organizations. These services may include co-location services,
storage services, domain name registration, virtual hosting
services, traffic statistics, and 24-hour access for web site
changes.
Growth Strategy
Adelphia Business Solutions provides its services to
communications-intensive customers. These customers include business,
governmental and educational end users, as well as other communications service
providers. Adelphia Business Solutions believes that its target customers
represent a large and under-served customer pool that generally has limited
choices in their communications services purchasing decisions. These customers
generally seek reliability, high quality, broad geographic coverage, end-to-end
service, solutions-oriented customer service and timely introduction of new and
innovative services. Adelphia Business Solutions offers dedicated access
services on a wholesale basis to interexchange or long distance carriers
("IXCs") and has entered into national service agreements with AT&T and
MCIWorldCom to be their preferred supplier.
The broad deployment of fiber optic cable in Adelphia Business Solutions'
markets typically enables connectivity among Adelphia Business Solutions, the
incumbent local exchange carrier ("LEC") central offices and Adelphia Business
Solutions' customers. Adelphia Business Solutions expects this strategy to
result in a high proportion of traffic that is both originated and terminated on
its network system, which would provide Adelphia Business Solutions with higher
long-term operating margins. As of December 31, 1999, Adelphia Business
Solutions had collocated in 167 incumbent LEC central offices, a figure which is
expected to increase to over 500 during 2000. In addition, Adelphia Business
Solutions had approximately 331,000 installed access lines as of December 31,
1999, 55% of which were on-switch.
In addition to the broad deployment of fiber optic cable in its markets,
Adelphia Business Solutions has been aggressively adding an inter-city fiber
network system that connects its various markets. Once fully deployed, this
approximately 33,000 mile fiber optic backbone will enhance Adelphia Business
Solutions' ability to originate and terminate Adelphia Business Solutions'
customers' communications traffic over its networks. Management of Adelphia
Business Solutions believes long-term operating margins on Adelphia Business
Solutions' long distance, Internet and data transfer businesses will increase
significantly as a result of connecting these markets. Management of Adelphia
Business Solutions also believes that its planned deployment of Local Multipoint
Distribution Service ("LMDS") and Digital Subscriber Line ("DSL") technologies
will provide additional, alternative means to connect customers to its networks.
In response to market demands and to maximize its selling efforts,
Adelphia Business Solutions offers a full suite of communications services to
its customers. Adelphia Business Solutions offers its services separately to
suit specific customer needs or bundled together to provide customers with a
cost-effective and comprehensive communications solution. In addition to the
pricing benefits Adelphia Business Solutions' customers receive from purchasing
bundled communications services, management of Adelphia Business Solutions
believes that bundled services provide Adelphia Business Solutions with
increased customer retention, higher operating margins and a reduced cost of
acquiring new customers.
Adelphia Business Solutions' service offerings currently include a wide
range of local dial tone and long distance services in all of Adelphia Business
Solutions' operating markets. In addition, Adelphia Business Solutions has
recognized the expanding demand for high-bandwidth by its customers in order to
support the growing number of data applications. Adelphia Business Solutions'
first data product to take advantage of these additional revenue opportunities
is high-speed Internet access, which has been introduced in most of Adelphia
Business Solutions' original 22 local markets ("Original Markets") and will be
rolled out to all of Adelphia Business Solutions' markets over the next several
months. Additionally, Adelphia Business Solutions plans to add to its product
capabilities by activating data centers and providing such products as e-mail,
directory services and web hosting, and by launching DSL, frame relay and
Asynchoronous Transmission Mode ("ATM") services over the next six months. To
accelerate Adelphia Business Solutions' frame relay and ATM service offerings,
Adelphia Business Solutions entered into a wholesale provider agreement with
Intermedia Communications ("Intermedia"), whereby Adelphia Business Solutions
will use Intermedia's frame relay network and data switches to offer data
services to Adelphia Business Solutions' customers and then move Adelphia
Business Solutions' customers' traffic onto its own network system as it becomes
operational. Management of Adelphia Business Solutions believes this approach
provides an efficient market-entry strategy under the Adelphia Business
Solutions trade name, while providing better long-term operating margins through
the use of Adelphia Business Solutions' own network system. Management of
Adelphia Business Solutions believes that the introduction of high margin data
products should enhance revenue growth and better leverage Adelphia Business
Solutions' significant fiber assets.
Adelphia Business Solutions intends to extend its fiber optic network into
the western half of the United States. This expansion will increase Adelphia
Business Solutions' addressable market from 35% to 65% of the business access
lines in the United States and will allow Adelphia Business Solutions to offer
services in approximately 200 markets by December 31, 2001. These markets will
provide Adelphia Business Solutions with a market opportunity of more than 39
million addressable business access lines, which currently generate over
$75,000,000 of annual communications services revenues.
Recent Development of the Systems
The Company has focused on acquiring and developing systems in markets
which have favorable historical growth trends. The Company believes that the
strong household growth trends in its Systems' market areas are a key factor in
positioning itself for future growth in basic subscribers. For a description of
acquisitions by the Company from April 1, 1997 through the date of this filing,
see Notes 1 and 13 to Adelphia's Consolidated Financial Statements included in
Item 8 of this Form 10-K.
On May 26, 1999, the Company announced that it had agreed to swap certain
cable systems with Comcast Corporation ("Comcast") and Jones Intercable, Inc.
("Jones") in a geographic rationalization of the companies' respective markets.
Adelphia will add approximately 440,000 subscribers in the Los Angeles, CA area
and the West Palm/Fort Pierce, FL area. In exchange, Comcast and Jones will
receive systems currently owned or managed serving approximately 464,000
subscribers in suburban Philadelphia, PA, Ocean County, NJ, Ft. Myers, FL,
Michigan, New Mexico and Indiana. All systems involved in the transactions will
be valued by agreement between the parties or, following a failure to reach
agreement, by independent valuations, with any difference in relative value to
be funded with cash or additional cable systems. The system swaps are subject to
customary closing conditions and regulatory approvals and are expected to close
by mid-2000.
In December 1999, the Company entered into definitive agreements under
which Cablevision Systems Corporation will sell its cable systems in the greater
Cleveland metropolitan area to Adelphia for approximately $1,530,000 in cash and
securities. As of December 31, 1999, these systems served approximately 307,350
basic subscribers. The transaction is subject to customary closing conditions
and regulatory approval and is expected to close by mid-2000.
The Company has entered into a definitive agreement under which Prestige
Communications of NC, Inc. will sell its cable systems in Virginia, North
Carolina and Maryland to Adelphia for approximately $700,000. These systems
serve approximately 120,000 basic subscribers. This transaction is subject to
customary closing conditions and regulatory approval is expected to be close by
mid-2000.
The Company will continue to evaluate new opportunities that allow for the
expansion of its business through the acquisition of additional cable television
systems in geographic proximity to its existing regional market areas or in
locations that can serve as the basis for new market areas, either directly or
indirectly through joint ventures, where appropriate.
The following table indicates the growth of the Company Systems by
summarizing the number of homes passed by cable and the number of basic
subscribers for each of the three years in the period ended March 31, 1998 and
for each of the two years in the period ended December 31, 1999. The table also
indicates the numerical growth in subscribers attributable to acquisitions and
the numerical and percentage growth attributable to internal growth.
<TABLE>
<CAPTION>
Year Ended
Year Ended March 31, December 31,
----------------------------------------------------------------------
1996 1997 1998 1998 1999
---------------------------------------- -----------------------------
COMPANY SYSTEMS:
Homes passed (a, b)
<S> <C> <C> <C> <C> <C>
Beginning of Year 1,852,860 2,053,679 2,220,695 2,413,389 3,075,580
Internal Growth (c) 42,715 54,189 43,221 45,850 77,261
% Internal Growth 2.3% 2.6% 1.9% 1.9% 2.5%
Acquired Homes Passed 158,104 112,827 161,337 616,341 4,570,092
End of Year 2,053,679 2,220,695 2,425,253 3,075,580 7,722,933
Basic subscribers (d, b)
Beginning of Year 1,281,383 1,443,605 1,555,174 1,711,372 2,169,882
Internal Growth (c) 38,544 33,255 28,137 27,892 28,449
% Internal Growth 3.0% 2.3% 1.8% 1.6% 1.3%
Acquired Subscribers 123,678 78,314 133,451 430,618 2,791,761
End of Year 1,443,605 1,555,174 1,716,762 2,169,882 4,990,092
Basic Penetration (e) 70.3% 70.0% 70.8% 70.6% 64.6%
<FN>
(a) A home which a broadband network passes in front of is deemed to be
"passed" by cable if it can be connected to the distribution system without
any further extension of the cable distribution plant.
(b) Data for the Olympus systems (which became wholly owned and consolidated on
October 1, 1999) is included under Company Systems for all periods
presented.
(c) The number of additional homes passed or additional basic subscribers not
attributable to acquisitions of new cable systems.
(d) A home with one or more television sets connected to a cable system is
counted as one basic subscriber.
(e) Basic subscribers as a percentage of homes passed by cable.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Market Areas
The Systems are "clustered" in twelve market areas as follows:
MARKET AREA LOCATION OF SYSTEMS
<S> <C>
Florida Portions of southern Dade, Citrus, Orange,
Hillsborough, Palm Beach, Martin,
Broward, Lee and St. Lucie Counties and Hilton Head,
South Carolina
Western New York City and suburbs of Buffalo and the adjacent
Niagara Falls area, city of Erie, Pennsylvania,
communities near Cleveland, Ohio and several small
communities in the southern tier of New York
Virginia Winchester, Charlottesville, Staunton, Richland,
Martinsville, Blacksburg, Salem,
Hopewell, Prince George, Harrisonburg, Petersburg
and surrounding communities in
Virginia, and South Boston and Elizabeth City,
North Carolina
Western Pennsylvania Suburbs of Pittsburgh and several small
communities in western Pennsylvania,
Maryland and West Virginia
New England Cape Cod communities, South Shore communities
(the area between Boston and Cape Cod,
Massachusetts), Martha's Vineyard, Massachusetts and
Bennington, Burlington, Rutland and Montpelier,
Vermont and surrounding communities in Vermont, New
Hampshire and New York and Seymour and Waterbury,
Connecticut and communities in southern, central and
coastal, Maine
Eastern Pennsylvania Suburbs of Philadelphia and Scranton
Ohio Suburbs of Cincinnati and Columbus and several small
communities in Ohio, suburbs of Lexington and several
small communities in Kentucky, several small
communities in Indiana and Kalamazoo, Michigan and
several small communities in Michigan
New Jersey Ocean County, New Jersey
Los Angeles City and suburbs of Los Angeles
Puerto Rico Cities of San Juan and Levittown
Colorado City of Colorado Springs
Other Various locations throughout the midwest
</TABLE>
<PAGE>
<TABLE>
The following table summarizes by market area the homes passed by cable,
basic subscribers and premium service units for the Systems as of December 31,
1999.
<CAPTION>
Homes Basic Basic Premium Premium
Passed Subscribers Penetration Units Penetration
Company Systems:
<S> <C> <C> <C> <C> <C>
Los Angeles 1,464,419 808,849 55.23% 512,927 63.41%
New England 1,065,827 766,372 71.90 284,852 37.17
Florida 1,039,728 684,724 65.86 273,091 39.88
Ohio 939,131 633,242 67.43 258,776 40.87
Western New York 750,658 500,700 66.70 295,916 59.10
Virginia 598,757 434,995 72.65 190,166 43.71
Western Pennsylvania 347,736 249,262 71.68 71,459 28.67
Eastern Pennsylvania 271,439 199,821 73.62 103,866 51.98
Puerto Rico 305,826 134,927 44.12 83,754 62.07
Colorado 191,311 111,544 58.31 44,215 39.64
New Jersey 133,431 109,675 82.20 57,572 52.49
Other 614,670 355,981 57.91 88,503 24.86
----------- ------------ -----------
Total 7,722,933 4,990,092 64.61 2,265,097 45.39
=========== ============ ===========
Managed Systems:
Western Pennsylvania 82,289 61,982 75.32 28,009 45.19
Florida 29,713 25,569 86.05 7,540 29.49
Eastern Pennsylvania 36,543 25,449 69.64 17,004 66.82
Virginia 31,229 21,502 68.85 11,855 55.13
----------- ------------ -----------
Total 179,774 134,502 74.82 64,408 47.89
=========== ============ ===========
Total Systems:
Los Angeles 1,464,419 808,849 55.23 512,927 63.41
New England 1,065,827 766,372 71.90 284,852 37.17
Florida 1,069,441 710,293 66.42 280,631 39.51
Ohio 939,131 633,242 67.43 258,776 40.87
Western New York 750,658 500,700 66.70 295,916 59.10
Virginia 629.986 456,497 72.46 202,021 44.25
Western Pennsylvania 430,025 311,244 72.38 99,468 31.96
Eastern Pennsylvania 307,982 225,270 73.14 120,870 53.66
Puerto Rico 305,826 134,927 44.12 83,754 62.07
Colorado 191,311 111,544 58.31 44,215 39.64
New Jersey 133,431 109,675 82.20 57,572 52.49
Other 614,670 355,981 57.91 88,503 24.86
----------- ------------ -----------
Total 7,902,707 5,124,594 64.85% 2,329,505 45.46%
=========== ============ ===========
</TABLE>
Financial Information
The financial data regarding the revenues, results of operations and
identifiable assets for the Company's two business segments as of and for each
of the three years in the period ended March 31, 1998, the nine months ended
December 31, 1998 and the year ended December 31, 1999 are set forth in, and
incorporated herein by reference to, Item 6 of this Form 10-K.
Cable Television Operations
Technologies and Capital Improvements
The Company has made a substantial commitment to the technological
development of the Systems and is aggressively investing in the upgrade of the
technical capabilities of its cable plant in a cost efficient manner. The
Company continues to deploy fiber optic cable and to upgrade the technical
capabilities of its broadband networks. The result is significant increases in
network capacity, digital capability, two-way communication and network
reliability.
The design of the current System upgrade, when completed, will deploy on
average one fiber optic node for every two system plant miles or approximately
one fiber node for every 180 homes passed compared to the industry norm of 500
to 1000 homes passed per fiber optic node. Approximately 75% of the System will
be upgraded to 750 Mhz. Approximately 25% of the plant will remain at 550 Mhz.
The upgraded system will be completely addressable and provide two-way
communication capability. The additional bandwidth will enable the Company to
offer additional video programming services. A portion of the bandwidth will be
allocated to the new service offerings such as two-way data, telephony and
video-on-demand. The Company believes this combination of bandwidth and the
relatively low number of homes passed per fiber node will provide adequate
capacity and flexibility to offer existing and anticipated services into the
foreseeable future with limited additional capital expenditures.
The upgraded System, on average, will include only two active pieces of
equipment between the headend and the home. Limiting the number of active pieces
of equipment combined with the small number of homes per fiber node reduces the
potential for mechanical failure and the number of customers affected by such a
failure, all of which provides increased reliability to the customers.
Subscriber Services and Rates
The Company's revenues are derived principally from monthly subscription
fees for various services. Rates to subscribers vary in accordance with the type
of service selected. Although service offerings vary across franchise areas
because of differences in plant capabilities, each of the areas typically offers
services at monthly prices ranging as follows:
<TABLE>
<CAPTION>
Service Rate Range
<S> <C>
Basic Cable Television $ 7.00 - 19.00
Cable Value Cable Television $ 11.00 - 28.00
Premium Cable Television $ 9.00 - 14.00
Digital Cable Television $ 10.00
High Speed Internet Access $ 35.00 - 50.00
Dial-up Internet Access $ 16.00
Paging $ 7.00 - 35.00
Long Distance $ .07 - .08 per minute
</TABLE>
In addition, the Company derives other telephony revenues with rates
determined on a usage basis.
An installation fee, which the Company may wholly or partially waive
during a promotional period, is usually charged to new subscribers. Subscribers
are free to terminate services at any time without charge, but often are charged
a fee for reconnection or change of service.
The Cable Communications Policy Act of 1984 (the "1984 Cable Act") as
amended by the Cable Television Consumer Protection and Competition Act of 1992
( the "1992 Cable Act"), deregulated basic service rates for systems in
communities meeting the Federal Communication Commissions ("FCC") definition of
effective competition. Pursuant to the FCC's definition of effective competition
adopted following enactment of the 1984 Cable Act, substantially all of the
Company's franchises were rate deregulated. However, in June 1991, the FCC
amended its effective competition standard, which increased the number of cable
systems which could be subject to local rate regulation. The 1992 Cable Act
contains a definition of effective competition under which nearly all cable
systems in the United States are subject to regulation of basic service rates.
Additionally, the legislation (i) eliminated the 5% annual basic rate increase
allowed by the 1984 Cable Act without local approval; (ii) allows the FCC to
adjudicate the reasonableness of rates for non-basic service tiers, other than
premium services, for cable systems not subject to effective competition in
response to complaints filed by franchising authorities and/or cable
subscribers; (iii) prohibits cable systems from requiring subscribers to
purchase service tiers above basic service in order to purchase premium services
if the system is technically capable of doing so; (iv) allows the FCC to impose
restrictions on the retiering and rearrangement of cable services under certain
circumstances; and (v) permits the FCC and franchising authorities more latitude
in controlling rates and rejecting rate increase requests. The
Telecommunications Act of 1996 (the "1996 Act") ended FCC regulation on nonbasic
tier rates on March 31, 1999. See "Legislation and Regulation."
For a discussion of recent FCC rate regulation and related developments,
see "Legislation and Regulation" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Regulatory and Competitive
Matters."
Franchises
The 1984 Cable Act provides that cable operators may not offer cable
service to a particular community without a franchise unless such operator was
lawfully providing service to the community on July 1, 1984 and the franchising
authority does not require a franchise. The Systems operate pursuant to
franchises or other authorizations issued by governmental authorities,
substantially all of which are nonexclusive. Such franchises or authorizations
awarded by a governmental authority generally are not transferable without the
consent of the authority. As of December 31, 1999, the Company held 2,885
franchises, and the Managed Systems held 102 franchises. Most of these
franchises can be terminated prior to their stated expiration by the relevant
governmental authority, after due process, for breach of material provisions of
the franchise.
Under the terms of most of the Company's franchises, a franchise fee
(generally ranging up to 5% of the gross revenues of the cable system) is
payable to the governmental authority. For the past three years, franchise fee
expense incurred by the Company has averaged approximately 2.4% of gross system
revenues.
The franchises issued by the governmental authorities are subject to
periodic renewal. In renewal hearings, the authorities generally consider, among
other things, whether the franchise holder has provided adequate service and
complied with the franchise terms. In connection with a renewal, the authority
may impose different and more stringent terms, the impact of which cannot be
predicted. To date, all of the Company's material franchises have been renewed
or extended, at or effective upon their stated expiration, generally on modified
terms. Such modified terms have not been materially adverse to the Company.
The Company believes that all of its material franchises are in good
standing. From time to time, the Company notifies the franchising authorities of
the Company's intent to seek renewal of the franchise in accordance with the
procedures set forth in the 1984 Cable Act. The 1984 Cable Act process requires
that the governmental authority consider the franchise holder's renewal proposal
on its own merits in light of the franchise holder's past performance and the
community's needs and interests, without regard to the presence of competing
applications. See "Legislation and Regulation." The 1992 Cable Act alters the
administrative process by which operators utilize their 1984 Cable Act franchise
renewal rights. Such changes could make it easier in some instances for a
franchising authority to deny renewal of a franchise.
Adelphia Business Solutions
Networks
Network Construction
Adelphia Business Solutions' networks are constructed to cost-effectively
access areas of significant end user communications traffic, as well as the
majority of the Local Exchange Carriers Central Offices ("LEC-COs") and Points
of Presence ("POPs") and most of the IXCs. Adelphia Business Solutions
establishes general requirements for network design including engineering
specifications, fiber type and amount, construction timelines and quality
control. Adelphia Business Solutions' engineering personnel provide project
management, including contract negotiation and overall supervision of the
construction, testing and certification of all facilities. The construction
period for a new network varies depending upon the number of route miles to be
installed, the initial number of buildings targeted for connection to the
network, the general deployment of the network and other factors. Networks that
Adelphia Business Solutions has installed to date have generally become
operational within ten to twelve months after the beginning of construction.
Network Operating Control Center ("NOCC")
Adelphia Business Solutions' NOCC is located in Coudersport, Pennsylvania.
The NOCC is equipped with state-of-the-art system monitoring and control
technology. The NOCC is a single point interface for monitoring all of Adelphia
Business Solutions' networks and provisioning all services and systems necessary
to operate the networks. The NOCC supports all of Adelphia Business Solutions'
networks including the management of 2,194 building connections, 22 switches or
remote switching modules and 16,060 network route miles as of December 31, 1999.
The NOCC is designed to accommodate Adelphia Business Solutions' anticipated
growth.
The NOCC is utilized for a variety of network management and control
functions including monitoring, managing and diagnosing Adelphia Business
Solutions' SONET networks, central office equipment, customer circuits and
signals and Adelphia Business Solutions' switches and associated equipment. The
NOCC is also the location where Adelphia Business Solutions provisions,
coordinates, tests and accepts all orders for switched and dedicated circuit
orders. In addition, the NOCC maintains the database for Adelphia Business
Solutions' circuits and network availability. Network personnel at the NOCC also
develop and distribute a variety of software utilized to manage and maintain the
networks.
Connections to Customer Locations
Office buildings are connected by network backbone extensions to one of a
number of physical rings of fiber optic cable, which originate and terminate at
the company's central office. Signals are sent simultaneously on both primary
and alternate protection paths through a network backbone to the company's
central office. Within each building, Company-owned internal wiring connects the
Company's fiber optic terminal equipment to the customer premises. Customer
equipment is connected to Company-provided electronic equipment generally
located where customer transmissions are digitized, combined and converted to an
optical signal. The traffic is then transmitted through the network backbone to
the Company's central office where it can be reconfigured for routing to its
ultimate destination on the network.
Cable Television Operations
Competition
Although the Company and the cable television industry have historically
faced modest competition, the competitive landscape is changing and competition
has increased. The Company believes that the increase in competition within its
communities will continue to occur over the next several years.
At the present time, cable television systems compete with other
communications and entertainment media, including off-air television broadcast
signals which a viewer is able to receive directly using the viewer's own
television set and antenna. The extent to which a cable system competes with
over-the-air broadcasting depends upon the quality and quantity of the broadcast
signals available by direct antenna reception compared to the quality and
quantity of such signals and alternative services offered by a cable system. In
many areas, television signals which constitute a substantial part of basic
service can be received by viewers who use their own antennas. Local television
reception for residents of apartment buildings or other multi-unit dwelling
complexes may be aided by use of private master antenna services. Cable systems
also face competition from alternative methods of distributing and receiving
television signals and from other sources of entertainment such as live sporting
events, movie theaters and home video products, including multimedia computers,
videotape recorders, digital video disc players and compact disc players. In
recent years, the FCC has adopted policies providing for authorization of new
technologies and a more favorable operating environment for certain existing
technologies that provide, or may provide, substantial additional competition
for cable television systems. The extent to which cable television service is
competitive depends in significant part upon the cable television system's
ability to provide an even greater variety of programming and other services
than that available off-air or through competitive alternative delivery sources.
In addition, certain provisions of the 1992 Cable Act and the 1996 Act are
expected to increase competition significantly in the cable industry. See
"Legislation and Regulation."
The 1992 Cable Act prohibits the award of exclusive franchises, prohibits
franchising authorities from unreasonably refusing to award additional
franchises and permits them to operate cable systems themselves without
franchises.
Individuals presently have the option to purchase earth stations, which
allow the direct reception of satellite-delivered program services formerly
available only to cable television subscribers. Most satellite-distributed
program signals are being electronically scrambled to permit reception only with
authorized decoding equipment, generally at a cost to the viewer. From time to
time, legislation has been introduced in Congress which, if enacted into law,
would prohibit the scrambling of certain satellite-distributed programs or would
make satellite services available to private earth stations on terms comparable
to those offered to cable systems. Broadcast television signals are being made
available to owners of earth stations under the Satellite Home View Copyright
Act of 1988, which became effective January 1, 1989 for a six-year period. This
Act establishes a statutory compulsory license for certain transmissions made by
satellite owners to home satellite dishes for which carriers are required to pay
a royalty fee to the Copyright Office. This Act was formally extended through
December 31, 1999 and deliberations relative to further extension of this Act
are ongoing. The 1992 Cable Act enhances the right of cable competitors to
purchase nonbroadcast satellite-delivered programming. See "Legislation and
Regulation--Federal Regulation."
Video programming is now being delivered to individuals by high-powered
direct broadcast satellites ("DBS") utilizing video compression technology. This
technology has the capability of providing more than 100 channels of programming
over a single high-powered DBS satellite with significantly higher capacity
available if multiple satellites are placed in the same orbital position. Video
compression technology is being used by cable operators to similarly increase
their channel capacity. DBS service can be received virtually anywhere in the
United States through the installation of a small rooftop or side-mounted
antenna, and it is more accessible than cable television service where a cable
plant has not been constructed or where it is not cost effective to construct
cable television facilities. DBS is being heavily marketed on a nationwide basis
by competing service providers. Congress passed the Satellite Home Viewer Act in
late 1999. The law allows DBS providers to begin offering local broadcast
channels. DBS companies have since added a limited number of local channels in
some regions, a trend that will continue, thus lessening the distinction between
cable television and DBS service.
Cable communications systems also compete with wireless program
distribution services such as multichannel, multipoint distribution service
("MMDS"), commonly called wireless cable systems, which use low-power microwave
frequencies to transmit video programming over-the-air to subscribers. There are
MMDS operators who are authorized to provide or are providing broadcast and
satellite programming to subscribers in areas served by the Company's Systems.
MMDS systems are less capital intensive, are not required to obtain local
franchises or to pay franchise fees and are subject to fewer regulatory
requirements than cable television systems. MMDS systems' ability to compete
with cable television systems has previously been limited by channel capacity,
the inability to obtain programming and regulatory delays. Recently, however,
MMDS systems have developed digital compression technology which provides for
more channel capacity and better signal delivery. Although relatively few MMDS
systems in the United States are currently in operation or under construction,
virtually all markets have been licensed or tentatively licensed. A series of
actions taken by the FCC, including reallocating certain frequencies to wireless
services, are intended to facilitate the development of wireless cable
television spectrum that will be used by wireless operators to provide
additional channels of programming over longer distances. Several Regional Bell
Operating Companies acquired interests in major MMDS companies. The Company is
unable to predict whether wireless video services will have a material impact on
its operations.
Additional competition may come from private cable television systems
servicing condominiums, apartment complexes and certain other multiple unit
residential developments. The operators of these private systems, known as
satellite master antenna television ("SMATV") systems, often enter into
exclusive agreements with apartment building owners or homeowners' associations
which preclude franchised cable television operators from serving residents of
such private complexes. However, the 1984 Cable Act gives franchised cable
operators the right to use existing compatible easements within their franchise
areas upon nondiscriminatory terms and conditions. Accordingly, where there are
preexisting compatible easements, cable operators may not be unfairly denied
access or discriminated against with respect to the terms and conditions of
access to those easements. There have been conflicting judicial decisions
interpreting the scope of the access right granted by the 1984 Cable Act,
particularly with respect to easements located entirely on private property.
Further, while a franchised cable television system typically is obligated to
extend service to all areas of a community regardless of population density or
economic risk, a SMATV system may confine its operation to small areas that are
easy to serve and more likely to be profitable. Under the 1996 Act, SMATV
systems can interconnect non-commonly owned buildings without having to comply
with local, state and federal regulatory requirements that are imposed upon
cable systems providing similar services, as long as they do not use public
rights-of-way. The U.S. Copyright Office has concluded that SMATV systems are
"cable systems" for purposes of qualifying for the compulsory copyright license
established for cable systems by federal law.
The FCC has authorized an interactive television service which permits
non-video transmission of information between an individual's home and
entertainment and information service providers. This service provides an
alternative means for DBS systems and other video programming distributors,
including television stations, to initiate the interactive television services.
This service may also be used by the cable television industry.
The FCC also has initiated a new rulemaking proceeding looking toward the
allocation of frequencies in the 28 Ghz range for a new multi-channel wireless
video service which could make 98 video channels available in a single market.
It cannot be predicted at this time whether competitors will emerge utilizing
such frequencies or whether such competition would have a material impact on the
operations of cable television systems.
The FCC has recently auctioned a sizable amount of spectrum in the 31 Ghz
band for use by a new wireless service, LMDS, which among other uses, can
deliver over 100 channels of digital programming directly to consumers' homes.
The FCC auctioned this spectrum to the public during 1998, with cable operators
and local telephone companies restricted in their participation in this auction.
The extent to which the winning licenses in this service will use this spectrum
in particular regions of the country to deliver multichannel video programming
to subscribers, and therefore provide competition for franchised cable systems,
is at this time, uncertain. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The 1996 Act eliminates the restriction against ownership and operation of
cable systems by local telephone companies within their local exchange service
areas. Telephone companies are now free to enter the retail video distribution
business through any means, such as DBS, MMDS, SMATV or as traditional
franchised cable system operators. Alternatively, the 1996 Act authorizes local
telephone companies to operate "open video systems" without obtaining a local
cable franchise, although telephone companies operating such systems can be
required to make payments to local governmental bodies in lieu of cable
franchise fees. Up to two-thirds of the channel capacity of an "open video
system" must be available to programmers unaffiliated with the local telephone
company. The open video system concept replaces the FCC's video dialtone rules.
The 1996 Act also includes numerous provisions designed to make it easier for
cable operators and others to compete directly with local exchange telephone
carriers. With certain limited exceptions, neither a local exchange carrier nor
a cable operator can acquire more than 10% of the other entity operating within
its own service area.
Advances in communications technology, as well as changes in the
marketplace and the regulatory and legislative environment, are constantly
occurring. Thus, it is not possible to predict the effect that ongoing or future
developments might have on the cable industry. The ability of cable systems to
compete with present, emerging and future distribution media will depend to a
great extent on obtaining and delivering attractive programming. The
availability and exclusive use of a sufficient amount of quality programming may
in turn be affected by developments in regulation or copyright law. See
"Legislation and Regulation."
The cable television industry competes with radio, television, the
Internet, and print media for advertising revenues. As the cable television
industry continues to develop programming designed specifically for distribution
by cable, advertising revenues may increase. Premium programming provided by
cable systems is subject to the same competitive factors which exist for other
programming discussed above. The continued profitability of premium services may
depend largely upon the continued availability of attractive programming at
competitive prices.
Adelphia Business Solutions
Competition
In each of the markets served by Adelphia Business Solutions' networks,
the services offered by Adelphia Business Solutions compete principally with the
services offered by the incumbent LEC serving that area. Incumbent LECs have
long-standing relationships with their customers, have the potential to
subsidize competitive services from monopoly service revenues, and benefit from
favorable state and federal regulations. In light of the passage of the 1996
Act, federal and state regulatory initiatives will provide increased business
opportunities to competitive local exchange carriers ("CLECs") such as Adelphia
Business Solutions, but regulators are likely to provide incumbent LECs with
increased pricing flexibility for their services as competition increases.
Further, if a Regional Bell Operating Company ("RBOC") is authorized to provide
in region long distance service in one or more states by fulfilling the market
operating provisions of the 1996 Act, the RBOC may be able to offer "one stop
shopping" that would be competitive with Adelphia Business Solutions' offerings.
To date, the FCC has approved Bell Atlantic's application for such authority in
New York. Any approval could result in decreased market share for the major
IXCs, which are among the operating companies' significant customers. Any of
these results could have an adverse effect on Adelphia Business Solutions.
There has been significant merger activity among the RBOCs in anticipation
of entry into the long distance market, including the merger of Ameritech and
SBC, whose combined territory covers a substantial portion of Adelphia Business
Solutions' markets. Other combinations have occurred in the industry, which may
have an effect on Adelphia Business Solutions, such as the combination of AT&T
Corp. and MediaOne and the proposed mergers between Bell Atlantic and GTE, Qwest
and US West, and MCIWorldCom and Sprint. The effects of these combinations are
unknown at this time. Management of Adelphia Business Solutions believes that
combinations of RBOCs and others will pose a greater competitive threat to
Adelphia Business Solutions' strategy of originating and terminating a
significant proportion of its customers' communications traffic over its own
networks, rather than relying on the network of the incumbent LEC.
Adelphia Business Solutions also faces, and will continue to face,
competition from other current and potential market entrants, including other
CLECs and data centric local providers, incumbent LECs which are not subject to
RBOC restrictions on long distance, AT&T, MCIWorldCom, Sprint and other IXCs,
cable television companies, electric utilities, microwave carriers, wireless
telecommunications providers and private networks built by large end users. In
addition, new carriers, such as Global Crossing, Williams, Qwest and Level 3 are
building and managing nationwide networks which, in some cases, are designed to
provide local services. Further, AT&T's acquisition of various cable companies
will exploit ubiquitous local cable infrastructure for telecommunications and
other services provided by the operating companies. Finally, although Adelphia
Business Solutions has generally good relationships with the other existing
IXCs, there are no assurances that any of these IXCs will not build their own
facilities, purchase other carriers or their facilities, or resell the services
of other carriers rather than use Adelphia Business Solutions' services when
entering the market for local exchange services.
Many of Adelphia Business Solutions' current and potential competitors,
particularly incumbent LECs, have financial, personnel and other resources
substantially greater than those of Adelphia Business Solutions, as well as
other competitive advantages over Adelphia Business Solutions.
Employees
At February 26, 2000, there were 11,740 full-time employees of the Company
and the Managed Partnerships, of which 724 employees were covered by collective
bargaining agreements at 25 locations. The Company considers its relations with
its employees to be good.
Legislation and Regulation
The Company's existing and anticipated businesses are regulated by the
FCC, some state governments and most local governments. In addition, various
legislative and regulatory proposals under consideration from time to time by
Congress and various federal agencies may materially affect the Company's
existing and anticipated businesses. The following is a summary of federal laws
and regulations affecting the growth and operation of the Company's existing and
anticipated businesses and a description of certain state and local laws.
Cable Television/Federal Laws and Regulations
Cable Communications Policy Act of 1984
The 1984 Cable Act became effective on December 29, 1984. This federal
statute, which amended the Communications Act of 1934 (the "Communications
Act"), created uniform national standards and guidelines for the regulation of
cable television systems. Violations by a cable television system operator of
provisions of the Communications Act, as well as of FCC regulations, can subject
the operator to substantial monetary penalties and other sanctions. Among other
things, the 1984 Cable Act affirmed the right of franchising authorities (state
or local, depending on the practice in individual states) to award one or more
franchises within their jurisdictions. It also prohibited non-grandfathered
cable television systems from operating without a franchise in such
jurisdictions. In connection with new franchises, the 1984 Cable Act provides
that in granting or renewing franchises, franchising authorities may establish
requirements for cable-related facilities and equipment, but may not establish
or enforce requirements for video programming or information services other than
in broad categories.
Cable Television Consumer Protection and Competition Act of 1992
On October 5, 1992, Congress enacted the 1992 Cable Act. This legislation
effected significant changes to the legislative and regulatory environment in
which the cable industry operates. It amended the 1984 Cable Act in many
respects. The 1992 Cable Act became effective on December 4, 1992, although
certain provisions, most notably those dealing with rate regulation and
retransmission consent, became effective at later dates. The legislation also
required the FCC to initiate a number of rulemaking proceedings to implement
various provisions of the statute. The 1992 Cable Act allows for a greater
degree of regulation on the cable industry with respect to, among other things:
(i) cable system rates for both basic and certain nonbasic services, (ii)
programming access and exclusivity arrangements, (iii) access to cable channels
by unaffiliated programming services, (iv) leased access terms and conditions,
(v) horizontal and vertical ownership of cable systems, (vi) customer service
requirements, (vii) franchise renewals, (viii) television broadcast signal
carriage and retransmission consent, (ix) technical standards, (x) subscriber
privacy, (xi) consumer protection issues, (xii) cable equipment compatibility,
(xiii) obscene or indecent programming and (xiv) requiring subscribers to
subscribe to tiers of service other than basic service as a condition of
purchasing premium services. Additionally, the legislation encourages
competition with existing cable systems by allowing municipalities to own and
operate their own cable systems without having to obtain a franchise, preventing
franchising authorities from granting exclusive franchises or unreasonably
refusing to award additional franchises covering an existing cable system's
service area and prohibiting the common ownership of cable systems and
co-located MMDS or SMATV systems. The 1992 Cable Act also precludes video
programmers affiliated with cable television companies from favoring cable
operators over competitors and requires such programmers to sell their
programming to other multichannel video distributors. This provision may limit
the ability of cable programming suppliers to offer exclusive programming
arrangements to cable television companies. A number of provisions in the 1992
Cable Act relating to, among other things, rate regulation, have had a negative
impact on the cable industry and the Company's business.
Telecommunications Act of 1996
The 1996 Act significantly revised the federal regulatory structure. As it
pertains to cable television, the 1996 Act, among other things, (i) eliminated
the regulation of certain nonbasic programming services in 1999, (ii) expanded
the definition of effective competition, the existence of which displaces rate
regulation, (iii) eliminated the restriction against the ownership and operation
of cable systems by telephone companies within their local exchange service
areas and (iv) liberalizes certain of the FCC's cross-ownership restrictions.
The FCC has been conducting a number of rulemaking proceedings in order to
implement many of the provisions of the 1996 Act.
FCC Regulation
The FCC, the principal federal regulatory agency with jurisdiction over
cable television, has promulgated regulations covering such areas as the
registration of cable systems, cross-ownership between cable systems and other
communications businesses, carriage of television broadcast programming,
consumer education and lockbox enforcement, origination cablecasting and
sponsorship identification, children's programming, the regulation of basic
cable service rates in areas where cable systems are not subject to effective
competition, signal leakage and frequency use, technical performance,
maintenance of various records, equal employment opportunity, and antenna
structure notification, marking and lighting. The FCC has the authority to
enforce these regulations through the imposition of substantial fines, the
issuance of cease and desist orders and/or the imposition of other
administrative sanctions, such as the revocation of FCC licenses needed to
operate certain transmission facilities often used in connection with cable
operations. Furthermore, the 1992 Cable Act required the FCC to adopt
regulations covering, among other things, cable rates, signal carriage, consumer
protection and customer service, leased access, indecent programming, programmer
access to cable television systems, programming agreements, technical standards,
consumer electronics equipment compatibility, ownership of home wiring, program
exclusivity, equal employment opportunity, and various aspects of direct
broadcast satellite system ownership and operation. The 1996 Act requires
certain changes to various provisions of these regulations. A brief summary of
the most material federal regulations as adopted to date follows.
Rate Regulation
The 1984 Cable Act codified existing FCC preemption of rate regulation for
premium channels and optional nonbasic program tiers. The 1984 Cable Act also
deregulated basic cable rates for cable television systems determined by the FCC
to be subject to effective competition. The 1992 Cable Act substantially changed
the statutory and FCC rate regulation standards. The 1992 Cable Act replaced the
FCC's old standard for determining effective competition, under which most cable
systems were not subject to local rate regulation, with a statutory provision
that has resulted in nearly all cable television systems becoming subject to
local rate regulation of basic service. Additionally, the 1992 Cable Act
eliminated the 5% annual rate increase for basic service previously allowed by
the 1984 Cable Act without local approval; required the FCC to adopt a formula,
for franchising authorities to enforce, to assure that basic cable rates are
reasonable; allows the FCC to review rates for nonbasic service tiers (other
than per-channel or per-program services) in response to complaints filed by
franchising authorities; prohibits cable television systems from requiring
customers to purchase service tiers above basic service in order to purchase
premium services if the system is technically capable of doing so; required the
FCC to adopt regulations to establish, on the basis of actual costs, the price
for installation of cable service, remote controls, converter boxes and
additional outlets; and allows the FCC to impose restrictions on the retiering
and rearrangement of cable services under certain limited circumstances. The
1996 Act expands the definition of effective competition to cover situations
where a local telephone company or its affiliate, or any multichannel video
provider using telephone company facilities, offers comparable video service by
any means except DBS. Satisfaction of this test deregulates both basic and
nonbasic tiers. The 1996 Act ended FCC regulation of nonbasic tier rates on
March 31, 1999.
The FCC's regulations set standards for the regulation of basic and
nonbasic cable service rates (other than per-channel or per-program services).
The FCC's original rules became effective on September 1, 1993. The rules have
been amended several times. The rate regulations adopt a benchmark price cap
system for measuring the reasonableness of existing basic and nonbasic service
rates, and a formula for future rate increases based on inflation and increases
in certain costs. Alternatively, cable operators have the opportunity to make
cost-of-service showings which, in some cases, may justify rates above the
applicable benchmarks. The rules also require that charges for cable-related
equipment (e.g., converter boxes and remote control devices) and installation
services be unbundled from the provision of cable service and based upon actual
costs plus a reasonable profit. Local franchising authorities and/or the FCC are
empowered to order a reduction of existing rates which exceed the benchmark
level for either basic and/or nonbasic cable services and associated equipment,
and refunds could be required. The retroactive refund period for basic cable
service rates was limited to one year. A significant number of franchising
authorities have become certified by the FCC to regulate the rates charged by
the Company for basic cable service and for associated equipment. The Company's
ability to implement rate increases consistent with its past practices will
likely be limited by the regulations that the FCC has adopted.
Carriage of Broadcast Television Signals
The 1992 Cable Act contains new mandatory carriage requirements. These new
rules allow commercial television broadcast stations which are "local" to a
cable system (i.e., the system is located in the station's area of dominant
influence), to elect every three years whether to require the cable system to
carry the station, subject to certain exceptions, or whether the cable system
will have to negotiate for "retransmission consent" to carry the station. Local,
noncommercial television stations are also given mandatory carriage rights,
subject to certain exceptions, within the larger of (i) a 50 mile radius from
the station's city of license or (ii) the station's Grade B contour (a measure
of signal strength). Unlike commercial stations, noncommercial stations are not
given the option to negotiate retransmission consent for the carriage of their
signal. In addition, cable systems will have to obtain retransmission consent
for the carriage of all "distant" commercial broadcast stations, except for
certain "superstations," (i.e., commercial satellite-delivered independent
stations such as WTBS). The 1992 Cable Act also eliminated, effective December
4, 1992, the FCC's regulations requiring the provision of input selector
switches. The statutory must-carry provisions for noncommercial stations became
effective on December 4, 1992. Must-carry rules for both commercial and
noncommercial stations and retransmission consent rules for commercial stations
were adopted by the FCC on March 11, 1993. The must-carry requirement for
commercial stations went into effect on June 2, 1993, and any stations for which
retransmission consent had not been obtained (other than must-carry stations,
non-commercial stations and superstations) had to be dropped as of October 6,
1993. The most recent election between must-carry and retransmission consent for
local commercial television broadcast stations was on October 1, 1996. A number
of stations previously carried by the Company's cable television systems elected
retransmission consent. The Company was able to reach agreements with
broadcasters who elected retransmission consent and has therefore not been
required to pay cash compensation to broadcasters for retransmission consent or
been required by broadcasters to remove broadcast stations from the cable
television channel line-ups. The Company has, however, agreed to carry some
services (e.g., ESPN2 and a new service by FOX) in specified markets pursuant to
retransmission consent arrangements which it believes are comparable to those
entered into by most other large cable operators.
Channel Set-Asides
The 1984 Cable Act permits local franchising authorities to require cable
operators to set aside certain channels for public, educational and governmental
access programming. The Company believes that none of the Systems' franchises
contain unusually onerous access requirements. The 1984 Cable Act further
requires cable systems with 36 or more activated channels to designate a portion
of their channel capacity for commercial leased access by unaffiliated third
parties. While the 1984 Cable Act presently allows cable operators substantial
latitude in setting leased access rates, the 1992 Cable Act requires leased
access rates to be set according to a formula determined by the FCC. The FCC has
revised the existing rate formula in a way which will significantly lower the
rates cable operators have been able to charge. It is possible that such leased
access will result in competition to services offered by the Company on the
other channels of its cable systems.
Competing Franchises
Questions concerning the ability of municipalities to award a single cable
television franchise and to impose certain franchise restrictions upon cable
television companies have been considered in several recent federal appellate
and district court decisions. These decisions have been somewhat inconsistent
and, until the U.S. Supreme Court rules definitively on the scope of cable
television's First Amendment protections, the legality of the franchising
process and of various specific franchise requirements is likely to be in a
state of flux. It is not possible at the present time to predict the
constitutionally permissible bounds of cable franchising and particular
franchise requirements. However, the 1992 Cable Act, among other things,
prohibits franchising authorities from unreasonably refusing to grant franchises
to competing cable systems and permits franchising authorities to operate their
own cable systems without franchises.
Cross-Ownership
The 1996 Act repealed the 1984 Cable Act's prohibition on LECs providing
video programming directly to customers within their local exchange telephone
service areas, except in rural areas or by specific waiver of FCC rules. The
1996 Act also authorized LECs to operate "open video systems" without obtaining
a local cable franchise, although LECs operating such systems can be required to
make payments to local governmental bodies in lieu of cable franchise fees.
Where demand exceeds channel capacity, up to two-thirds of the channels on an
"open video system" must be available to programmers unaffiliated with the LEC.
The 1996 Act eliminated the FCC rule prohibiting common ownership between
a cable system and a national broadcast television network. The 1996 Act also
eliminated the statutory ban covering certain common ownership interests,
operation or control between a television station and cable system within the
station's Grade B signal coverage area. However, the parallel FCC rules against
cable/television station cross-ownership remain in place, subject to review by
the FCC within two years. Finally, the 1992 Cable Act prohibits common
ownership, control or interest in cable television systems and MMDS facilities
or SMATV systems having overlapping service areas, except in limited
circumstances. The 1996 Act exempts cable systems facing "effective competition"
from the MMDS and SMATV cross-ownership restrictions.
Pursuant to the 1992 Cable Act, the FCC has imposed limits on the number
of cable systems which a single cable operator can own. In general, no cable
operator can have an attributable interest in cable systems which pass more than
30% of all homes nationwide. Attributable interests for these purposes include
voting interests of 5% or more (unless there is another single holder of more
than 50% of the voting stock), officerships, directorships and general
partnership interests. The FCC has stayed the effectiveness of these rules
pending the outcome of the appeal from the U.S. District Court decision holding
the multiple ownership limit provision of the 1992 Cable Act unconstitutional.
The FCC has also adopted rules which limit the number of channels on a
cable system which can be occupied by programming in which the cable system's
owner has an attributable interest. The limit is 40% of all activated channels.
Franchise Transfers
The 1992 Cable Act requires franchising authorities to act on any
franchise transfer request submitted after December 4, 1992 within 120 days
after receipt of all information required by FCC regulations and by the
franchising authority. Approval is deemed to be granted if the franchising
authority fails to act within such period.
Technical Requirements
Historically, the FCC has imposed technical standards applicable to the
cable channels on which broadcast stations are carried, and has prohibited
franchising authorities from adopting standards which were in conflict with or
more restrictive than those established by the FCC. The FCC has recently revised
such standards and made them applicable to all classes of channels which carry
downstream NTSC video programming. Local franchising authorities are permitted
to enforce the FCC's new technical standards. The FCC also has adopted
additional standards applicable to cable television systems using frequencies in
the 108-137 MHz and 225-400 MHz bands in order to prevent harmful interference
with aeronautical navigation and safety radio services, and has also established
limits on cable system signal leakage. Periodic testing by cable operators for
compliance with these technical standards and signal leakage limits is required.
The Company believes that the Systems are in compliance with these standards in
all material respects. The 1992 Cable Act requires the FCC to update
periodically its technical standards to take into account changes in technology.
The FCC has adopted regulations to implement the requirements of the 1992 Cable
Act designed to improve the compatibility of cable systems and consumer
electronics equipment.
Pole Attachments
The FCC currently regulates the rates and conditions imposed by certain
public utilities for use of their poles, unless under the Federal Pole
Attachments Act, state public service commissions are able to demonstrate that
they regulate rates, terms and conditions of the cable television pole
attachments. A number of states (including Massachusetts, Michigan, New Jersey,
New York, Ohio and Vermont) and the District of Columbia have certified to the
FCC that they regulate the rates, terms and conditions for pole attachments. In
the absence of state regulation, the FCC administers such pole attachment rates
through use of a formula which it has devised and from time to time revises. The
1996 Act directs the FCC to adopt a new rate formula for any attaching party,
including cable systems, which offers telecommunications services. This new
formula will result in significantly higher attachment rates for cable systems
which choose to offer such services.
Other Matters
FCC regulation also includes matters regarding a cable system's carriage
of local sports programming; restrictions on origination and cablecasting by
cable system operators; application of the rules governing political broadcasts;
customer service; home wiring; and limitations on advertising contained in
nonbroadcast children's programming.
Copyright
Cable television systems are subject to federal copyright licensing
covering carriage of broadcast signals. In exchange for making semi-annual
payments to a federal copyright royalty pool and meeting certain other
obligations, cable operators obtain a statutory license to retransmit broadcast
signals. The amount of this royalty payment varies, depending on the amount of
system revenues from certain sources, the number of distant signals carried, and
the location of the cable system with respect to over-the-air television
stations.
Various bills have been introduced into Congress over the past several
years that would eliminate or modify the cable television compulsory license. At
the request of Congress, the Copyright Office has commenced an inquiry into
possible revisions of the compulsory license. Without the compulsory license,
cable operators might need to negotiate rights from the copyright owners for
each program carried on each broadcast station in the channel lineup. Such
negotiated agreements could increase the cost to cable operators of carrying
broadcast signals. The 1992 Cable Act's retransmission consent provisions
expressly provide that retransmission consent agreements between television
broadcast stations and cable operators do not obviate the need for cable
operators to obtain a copyright license for the programming carried on each
broadcaster's signal.
Copyrighted music performed in programming supplied to cable television
systems by pay cable networks (such as HBO) and basic cable networks (such as
USA Network) has generally been licensed by the networks through private
agreements with the American Society of Composers and Publishers ("ASCAP") and
BMI, Inc. ("BMI"), the two major performing rights organizations in the United
States. As a result of extensive litigation, ASCAP and BMI are both now required
to offer "through to the viewer" licenses to the cable networks which would
cover the retransmission of the cable networks' programming by cable systems to
their subscribers.
Copyrighted music performed by cable systems themselves on local
origination channels, Public Education Grant ("PEG") channels, and in locally
inserted advertising and cross promotional announcements must also be licensed.
A blanket license was obtained for periods through December 31, 1996 from BMI. A
settlement with ASCAP has been made for all periods through December 31, 1999.
Cable industry negotiations with both BMI and ASCAP are ongoing for periods
subsequent to these settlements.
Cable Television/State and Local Regulation
Because a cable television system uses local streets and rights-of-way,
cable television systems are subject to state and local regulation, typically
imposed through the franchising process. State and/or local officials are
usually involved in franchise selection, system design and construction, safety,
service rates, consumer relations, billing practices and community related
programming and services.
Cable television systems generally are operated pursuant to nonexclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. Franchises generally are granted for fixed terms and in
many cases are terminable if the franchise operator fails to comply with
material provisions. The 1984 Cable Act established renewal procedures and
criteria designed to protect incumbent franchises against arbitrary denials of
renewal. While these formal procedures are not mandatory unless timely invoked
by either the cable operator or the franchising authority, they can provide
substantial protection to incumbent franchisees. Even after the formal renewal
procedures are invoked, franchising authorities and cable operators remain free
to negotiate a renewal outside the formal process. Nevertheless, renewal is by
no means assured, as the franchisee must meet certain statutory standards. Even
if a franchise is renewed, a franchising authority may impose new and more
onerous requirements such as upgrading facilities and equipment, although the
municipality must take into account the cost of meeting such requirements. The
1992 Cable Act makes several changes to the process under which a cable operator
seeks to enforce its renewal rights which could make it easier in some cases for
a franchising authority to deny renewal.
Franchises usually call for the payment of fees, often based on a
percentage of the system's gross subscriber revenues, to the granting authority.
Although franchising authorities may impose franchise fees under the 1984 Cable
Act, such payments cannot exceed 5% of a cable system's annual gross revenues.
In those communities in which franchise fees are required, the Company currently
pays franchise fees ranging up to 5% of gross revenues. Franchising authorities
are also empowered in awarding new franchises or renewing existing franchises to
require cable operators to provide cable-related facilities and equipment and to
enforce compliance with voluntary commitments. In the case of franchises in
effect prior to the effective date of the 1984 Cable Act, franchising
authorities may enforce requirements contained in the franchise relating to
facilities, equipment and services, whether or not cable-related. The 1984 Cable
Act, under certain limited circumstances, permits a cable operator to obtain
modifications of franchise obligations.
Upon receipt of a franchise, the cable system owner usually is subject to
a broad range of obligations to the issuing authority directly affecting the
business of the system. The terms and conditions of franchises vary materially
from jurisdiction to jurisdiction, and even from city to city within the same
state, historically ranging from reasonable to highly restrictive or burdensome.
The 1984 Cable Act places certain limitations on a franchising authority's
ability to control the operation of a cable system operator and the courts have
from time to time reviewed the constitutionality of several general franchise
requirements, including franchise fees and access channel requirements, often
with inconsistent results. On the other hand, the 1992 Cable Act prohibits
exclusive franchises, and allows franchising authorities to exercise greater
control over the operation of franchised cable systems, especially in the area
of customer service and rate regulation. The 1992 Cable Act also allows
franchising authorities to operate their own multichannel video distribution
system without having to obtain a franchise and permits states or local
franchising authorities to adopt certain restrictions on the ownership of cable
systems. Moreover, franchising authorities are immunized from monetary damage
awards arising from regulation of cable systems or decisions made on franchise
grants, renewals, transfers and amendments.
The specific terms and conditions of a franchise and the laws and
regulations under which it was granted directly affect the profitability of the
cable television system. Cable franchises generally contain provisions governing
charges for basic cable television services, fees to be paid to the franchising
authority, length of the franchise term, renewal, sale or transfer of the
franchise, territory of the franchise, design and technical performance of the
system, use and occupancy of public streets and number and types of cable
services provided. The 1996 Act prohibits a franchising authority from either
requiring or limiting a cable operator's provision of telecommunications
services.
Various proposals have been introduced at the state and local levels with
regard to the regulation of cable television systems, and a number of states
have adopted legislation subjecting cable television systems to the jurisdiction
of centralized state governmental agencies, even to the exclusion of local
community regulation. Some of these states regulate jointly and impose
regulation of a character similar to that of a public utility. Attempts in other
states to regulate cable television systems are continuing and can be expected
to increase. Such proposals and legislation may be preempted by federal statute
and/or FCC regulation. To date, the states in which the Company operates that
have enacted such state level regulation are New York, New Jersey, Massachusetts
and Vermont. The Company cannot predict whether other states in which it
currently operates, or in which it may acquire systems, will engage in such
regulation in the future.
The foregoing does not purport to describe all present and proposed
federal, state and local regulations and legislation relating to the cable
television industry. Other existing federal regulations, copyright licensing
and, in many jurisdictions, state and local franchise requirements currently are
the subject of a variety of judicial proceedings, legislative hearings and
administrative and legislative proposals which could change, in varying degrees,
the manner in which cable television systems operate. Neither the outcome of
these proceedings nor their impact upon the cable television industry or the
Company can be predicted at this time.
Telephony and Telecommunications/Federal Laws and Regulations
The 1996 Act also alters federal, state and local laws and regulations
regarding telecommunications providers and services, including the Company, and
creates a favorable environment in which the Company may provide telephone and
other telecommunications services and facilities. The following is a summary of
the key provisions of the 1996 Act that could materially affect the
telecommunications business of the Company.
The 1996 Act was intended to promote the provision of competitive
telephone services and facilities by cable television companies and others. The
1996 Act declares that no state or local laws or regulations may prohibit or
have the effect of prohibiting the ability of any entity to provide any
interstate or intrastate telecommunications service. States are authorized to
impose "competitively neutral" requirements regarding universal service, public
safety and welfare, service quality, and consumer protection. The 1996 Act
further provides that cable operators and affiliates providing
telecommunications services are not required to obtain a separate franchise from
local franchising authorities ("LFAs") for such services. An LFA may not order a
cable operator or affiliate to discontinue providing telecommunications services
or discontinue operating its cable system on the basis that it has failed to
obtain a separate franchise or renewal for the provision of telecommunications
services. The 1996 Act prohibits LFAs from requiring cable operators to provide
telecommunications service or facilities as a condition of the grant of a
franchise, franchise renewal, or franchise transfer, except that LFAs may seek
"institutional networks" as part of such franchise negotiations.
The 1996 Act provides that, when cable operators provide
telecommunications services, LFAs may require reasonable, competitively neutral
compensation for management of the public rights-of-way. The LFA must publicly
disclose such compensation requirements.
The Company believes that it qualifies as a connecting carrier under
federal law and therefore does not need FCC certification to provide intrastate
service. In the event that it is determined that the Company must seek FCC
certification, the Company believes that such certification will be granted by
the FCC in a timely manner. The Company may be required to file certain tariffs
and reports with the FCC.
Interconnection and Other Telecommunications Carrier Obligations
To facilitate the entry of new telecommunications providers (including
cable operators), the 1996 Act imposes interconnection obligations on all
telecommunications carriers. All carriers must interconnect their networks with
other carriers and must not deploy network features and functions that interfere
with interoperability. LECs also have a set of separate identified obligations
beyond those that apply to new entrants: (i) good faith negotiation with those
seeking interconnection, (ii) unbundling, equal access and non-discrimination
requirements, (iii) resale of services, including "resale at wholesale rates,"
(iv) notice of changes in the network that would affect interconnection and
interoperability and (v) physical collocation unless shown that practical
technical reasons, or space limitations, make physical collocation impractical.
Under the 1996 Act, individual interconnection rates must be just and
reasonable, based on cost, and may include a reasonable profit. Traffic
termination charges shall be "mutual and reciprocal." The 1996 Act permits
carriers to agree on a "bill and keep" system, but does not require such a
system.
The 1996 Act contemplates that interconnection agreements will be
negotiated by the parties and submitted to a state public service commission
("SPSC") for approval. A SPSC may become involved, at the request of either
party, if negotiations fail. If the state regulator refuses to act, the FCC may
determine the matter. If the SPSC acts, an aggrieved party's remedy is to file a
case in federal district court. The 1996 Act provides for a rural exemption to
interconnection requests, but also provides that the exception does not apply
where a cable operator makes an interconnection request of a rural LEC within
the operator's franchise area.
The 1996 Act requires that all telecommunications providers (including
cable operators that provide telecommunications services) contribute equitably
to a Universal Service Fund ("USF"), and the FCC may exempt an interstate
carrier or class of carriers if its contribution would be minimal under the USF
formula. The 1996 Act allows states to determine which intrastate
telecommunications providers contribute to the USF. The 1996 Act prohibits
geographic end user rate de-averaging to protect rural subscribers' rates.
FCC Interconnection Order
On August 8, 1996 the FCC released its First Report and Order, Second
Report and Order and memorandum Opinion and Order promulgating rules and
regulations to implement Congress' statutory directive concerning the
interconnection obligations of all telecommuications carriers, including
obligations of CLECs and LECs, and incumbent LEC pricing of interconnection and
unbundled elements (the "Local Competition Orders"). The Local Competition
Orders adopted a national framework for interconnection but left to the
individual states the task of implementing the FCC's rules. The Local
Competition Orders also established rules implementing the 1996 Act requirements
that LECs negotiate interconnection agreements, and provide guidelines for
review of such agreements by State PUCs.
In July 1997, the United States Court of Appeals for the Eighth Circuit
vacated in part the FCC's local competition rules. That court concluded that the
FCC did not have the authority to establish rules to govern the pricing of
interconnection, network elements, and resale services provided by incumbent
local exchange carriers. In addition, it found certain other FCC rules to be
unlawful. On January 25, 1999, the Supreme Court issued an opinion in which it
reversed portions of the court of appeals decision. The Supreme Court held that
the FCC has authority under the Communications Act to establish rules, including
pricing rules, to implement the local competition provisions of the 1996 Act,
even with respect to intrastate services. The Supreme Court did not address the
merits of the FCC's 1996 pricing rules. In addition, the Supreme Court affirmed
several of the other rules which had been promulgated by the FCC, but which had
been found unlawful by the court of appeals. These included a rule allowing
requesting carriers to select provisions from among different interconnection
agreements approved by state commissions (the so-called "pick-and-choose" rule)
and a rule allowing requesting carriers to obtain from incumbent local exchange
carriers assembled combinations of unbundled network elements (sometimes called
unbundled network element platforms). The Supreme Court vacated a FCC rule
identifying specific network elements which incumbent local exchange carriers
must make available to requesting carriers on the basis that the FCC had failed
to consider (i) whether such network elements were necessary, and (ii) whether
the failure to make network elements available would impair the ability of
requesting carriers to provide the services they seek to offer. The FCC has
indicated that it will conduct further proceedings to comply with the Supreme
Court's opinion regarding the availability of network elements. Whether
incumbent local exchange carriers will be required to make available combined
platforms of network elements will depend on how the FCC implements the
"necessary" and "impair" standards governing network element availability in
light of the Supreme Court opinion.
Internet Services/Federal Laws and Regulations
Transmitting indecent material via the Internet was made criminal by the
1996 Act. However, on-line access providers are exempted from criminal liability
for simply providing interconnection service; they are also granted an
affirmative defense from criminal or other action where in "good faith" they
restrict access to indecent materials. These provisions have been challenged in
federal court. The 1996 Act further exempts on-line access providers from civil
liability for actions taken in good faith to restrict access to obscene,
excessively violent or otherwise objectionable material.
Forced Internet Access
Cable operators have begun to offer high-speed Internet access to
subscribers. These services are in direct competition with a number of other
companies, many of which have substantial resources, such as existing ISPs and
local and long distance telephone companies.
Recently, a number of ISP's have asked local franchising authorities and
the FCC to grant them rights of access to cable systems' broadband
infrastructure so that they can deliver their services directly to cable
systems' customers. Several local franchising authorities and state legislatures
have been examining the issue and a few local authorities have required cable
operators to provide such access. A U.S. District Court recently ruled that the
City of Portland, OR was authorized to require such access. This decision is on
appeal. Some cable companies have initiated their own litigation challenging
municipal forced access requirements. Congress and the FCC have thus far
declined to take action on the issue of ISP's access to broadband cable
facilities. If cable operators are subject to this forced access, it could
prohibit the Company from entering into agreements or limiting existing
agreements with ISPs which could adversely impact our anticipated revenues from
high-speed Internet access services. Franchise renewals and transfers could
become more difficult depending upon the outcome of this issue.
Telephony and Telecommunications/State Law and Regulation
In 1995, the Florida Legislature amended Chapter 362 of Florida Statutes
by enacting "An Act Relating to Local Exchange Telecommunications Companies"
("Florida Act") (Chapter 362, Fl. Stat. (1995)). This new law substantially
altered Florida law regarding telecommunications providers and services, such as
Olympus. The following is a summary of the key provisions of the Florida Act and
associated Florida Public Service Commission ("PSC") actions that could
materially affect Adelphia's telecommunications business in Florida.
The Florida Act
The Florida Act vests in the PSC virtually exclusive jurisdiction over
intrastate telecommunications matters. The Florida Act limits municipalities to
taxation of certain telecommunications services or management of long distance
carriers' occupation of local rights-of-way. The Florida Act further directs the
PSC to employ flexible regulatory treatment to ensure the widest possible range
of telecommunications services, and provides that new entrants such as the
Company are subject to a lesser level of regulatory oversight than LECs.
PSC Actions
Florida has also promulgated legislation that fosters competition in
intrastate telecommunications services, which is administered by the Florida
Public Service Commission ("PSC"). The PSC grants certification to competitive,
alternative providers upon a showing of sufficient technical, financial, and
managerial capability. The PSC also remains active in governing the business of
alternative carriers, such as imposing certain continuing reporting and other
obligations (or restrictions) on such carriers. For instance, although the PSC
has mandated that competitive providers file certain price lists, the PSC has
resisted allowing competitive carriers to file full tariffs, which would deny
them the ability to rely on terms and conditions normally included in such
tariffs and required instead reliance on individual contracts. In addition, the
PSC conducts proceedings and rulemakings to address local competition issues
including pricing of unbundled network elements and wholesale services available
for resale. Finally, pursuant to its obligation under the 1996 Act, the PSC also
reviews or arbitrates interconnection agreement negotiations.
Based on the foregoing, the Company believes that the Florida Act and
actions of the PSC to date reflect a generally favorable legal and regulatory
environment for new entrants, such as the Company, to intrastate
telecommunications in Florida.
ITEM 2. PROPERTIES
The Company's principal physical assets consist of cable television
operating plant and equipment, including signal receiving, encoding and decoding
devices, headends and distribution systems and subscriber house drop equipment
for each of its cable television systems. The signal receiving apparatus
typically includes a tower, antenna, ancillary electronic equipment and earth
stations for reception of satellite signals. Headends, consisting of associated
electronic equipment necessary for the reception, amplification and modulation
of signals, are located near the receiving devices. The Company's distribution
system consists primarily of coaxial and fiber optic cables and related
electronic equipment. Subscriber devices consist of decoding converters. The
physical components of cable television systems require maintenance and periodic
upgrading to keep pace with technological advances.
The Company's cables and related equipment are generally attached to
utility poles under pole rental agreements with local public utilities, although
in some areas the distribution cable is buried in underground ducts or trenches.
See "Legislation and Regulation-Federal Regulation."
The Company owns or leases parcels of real property for signal reception
sites (antenna towers and headends), microwave facilities and business offices
in each of its market areas, and owns most of its service vehicles. The Company
also leases certain cable, operating and support equipment from a corporation
owned by members of the Rigas family. All leasing transactions between the
Company and its officers, directors or principal stockholders, or any of their
affiliates, are, in the opinion of management, on terms no less favorable to the
Company than could be obtained from unaffiliated third parties.
Substantially all of the assets of Adelphia's subsidiaries are subject to
encumbrances as collateral in connection with the Company's credit arrangements,
either directly with a security interest or indirectly through a pledge of the
stock in the respective subsidiaries. See Note 3 to the Adelphia Consolidated
Financial Statements. The Company believes that its properties, both owned and
leased, are in good operating condition and are suitable and adequate for the
Company's business operations.
Adelphia Business Solutions' fiber optic cable, fiber optic communications
equipment and other properties and equipment used in its networks, are owned or
leased by Adelphia Business Solutions and its subsidiaries, or in certain
circumstances, its joint ventures. Fiber optic cable plant used in providing
service is primarily on or under public roads, highways or streets, with the
remainder being on or under private property. As of December 31, 1999, Adelphia
Business Solutions' total communications equipment in service consists of fiber
optic communications equipment, fiber optic cable, switches, other electronic
equipment, furniture and fixtures, leasehold improvements and construction in
progress. Such properties do not lend themselves to description by character and
location of principal units.
ITEM 3. LEGAL PROCEEDINGS
In February 2000, the Company settled all disputes and claims arising out
of a summons and complaint filed in the United States District Court for the
Northern District of New York, Case Number 99-CV-268, against the Company by
Hyperion Solutions Corporation ("Solutions"), which is described in the
complaint as a company in the business of developing, marketing and supporting
comprehensive computer software tools, executive information systems and
applications that companies use to improve their business performance. The
complaint alleged, among other matters, that the Company's use of the name
"Hyperion" in its business infringed upon various trademarks and service marks
of Solutions in violation of federal trademark laws and violate various New
York business practices, advertising and business reputation laws. Management of
the Company believes that the Company had meritorious defenses to the complaint
and has vigorously defended this lawsuit including filing a counterclaim against
Solutions. As part of the settlement, Solutions' complaint and the Company's
counterclaim were dismissed with prejudice and both the Company and Solutions
entered into mutual releases regarding the complaint and counterclaim.
Management believes that this matter will not have a material adverse effect
upon the Company.
On or about March 10, 1999, Robert Lowinger, on behalf of himself and
all others similarly situated (the "Plaintiff") commenced an action by filing a
Class Action Complaint (the "Complaint") in the Superior Court of Connecticut,
Judicial District of Stamford/Norwalk against Century, all of its directors, and
Adelphia. The Plaintiff, claiming that he owns shares of Class A Common Stock of
Century, alleged that in connection with the proposed merger of Century with
Adelphia, holders of Class B Common Stock of Century (which has superior voting
rights to the Class A Common Stock of Century) will receive consideration for
their shares that exceeds by $4.00 per share the consideration to be paid to
Century's Class A shareholders resulting in the Century's Class B shareholders
receiving approximately $170,000 more than if they held the equivalent number of
the Century's Class A shares. The Plaintiff claimed that the individual
defendants breached their fiduciary duties of loyalty, good faith, and due care
to Century's Class A shareholders by approving the higher payment to Century's
Class B shareholders and that Century and Adelphia aided and abetted these
alleged breaches of fiduciary duty. The Plaintiff seeks certification of a class
of Century's Class A shareholders and seeks recovery on behalf of himself and
the class of unspecified damages, profits, and special benefits alleged to have
been wrongfully obtained by the defendants, as well as all costs, expenses and
attorney's fees. On October 21, 1999, Adelphia and Century filed motions to
strike the Complaint, and several of the individual defendants moved to dismiss
all counts in the Complaint against them for lack of personal jurisdiction over
each of them. On January 3, 2000, the court dismissed all counts in the
Complaint as to two of the individual defendants. On January 13, 2000, the court
granted defendants' motions to strike and dismissed Plaintiff's complaint in its
entirety for failure to state a claim upon which relief can be granted. The
court entered judgment on February 16, 2000. To the Company's knowledge the
Plaintiff has not filed an appeal in this action within the time provided by
local court rules for the filing of an appeal.
Adelphia and certain subsidiaries are defendants in several putative
subscriber class action suits in state courts in Vermont, Pennsylvania and
Mississippi initiated during 1999. The suits all challenge the propriety of late
fees charged by the subsidiaries to customers who fail to pay for services in a
timely manner. The suits seek injunctive relief and various formulations of
damages under various claimed causes of action under various bodies of state
law. These actions are in various stages of defense and, in one case, the
Company was required to refund the late fees, however, Adelphia has appealed
this decision. All of these actions are being defended vigorously. The outcome
of these matters cannot be predicted at this time.
There are no other material pending legal proceedings, other than routine
litigation incidental to the business, to which the Company is a part of or
which any of its property is subject.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special meeting of the stockholders of the Company was held on October
1, 1999. Stockholders entitled to vote a total of 137,018,185 votes out of
158,673,103 votes attributable to all shares of the Company's outstanding
capital stock were represented at the meeting either in person or by proxy.
At such meeting (a) the stockholders approved, as required by the Nasdaq
National Market, the issuance of shares of Adelphia's Class A common stock in
connection with the merger of Century Communications Corp. with and into a
wholly owned subsidiary of Adelphia.
<TABLE>
<CAPTION>
Class of Broker
Stock Vote For Withheld Abstain Non-voting
------------- -------------- ----------- --------- --------------
<S> <C> <C> <C> <C>
(a) Approval of issuance of Class A
common stock in connection
with merger Class A 28,469,361 197,555 6,509 --
Class B 108,344,760 -- -- --
</TABLE>
The annual meeting of the stockholders of the Company was held on October
25, 1999. Stockholders entitled to vote a total of 145,396,632 votes out of
158,673,103 votes attributable to all shares of the Company's outstanding
capital stock were represented at the meeting either in person or by proxy. At
such meeting, (a) one director (the "Class A Director") was elected by vote of
the holders of Class A common stock voting as a separate class, (b) nine
directors, ("Class A and B Directors") were elected by vote of the holders of
Class A common stock and the holders of Class B common stock voting together and
(c) an amendment to Article IV of the Certificate of Incorporation increasing
authorized shares of capital stock from 230,000,000 to 1,550,000,000, authorized
shares of Class A common stock from 200,000,000 to 1,200,000,000, authorized
shares of Class B common stock from 25,000,000 to 300,000,000 and authorized
shares of Preferred Stock from 5,000,000 to 50,000,000 was approved.
<TABLE>
<CAPTION>
The stockholder voting results are as follows:
Class of Broker
Stock Vote for Withheld Abstain Non-votes
--------------------------- ------------- --------------- ---------------
(a) Class A Director Elected
<S> <C> <C> <C> <C> <C>
Perry S. Patterson Class A 36,541,359 460,513 -- --
(b) Class A and B Directors Elected
John J. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
Michael J. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
Timothy J. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
James P. Rigas Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
Pete J. Metros Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
Dennis P. Coyle Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
Leslie J. Gelber Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
Peter L. Venetis Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
Erland E. Kailbourne Class A 31,746,369 2,717,096 2,469 2,535,938
Class B 108,344,760 -- -- --
(c) Amendment to Article IV
increase in Capital Stock Class A 29,983,218 6,783,347 285,307 --
Class B 108,344,760 -- -- --
</TABLE>
<PAGE>
Executive Officers of the Registrant
The executive officers of the Company, first elected to hold their
respective positions on July 1, 1986, serve at the discretion of the Board of
Directors.
The executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
John J. Rigas 75 Chairman, Chief Executive Officer, President and Director
Michael J. Rigas 46 Executive Vice President, Operations, Secretary and Director
Timothy J. Rigas 43 Executive Vice President, Chief Financial Officer, Treasurer and Director
James P. Rigas 42 Executive Vice President, Strategic Planning and Director
</TABLE>
John J. Rigas is the founder, Chairman, President and Chief
Executive Officer of Adelphia and is President of its subsidiaries. He is also
Chairman of Adelphia Business Solutions. Mr. Rigas has served as President or
general partner of most of the constituent entities which became wholly-owned
subsidiaries of Adelphia upon its formation in 1986, as well as the cable
television operating companies acquired by the Company which were wholly or
partially owned by members of the Rigas family. Mr. Rigas has owned and operated
cable television systems since 1952. Among his business and community service
activities, Mr. Rigas is Chairman of the Board of Directors of Citizens
Bancorp., Inc., Coudersport, Pennsylvania, and a member of the Board of
Directors of Charles Cole Memorial Hospital. He is a director of the National
Cable Television Association and a past President of the Pennsylvania Cable
Television Association. He is also a member of the Board of Directors of C-SPAN
and the Cable Advertising Bureau, and is a Trustee of St. Bonaventure
University. He graduated from Rensselaer Polytechnic Institute with a B.S. in
Management Engineering in 1950.
John J. Rigas is the father of Michael J. Rigas, Timothy J. Rigas and
James P. Rigas, each of whom currently serves as a director and executive
officer of the Company.
Michael J. Rigas is Executive Vice President, Operations and Secretary of
Adelphia and is a Vice President of its subsidiaries. He is also Vice Chairman
and Secretary of Adelphia Business Solutions. Since 1981, Mr. Rigas has served
as a Senior Vice President, Vice President, general partner or other officer of
the constituent entities which became wholly-owned subsidiaries of Adelphia upon
its formation in 1986, as well as the cable television operating companies
acquired by the Company which were wholly or partially owned by members of the
Rigas family. From 1979 to 1981, he worked for Webster, Chamberlain & Bean, a
Washington, D.C. law firm. Mr. Rigas graduated from Harvard University (magna
cum laude) in 1976 and received his Juris Doctor degree from Harvard Law School
in 1979.
Timothy J. Rigas is Executive Vice President, Chief Financial Officer and
Treasurer of Adelphia and its subsidiaries. He is also Vice Chairman, Chief
Financial Officer and Treasurer of Adelphia Business Solutions. Since 1979, Mr.
Rigas has served as Senior Vice President, Vice President, general partner or
other officer of the constituent entities which became wholly-owned subsidiaries
of Adelphia upon its formation in 1986, as well as the cable television
operating companies acquired by the Company which were wholly or partially owned
by members of the Rigas family. Mr. Rigas graduated from the University of
Pennsylvania, Wharton School, with a B.S. degree in Economics (cum laude) in
1978.
James P. Rigas is Executive Vice President, Strategic Planning of Adelphia
and is a Vice President of its subsidiaries, and also serves as Vice Chairman,
President, Chief Executive Officer and Chief Operating Officer of Adelphia
Business Solutions. Since February 1986, Mr. Rigas has served as a Senior Vice
President, Vice President or other officer of the constituent entities which
became wholly-owned subsidiaries of Adelphia upon its formation in 1986, as well
as the cable television operating companies acquired by the Company which were
wholly or partially owned by members of the Rigas family. Among his business
activities, Mr. Rigas is a member of the Board of Directors of Cable Labs. Mr.
Rigas graduated from Harvard University (magna cum laude) in 1980 and received a
Juris Doctor degree and an M.A. degree in Economics from Stanford University in
1984. From June 1984 to February 1986, he was a consultant with Bain & Co., a
management consulting firm.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A common stock is quoted on the National Association
of Securities Dealers Automated Quotations System National Market System
(NASDAQ-NMS). Adelphia's NASDAQ-NMS symbol is "ADLAC."
The following table sets forth the range of high and low prices of the
Class A common stock on NASDAQ-NMS for the periods presented. Such prices
represent inter-dealer quotations, without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK
QUARTER ENDED: HIGH LOW
<S> <C> <C>
June 30, 1998 $ 37 1/8 $ 21 1/2
September 30, 1998 $ 44 $ 30 7/16
December 31, 1998 $ 48 1/8 $ 29 1/8
March 31, 1999 $ 64 3/8 $ 44 7/8
June 30, 1999 $ 87 $ 55 1/8
September 30, 1999 $ 69 1/4 $ 54
December 31, 1999 $ 67 $ 47 1/4
</TABLE>
As of March 23, 2000, there were approximately 667 holders of record of
Adelphia's Class A common stock. As of March 23, 2000, five record holders were
registered clearing agencies holding Class A common stock on behalf of
participants in such clearing agencies.
No established public trading market exists for Adelphia's Class B common
stock. As of the date hereof, the Class B common stock was held of record by
seven persons, principally members of the Rigas family, including a Pennsylvania
general partnership all of whose partners are members of the Rigas family. The
Class B common stock is convertible into shares of Class A common stock on a
one-to-one basis. As of March 28, 2000 the Rigas family owned 100% of the
outstanding Class B common stock.
Adelphia has never paid a cash dividend on its common stock and
anticipates that for the foreseeable future any earnings will be retained for
use in its business. The ability of Adelphia to pay cash dividends on its common
stock is limited by the provisions of its indentures. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources."
On October 1, 1999, Adelphia purchased Citizens Cable Company's 50%
interest in the Citizens/Century Cable Television Joint Venture, one of
Century's 50% owned joint ventures, for a purchase price of approximately $131.9
million, comprised of approximately $27.7 million in cash, approximately
1,850,000 shares of Adelphia Class A common stock and the assumption of
indebtedness. The Class A common stock was issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as
amended.
On October 1, 1999, Adelphia acquired FrontierVision Partners, L.P.
("FrontierVision"). In connection with the acquisition, Adelphia issued
7,000,000 shares of its Class A common stock to the partners of FrontierVision,
assumed debt of approximately $1.15 billion and paid cash of approximately $543
million. The Class A common stock was issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as
amended.
On December 29, 1999, Adelphia issued 13,355 shares of Class A common
stock to the former owners of the Verto cable system purchased earlier in 1999,
as part of the post-closing adjustment for that acquisition. The Class A common
stock was issued pursuant to the exemption from registration under Section 4(2)
of the Securities Act of 1933, as amended.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
The selected consolidated financial data as of and for each of the three
years in the period ended March 31, 1998, the nine months ended December 31,
1998 and the year ended December 31, 1999 have been derived from the audited
consolidated financial statements of the Company. The selected consolidated
financial data for the twelve months ended December 31, 1998 have been derived
from unaudited condensed consolidated financial statements of the Company not
included herein; however, in the opinion of management, such data reflect all
adjustments (consisting only of normal and recurring adjustments) necessary to
fairly present the data for such period. This data should be read in
conjunction with the consolidated financial statements and related notes thereto
as of December 31, 1998 and 1999 and the year ended March 31, 1998, the nine
months ended December 31, 1998 and the year ended December 31, 1999 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Annual Report on Form 10-K. The statement
of operations data with respect to fiscal years ended March 31, 1996 and 1997,
and the balance sheet data at March 31, 1996, 1997 and 1998, have been derived
from audited consolidated financial statements of the Company not included
herein.
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended
Year Ended March 31, December December 31,
31,
--------------------------------------------------------------------------
1996 1997 1998 1998 1998 1999
------------------------------------------------------------ ------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 403,597 $472,778 $ 524,889 $ 496,014 $ 630,999 $1,287,968
Direct operating and programming 124,116 148,982 167,288 167,963 213,327 432,612
expense
Selling, general and administrative 68,357 81,763 95,731 107,249 132,895 340,579
expense
Depreciation and amortization expenses 111,031 124,066 145,041 140,823 181,294 370,836
Merger and integration costs -- -- -- -- -- 4,736
Rate regulation charge 5,300 -- -- -- -- --
--------- --------- ---------- ------------ ------------- ------------
Operating income 94,793 117,967 116,829 79,979 103,483 139,205
--------- --------- ---------- ------------ ------------ ------------
Priority investment income from Olympus 28,852 42,086 47,765 36,000 48,000 36,000
Cash interest expense - net (183,780) (190,965) (206,124) (156,789) (205,554) (307,517)
Noncash interest expense (16,288) (41,360) (37,430) (23,663) (31,112) (52,068)
Equity in loss of joint ventures (46,257) (59,169) (79,056) (58,471) (78,193) (68,376)
Adelphia Business Solutions preferred
stock dividends -- -- (12,682) (21,536) (28,230) (32,173)
Minority interest in net losses of -- -- -- 25,772 25,772 38,699
subsidiaries
Other -- 12,151 2,538 1,113 2,633 1,865
--------- --------- ---------- ------------ ------------- ------------
Loss before income taxes and (122,680) (119,290) (168,160) (117,595) (163,201) (244,365)
extraordinary loss
Income tax benefit 2,786 358 5,606 6,802 12,967 14,493
--------- --------- ---------- ------------ ------------- ------------
Loss before extraordinary loss (119,894) (118,932) (162,554) (110,793) (150,234) (229,872)
Extraordinary loss on early retirement -- (11,710) (11,325) (4,337) (4,337) (10,658)
of debt
--------- --------- ---------- ------------ ------------- ------------
Net loss (119,894) (130,642) (173,879) (115,130) (154,571) (240,530)
Dividend requirements applicable
to preferred stock -- -- (18,850) (20,718) (27,570) (41,963)
--------- --------- ---------- ------------ ------------- ------------
Net loss applicable to common
stockholders $(119,894) $(130,642) $(192,729) $ (135,848) $ (182,141) $ (282,493)
========= ========= ========== ============ ============= ============
Basic and diluted loss per weighted
average share of common stock before
extraordinary loss $ (4.56) $ (4.50) $ (6.07) $ (3.63) $ (5.10) $ (3.73)
Basic and diluted net loss per
weighted (4.56) (4.94) (6.45) (3.75) (5.23) (3.88)
average share of common stock
Cash dividends declared per common
share -- -- -- -- -- --
</TABLE>
<PAGE>
Business Segment Information:
As more fully described in this Form 10-K, Adelphia operates primarily in
two operating segments within the telecommunications industry: cable television
and related investments ("Adelphia, excluding Adelphia Business Solutions" or
"Cable and Other Segment") and competitive local exchange carrier telephony
("Adelphia Business Solutions" or "CLEC Segment"). The balance sheet data and
other data as of and for each of the three years in the period ended March 31,
1998, the nine months ended December 31, 1998 and the year ended December 31,
1999 of Adelphia Business Solutions have been derived from audited consolidated
financial statements of Adelphia Business Solutions not included herein. The
selected consolidated financial data for the twelve months ended December 31,
1998 have been derived from unaudited condensed consolidated financial
statements of Adelphia Business Solutions not included herein; however, in the
opinion of management, such data reflect all adjustments (consisting only of
normal and recurring adjustments) necessary to fairly present the data for such
period.
<TABLE>
<CAPTION>
March 31, December 31,
--------------------------------------------------------------------------
1996 1997 1998 1998 1999
--------------------------------------------------------------------------
Balance Sheet Data:
Adelphia Consolidated
<S> <C> <C> <C> <C> <C>
Total assets $ 1,367,579 $ 1,643,826 $ 2,304,671 $ 3,294,457 $ 17,267,500
Total debt 2,175,473 2,544,039 2,909,745 3,527,452 9,291,732
Cash and cash equivalents 10,809 61,539 276,895 398,644 186,874
Investments (a) 74,961 130,005 150,787 229,494 308,342
Redeemable preferred stock -- -- 355,266 376,865 409,211
Convertible preferred stock
(liquidation preference) -- -- 100,000 100,000 675,000
Adelphia Business Solutions
Total assets $ 35,269 $ 174,601 $ 639,992 $ 836,342 $ 1,171,074 (b)
Total debt 50,855 215,675 528,776 494,109 845,178
Cash and cash equivalents -- 59,814 230,750 242,570 2,133
Investments (a) 27,900 56,695 69,596 138,614 61,400
Redeemable preferred stock -- -- 207,204 228,674 260,848
Adelphia, excluding Adelphia
Business Solutions
Total assets $ 1,332,310 $ 1,469,225 $ 1,664,679 $ 2,458,115 $ 16,096,426
Total debt 2,124,618 2,328,364 2,380,969 3,033,343 8,446,554
Cash and cash equivalents 10,809 1,725 46,145 156,074 184,741
Investments (a) 47,061 73,310 81,191 90,880 246,942
Redeemable preferred stock -- -- 148,062 148,191 148,363
Convertible preferred stock
(liquidation preference) -- -- 100,000 100,000 675,000
See "Other Data" on next page.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended Three Months Ended
Year Ended March 31, December 31, December 31, December 31,
-------------------------------------------------- ------------------------ -----------------------
Other Data: 1996 1997 1998 1998 1998 1999 1998 1999
----------- ----------- ------------------------- ------------ ----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Adelphia Consolidated
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 403,597 $ 472,778 $ 524,889 $ 496,014 $ 630,999 $1,287,968 $ 188,301 $ 635,273
Priority income 28,852 42,086 47,765 36,000 48,000 36,000 12,000 --
Operating expenses (c) 192,473 230,745 263,019 275,212 346,222 773,191 107,725 367,608
Depreciation and
amortization expenses 111,031 124,066 145,041 140,823 181,294 370,836 56,181 184,646
Operating income 94,793 117,967 116,829 79,979 103,483 139,205 24,395 78,283
Interest expense - net (200,068) (232,325) (243,554) (180,452) (236,666) (359,585) (60,820) (187,945)
Preferred stock dividends -- -- (31,532) (42,254) (55,800) (74,136) (14,330) (23,217)
Capital expenditures 100,089 129,609 183,586 255,797 321,823 819,197 76,945 415,188
Cash paid for acquisitions -
net of cash acquired 60,804 143,412 146,546 403,851 462,180 2,178,037 -- 1,988,249
Cash used for investments 24,333 51,415 86,851 81,558 106,219 56,365 56,570 14,342
Adelphia Business Solutions
Revenues $ 3,322 $ 5,088 $ 13,510 $ 34,776 $ 39,596 $ 154,575 15,043 $ 55,575
Operating expenses (c) 5,774 10,212 22,118 54,050 61,806 201,140 23,182 71,485
Depreciation and
amortization expenses 1,184 3,945 11,477 26,671 31,121 65,244 10,708 19,955
Operating loss (3,636) (9,069) (20,085) (45,945) (53,331) (111,809) (18,847) (35,865)
Interest expense - net (d) (5,889) (22,401) (36,030) (20,010) (28,057) (45,898) (6,994) (16,103)
Preferred stock dividends -- -- (12,682) (21,536) (28,230) (32,173) (7,424) (8,586)
Capital expenditures 6,084 36,127 68,629 146,752 180,547 453,206 35,057 220,788
Cash paid for acquisitions -
net of cash acquired -- 5,040 65,968 - 58,329 129,118 -- --
Cash used for investments 12,815 34,769 64,260 69,018 87,159 24,496 54,258 (2,925)
Adelphia, excluding Adelphia
Business Solutions
Revenues $ 400,275 $ 467,690 $ 511,379 $ 461,238 $ 591,403 $1,133,393 173,258 $ 579,698
Priority income 28,852 42,086 47,765 36,000 48,000 36,000 12,000 --
Operating expenses (c) 186,699 220,533 240,901 221,162 284,416 572,051 84,543 296,123
Depreciation and
amortization expenses 109,847 120,121 133,564 114,152 150,173 305,592 45,473 164,691
Operating income 98,429 127,036 136,914 125,924 156,814 251,014 43,242 114,148
Interest expense - net (e) (194,179) (209,924) (207,524) (160,442) (208,609) (313,687) (53,826) (171,842)
Preferred stock dividends -- -- (18,850) (20,718) (27,570) (41,963) (6,906) (14,631)
Capital expenditures 94,005 93,482 114,957 109,045 141,276 365,991 41,888 194,400
Cash paid for acquisitions -
net of cash acquired 60,804 138,372 80,578 403,851 403,851 2,048,919 -- 1,988,249
Cash used for investments 11,518 16,646 22,591 12,540 19,060 31,869 2,312 17,267
<FN>
(a) Represents total investments before cumulative equity in net losses.
(b) Amount excludes receivables from Adelphia of $392,629 as of
December 31, 1999.
(c) Amount excludes depreciation and amortization expenses and merger and
integration costs.
(d) Amounts include interest income from Adelphia of $0, $0, $0, $8,395,
$11,223, $8,483, $3,576 and $1,540 for the respective periods.
(e) Amounts include interest expense to Adelphia Business Solutions of $0,
$0, $0, $8,395, $11,223, $8,483, $3,576 and $1,540 for the respective
periods.
</FN>
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Dollars in thousands)
Introduction
During the year ended December 31, 1999, the Company completed the
acquisition of the Olympus partnership interests held by FPL Group, Inc., and
the acquisitions of FrontierVision Partners, L.P., Century Communications Corp.
and Harron Communications Corp. (collectively, the "Acquisitions"). The
Acquisitions were all completed on October 1, 1999 and were accounted for under
the purchase method of accounting. Accordingly, the financial results of the
Acquisitions have been included in the results of Adelphia effective from
October 1, 1999. The Company had additional acquisitions during the year ended
December 31, 1999 which are disclosed in Note 1 to the Adelphia consolidated
financial statements that are included in Adelphia's results of operations
effective from the dates acquired. In addition, during the year ended December
31, 1999, the Company entered into several financing transactions, the proceeds
of which were partially used to fund one or more of the Acquisitions or for
other general corporate purposes.
Please refer to the discussion of the Private Securities Litigation Reform
Act of 1995, which is incorporated herein by reference to Item 1,
"Business-Introduction".
Results of Operations
General
On March 30, 1999, the Board of Directors of Adelphia changed its fiscal
year from March 31 to December 31. The decision was made to conform to general
industry practice and for administrative purposes. The change became effective
for the nine months ended December 31, 1998. Management's discussion and
analysis of financial condition and results of operations compares the twelve
months ended December 31, 1998 and 1999 and the nine months ended December 31,
1997 and 1998.
Adelphia earned substantially all of its revenues in the year ended March
31, 1998, the nine months ended December 31, 1998 and the year ended December
31, 1999 from monthly subscriber fees for basic, satellite, premium and
ancillary services (such as installations and equipment rentals), local and
national advertising sales, pay-per-view programming, high speed data services
and CLEC telecommunications services.
The changes in Adelphia's results of operations for the nine months ended
December 31, 1998 and the year ended December 31, 1999, compared to the
respective prior periods, were primarily the result of acquisitions, expanding
existing cable television operations and the impact of increased advertising
sales and other service offerings as well as increases in cable rates, effective
October 1, 1998, January 1, 1999 and August 1, 1999.
The high level of depreciation and amortization associated with the
significant number of acquisitions in recent years, the continued upgrade and
expansion of systems, interest costs associated with financing activities and
Adelphia Business Solutions' continued investment in the CLEC business will
continue to have a negative impact on the reported results of operations.
Adelphia expects to report net losses for the next several years.
Adelphia Business Solutions, together with its subsidiaries, operates
certain wholly owned CLEC telecommunications systems and owns certain
investments in CLEC joint ventures and manages those ventures. Adelphia Business
Solutions is an unrestricted subsidiary for purposes of the Company's
indentures.
The information below for the year ended March 31, 1998, the nine months
ended December 31, 1998 and the year ended December 31, 1999 is derived from
Adelphia's consolidated financial statements that are included in this Annual
Report on Form 10-K. Information for the nine months ended December 31, 1997 and
the twelve months ended December 31, 1998 is derived from unaudited condensed
consolidated financial statements of the Company not included herein; however,
in the opinion of management, such data reflect all adjustments (consisting only
of normal and recurring adjustments) necessary to fairly present the data for
such periods.
<PAGE>
This table sets forth the percentage relationship to revenues of the
components of operating income contained in such financial statements for the
periods indicated.
<TABLE>
<CAPTION>
Percentage of Revenues
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
1998 1998 1998 1999
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues. 100.0% 100.0% 100.0% 100.0%
Operating Expenses:
Direct operating and programming 31.9% 33.9% 33.8% 33.6%
Selling, general and administrative 18.2% 21.6% 21.1% 26.4%
Depreciation and amortization 27.6% 28.4% 28.7% 28.8%
Merger and integration costs -- -- -- 0.4%
------------ ------------ ----------- -----------
Operating Income 22.3% 16.1% 16.4% 10.8%
============ ============ =========== ===========
</TABLE>
The information below separately discusses the operating results of
Adelphia's two operating segments: Cable and Other Segment and CLEC Segment.
Cable and Other Segment
Comparison of the Years Ended December 31, 1998 and 1999
Revenues. The primary revenue sources reflected as a percentage of
total revenues for the cable and other segment were as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1998 1999
------------ ------------
<S> <C> <C>
Regulated service and equipment 79% 79%
Premium programming 10% 10%
Advertising sales and other services 11% 11%
</TABLE>
Revenues increased approximately 91.6% for the year ended December 31,
1999 compared with the prior year. The increase is attributable to the
following:
<TABLE>
<CAPTION>
Year Ended
December 31,
1999
------------------
<S> <C>
Acquisitions 91%
Basic subscriber growth 2%
Rate increases 12%
Premium programming (8%)
Advertising sales and other services 3%
</TABLE>
Effective August 1, 1999, certain rate increases related to regulated
cable services were implemented in substantially all of the Company's systems.
Advertising revenues and revenues derived from other strategic service offerings
such as paging, high-speed data and long distance services also had a positive
impact on revenues for the year ended December 31, 1999. The Company expects to
implement rate increases related to certain regulated cable services in
substantially all of the Company's systems during 2000.
Direct Operating and Programming Expenses. Direct operating and
programming expenses, which are mainly basic and premium programming costs and
technical expenses, increased 94.8% for the year ended December 31, 1999
compared with the prior year. Acquisitions accounted for 91.0% of the increase
in 1999. The remaining increase was due primarily to increased programming
costs, incremental costs associated with increased subscribers and new services.
Selling, General and Administrative Expenses. These expenses, which are
mainly comprised of costs related to system offices, customer service
representatives and sales and administrative employees, increased 114.4% for the
year ended December 31, 1999 compared with prior year. Acquisitions accounted
for 77.8% of the increase in 1999. The remaining increase was due primarily to
subscriber growth, new services, and an increase in administrative employees due
to the recently completed acquisitions.
Depreciation and Amortization. Depreciation and amortization for the cable
and other segment increased 103.5% for the year ended December 31, 1999,
compared with the prior year. Acquisitions accounted for 84.3% of the increase
in 1999. The remaining increase was due primarily to increased capital
expenditures made during the past several years.
Priority Investment Income. Priority investment income is comprised of
payments received from Olympus of accrued priority return on the Company's
investment in 16.5% preferred limited partner ("PLP") interests in Olympus prior
to the consolidation of Olympus effective October 1, 1999.
Interest Expense - net. Interest expense - net increased 50.4% for the
year ended December 31, 1999, compared with the prior year. Acquisitions
accounted for 114.7% of the increase in 1999. This increase was partially offset
by paying down debt for a portion of the year due to financing transactions and
increased interest income.
Equity in Loss of Joint Ventures. The equity in loss of joint ventures
represents primarily (i) the Company's pro-rata share of Olympus' losses and the
accretion requirements of Olympus' PLP interests prior to the consolidation of
Olympus, and (ii) Adelphia Business Solutions' pro-rata share of its less than
majority owned partnerships' operating losses. Equity in loss of joint ventures
decreased in 1999 as compared to 1998, primarily due to the consolidation of
Olympus.
Minority Interest in Net Losses of Subsidiaries. Minority interest in net
losses of subsidiaries increased 50.2% for the year ended December 31, 1999
compared with the prior year. Acquisitions accounted for 45.4% of the increase
in 1999. The remaining increase was primarily due to increased net losses of
Adelphia Business Solutions attributable to minority interests.
Extraordinary Loss on Early Retirement of Debt. During the year ended
December 31, 1999, Adelphia redeemed $154,500 of its 9 1/2% Senior Pay-in-Kind
due 2004 at 103.56% of principal, $125,000 of its 11 7/8% Senior Debentures at
104.50% of principal and repaid certain institutional indebtedness. As a result
of these transactions, Adelphia recognized an extraordinary loss on retirement
of debt, net of income tax benefit, of $10,658 for the year ended December 31,
1999.
Comparison of the Nine Months Ended December 31, 1997 and 1998
Revenues. The primary revenue sources reflected as a percentage of total
revenues for the cable and other segment were as follows:
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
------------------------
1997 1998
------------------------
<S> <C> <C>
Regulated service and equipment fees 78% 79%
Premium programming fees 12% 10%
Advertising sales and other services 10% 11%
</TABLE>
<PAGE>
Revenues increased approximately 21.0% for the nine months ended December
31, 1998 compared with the same period of the prior year. The increase is
attributable to the following:
<TABLE>
<CAPTION>
Nine Months
Ended
December 31,
1998
-------------
<S> <C>
Acquisitions 65%
Basic subscriber growth 5%
Rate increases 27%
Premium programming (7%)
Advertising sales and other services 10%
</TABLE>
Effective August 1, 1998, certain rate increases related to regulated
cable services were implemented in substantially all of the Company's Systems.
Advertising revenues and revenues derived from other strategic service offerings
such as paging, high speed data services and long distance services also had a
positive impact on revenues for the nine months ended December 31, 1998.
Direct Operating and Programming Expenses. Direct operating and
programming expenses, which are mainly basic and premium programming costs and
technical expenses, increased 27.9% for the nine months ended December 31, 1998,
compared with the same period of the prior year. The increase was primarily due
to increased operating expenses from acquired systems, increased programming
costs and incremental costs associated with increased subscribers.
Selling, General and Administrative Expenses. These expenses, which are
mainly comprised of costs related to system offices, customer service
representatives, and sales and administrative employees, increased 17.9% for the
nine months ended December 31, 1998, compared with the same period of the prior
year. The increase was primarily due to incremental costs associated with
acquisitions and subscriber growth.
Depreciation and Amortization. Depreciation and amortization increased
17.0% for the nine month period ended December 31, 1998, compared with the same
period of the prior year. The increase is primarily due to increased
depreciation and amortization related to acquisitions, as well as increased
capital expenditures made during the past several years.
Priority Investment Income. Priority investment income is comprised of
payments received from Olympus of accrued priority return on the Company's
investment in 16.5% PLP interests in Olympus.
Interest Expense - net. Interest expense - net increased approximately
0.7% for the nine months ended December 31, 1998, compared with the same period
of the prior year. This increase is primarily due to incremental debt related to
acquisitions. These increases were partially offset by (i) utilization of the
proceeds from the convertible preferred stock and the redeemable preferred stock
offerings to repay outstanding debt, (ii) the refinancing of outstanding
borrowings and (iii) interest income on cash balances.
Equity in Loss of Joint Ventures. The equity in loss of joint ventures
represents primarily (i) the Company's pro rata share of Olympus' losses and the
accretion requirements of Olympus' PLP interests, and (ii) Adelphia Business
Solutions' pro rata share of its less than majority owned partnerships'
operating losses.
Extraordinary Loss on Early Retirement of Debt. During the nine months
ended December 31, 1998, $69,838 of 12 1/2% Senior Notes due 2002 were redeemed
at 103% of principal and subsidiary debt in the amount of $52,000 was repaid
prior to its maturity at a premium. As a result of these transactions, Adelphia
recognized an extraordinary loss on early retirement of debt of $4,574.
<PAGE>
CLEC Segment
Comparison of the Years Ended December 31, 1998 and 1999
Revenues. Revenues increased 290% to $154,600 for the year ended
December 31, 1999, from $39,600 in the prior year.
<TABLE>
<CAPTION>
The increase is attributable to the following:
<S> <C>
Growth in Original Markets $ 75,978
Acquisition of local partner interests 27,955
New markets 9,798
Management fees 1,247
</TABLE>
The primary sources of revenues, reflected as a percentage of total
revenue were as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1998 1999
-------------- ------------
<S> <C> <C>
Local service 53.0% 69.1%
Dedicated access 37.5 21.1
Management fees 9.3 3.2
Enhanced services - 3.1
Long distance 0.1 1.1
Other 0.1 2.3
</TABLE>
Network Operations Expense. Network operations expense increased
175% to $58,500 for the year ended December 31, 1999, from $21,300 in the year.
<TABLE>
<CAPTION>
The increase is attributable to the following:
<S> <C>
Growth in Original Markets $ 17,270
Acquisition of local partner interests 8,381
New markets 10,888
Network control center 701
</TABLE>
The increased number and size of the operations of the networks resulted
in increased employee related costs, equipment maintenance costs and expansion
costs.
Selling, General and Administrative Expense. Selling, general and
administrative expense increased 251% to $142,600 for the year ended December
31, 1999, from $40,600 in the prior year.
<TABLE>
<CAPTION>
The increase is attributable to the following:
<S> <C>
Growth in Original Markets $ 28,406
Acquisition of local partner interests 12,242
New markets 42,609
Sales and marketing activities 6,865
Corporate overhead charges 11,830
</TABLE>
Depreciation and Amortization Expense. Depreciation and amortization
expense increased 110% to $65,200 during the year ended December 31, 1999, from
$31,100 in the prior year, primarily as a result of increased depreciation
resulting from the higher depreciable asset base at the NOCC and the networks,
amortization of deferred financing costs and the acquisition of local partner
interests.
Interest Expense - net. Interest expense - net increased 63% to $45,900
for the year ended December 31, 1999, from $28,100 in the prior year as a result
of the issuance of the 12% Senior Subordinated Notes due 2007 discussed
previously partially offset by an increase in the amount of interest capitalized
on projects under construction in 1999.
Equity in Net Loss of Joint Ventures. Equity in net loss of joint ventures
decreased by 41% to $7,800 for the year ended December 31, 1999, from $13,300 in
the prior year as a result of the consolidation of several joint ventures
resulting from the purchase of the local partners' interests, and to the
maturing of the remaining joint venture networks. The decreased net losses of
the joint ventures were primarily the result of increased revenues only
partially offsetting startup and other costs and expenses associated with
design, construction, operation and management of the networks.
The number of non-consolidated joint venture networks paying management
fees to Adelphia Business Solutions decreased from eight at December 31, 1998 to
four at December 31, 1999. These networks paid management and monitoring fees to
Adelphia Business Solutions, which are included in revenues, aggregating
approximately $4,900 for the twelve months ended December 31, 1999, an increase
of approximately $1,200 over the prior twelve-month period. The non-consolidated
networks' net losses, including networks under construction, for the twelve
months ended December 31, 1998 and 1999 aggregated approximately $28,400 and
$15,200 respectively.
Preferred Stock Dividends. Preferred stock dividends increased 14% to
$32,200 during the year ended December 31, 1999 from $28,200 during the prior
year. The increase was due to a higher outstanding preferred stock base
resulting from the payment of dividends in additional shares of preferred stock.
Comparison of the Nine Months Ended December 31, 1997 and 1998
Revenues. Revenues increased 300% to $34,800 for the nine months ended
December 31, 1998, from $8,700 for the same period in the prior year. Growth in
revenues of $26,100 resulted from an increase in revenues from majority and
wholly-owned Networks of approximately $27,200 as compared to the same period in
the prior fiscal year due to the continued expansion of Adelphia Business
Solutions' customer base, its success in the roll out of switched services and
the consolidation of the Buffalo, Syracuse, New Jersey, Louisville, Lexington
and Harrisburg networks. Management fees from non-consolidated subsidiaries
decreased $1,100 as compared to the same period in the prior fiscal year
primarily due to the consolidation of the above mentioned networks.
Network Operations Expense. Network operations expense increased 255% to
$18,700 for the nine months ended December 31, 1998 from $5,300 for the same
period in the prior year. The increase was attributable to the expansion of
operations at the NOCC, and the increased number and size of the operations of
the Networks which resulted in increased employee related costs and equipment
maintenance costs and the consolidation of the Buffalo, Syracuse, New Jersey,
Louisville, Lexington and Harrisburg networks.
Selling, General and Administrative Expense. Selling, general and
administrative expense increased 288% to $35,300 for the nine months ended
December 31, 1998 from $9,100 for the same period in the prior year. The
increase was due primarily to increased expense associated with the network
expansion plan, an increase in the sales force in the original markets and an
increase in corporate overhead costs to accommodate the growth in the number,
size and operations of Networks managed and monitored by Adelphia Business
Solutions, as well as the consolidation of the Buffalo, Syracuse, New Jersey,
Louisville, Lexington and Harrisburg networks.
Depreciation and Amortization Expense. Depreciation and amortization
expense increased 280% to $26,700 during the nine months ended December 31, 1998
from $7,100 for the same period in the prior year primarily as a result of
increased amortization of deferred financing costs and increased depreciation
resulting from the higher depreciable asset base at the NOCC and the majority
and wholly owned Networks and the consolidation of the Buffalo, Syracuse, New
Jersey, Louisville, Lexington and Harrisburg networks.
Interest Expense - net. Interest expense - net decreased 29% to $20,000
during the nine months ended December 31, 1998 from $28,200 for the same period
in the prior year. The increase was attributable to interest income related to
increased cash and cash equivalents and U.S. Government Securities related to
proceeds of various offerings, partially offset by interest on the 12 1/4%
Senior Secured Notes.
Equity in Net Loss of Joint Ventures. Equity in net loss of joint ventures
increased to $9,600 during the nine months ended December 31, 1998 from $9,300
for the same period in the prior fiscal year. The net losses of the
nonconsolidated Networks for the nine months ended December 31, 1998
were primarily the result of increased revenues only partially offsetting
startup and other costs and expenses associated with design, construction,
operation and management of the networks , and the effect of the typical lag
time between the incurrence of such costs and expenses and the subsequent
generation of revenues by a network. The increase was partially offset by the
consolidation of the Buffalo, Syracuse, New Jersey, Louisville, Lexington and
Harrisburg networks for the current period.
The number of non-consolidated Networks paying management fees
to Adelphia Business Solutions was eight at December 31, 1998. These Networks
and networks under construction paid management and monitoring fees to
Adelphia Business Solutions, which are included in revenues, aggregating
approximately $2,700 for the nine months ended December 31, 1998, as compared
with $3,800 for the same period in the prior fiscal year. The non-consolidated
Networks' net losses, including networks under construction, for the
nine months ended December 31, 1997 and 1998 aggregated approximately $13,700
and $22,300, respectively.
Preferred Stock Dividends. Preferred stock dividends increased by 271% to
$21,500 for the nine months ended December 31, 1998 from $5,800 for the same
period in the prior fiscal year. The increase is due to the preferred stock
which was issued in October 1997.
Liquidity and Capital Resources
Cable television and other telecommunications businesses are capital
intensive and typically require continual financing for the construction,
modernization, maintenance, expansion and acquisition of cable and other
telecommunications systems. During the nine months ended December 31, 1997 and
1998 and the year ended December 31, 1998 and 1999, the Company committed
substantial capital resources for these purposes and for investments in Olympus
and other affiliates and entities. These expenditures were funded through the
sale of common and preferred stock, long-term borrowings and internally
generated funds. The Company's ability to generate cash to meet its future needs
will depend generally on its results of operations and the continued
availability of external financing.
For information regarding significant events and financings subsequent to
December 31, 1999, see Note 13 to Adelphia's Consolidated Financial Statements.
For the year ended December 31, 1998 and 1999, cash provided by operating
activities totaled $145,592 and $332,139, respectively; cash used for investing
activities totaled $1,155,245 and $3,522,222, respectively and cash provided by
financing activities totaled $1,029,894 and $2,978,313, respectively. The
Company's aggregate outstanding borrowings as of December 31, 1999 were
$9,291,732. The Company also had total redeemable preferred stock of $409,211
outstanding as of December 31, 1999.
For the nine months ended December 31, 1997 and 1998, cash provided by
operating activities totaled $62,038 and $138,360, respectively; cash used for
investing activities totaled $423,965 and $1,015,690, respectively and cash
provided by financing activities totaled $681,791 and $999,079, respectively.
The Company's aggregate outstanding borrowings as of December 31, 1998 were
$3,527,452. The Company also had total redeemable preferred stock of $376,865
outstanding as of December 31, 1998.
Capital Expenditures
Cable and Other Segment
Capital expenditures for the years ended December 31, 1998 and 1999 were
$141,276 and $365,991 respectively. This increase was primarily due to
acquisitions and cable plant rebuilds and upgrades to expand services. The
Company expects that capital expenditures for the Cable and Other Segment for
the year ending December 31, 2000 will be in a range of approximately $700,000
to $800,000.
Capital expenditures for the nine months ended December 31, 1997 and 1998
were $82,726 and $109,045, respectively. The increase in capital expenditures
for the nine months ended December 31, 1998, compared to the nine months ended
December 31, 1997, was primarily due to acquisitions and cable plant rebuilds
and upgrades to expand services.
CLEC Segment
Capital expenditures for the years ended December 31, 1998 and 1999 were
$180,547 and $453,206, respectively. This increase was primarily due to
expenditures necessary to develop the Original Markets and the new markets, as
well as the fiber purchases to interconnect the networks. Adelphia Business
Solutions estimates that a total of approximately $500,000 will be required to
fund Adelphia Business Solutions capital expenditures, working capital
requirements, operating losses and pro rata investments in the joint ventures
for the year ending December 31, 2000.
Capital expenditures for Adelphia Business Solutions for the nine months
ended December 31, 1997 and 1998 were $34,834 and $146,752, respectively. The
increase in capital expenditures for the nine months ended December 31, 1998,
compared to the nine months ended December 31, 1997, was primarily due to
expenditures necessary to develop the original markets and the new markets and
Adelphia Business Solutions' introduction of switching services.
Financing Activities
The Company's financing strategy has been to maintain its public long-term
debt at the parent holding company level while the Company's consolidated
subsidiaries have their own senior and subordinated credit arrangements with
banks and insurance companies, or for Adelphia Business Solutions, its own
public debt and equity. As a result of the Acquisitions, Adelphia has four other
wholly owned subsidiaries with public long-term debt: Olympus, Arahova,
FrontierVision Holdings, L.P. and FrontierVision Operating Partners, L.P. The
Company's ability to generate cash adequate to meet its future needs will depend
generally on its results of operations and the continued availability of
external financing. During the year ended March 31, 1998, the nine months ended
December 31, 1998 and the year ended December 31, 1999, the Company generally
funded its acquisitions, working capital requirements, capital expenditures, and
investments in Olympus, CLEC joint ventures and other affiliates and entities
through long-term borrowings primarily from banks, short-term borrowings,
internally generated funds and the issuance of public debt or equity. The
Company generally has funded the principal and interest obligations on its
long-term borrowings from banks and insurance companies by refinancing the
principal with new loans or through the issuance of parent and subsidiary
company debt securities, and by paying the interest out of internally generated
funds. Adelphia has generally funded the interest obligations on its public
borrowings from internally generated funds.
Most of Adelphia's wholly or majority-owned subsidiaries have their own
senior credit agreements with banks and/or insurance companies. Typically,
borrowings under these agreements are collateralized by the stock and, in some
cases, by the assets of the borrowing subsidiary and its subsidiaries and, in
some cases, are guaranteed by such subsidiary's subsidiaries. At December 31,
1999, an aggregate of $3,088,477 in borrowings was outstanding under these
agreements. These agreements contain certain provisions which, among other
things, provide for limitations on borrowings of and investments by the
borrowing subsidiaries, transactions between the borrowing subsidiaries and
Adelphia and its other subsidiaries and affiliates, and the payment of dividends
and fees by the borrowing subsidiaries. Several of these agreements also contain
certain cross-default provisions relating to Adelphia or other subsidiaries.
These agreements also require the maintenance of certain financial ratios by the
borrowing subsidiaries. See Note 3 to the Adelphia Communications Corporation
consolidated financial statements. Management believes the Company is in
compliance with the financial covenants and related financial ratio requirements
contained in its various credit agreements.
At December 31, 1999, Adelphia's subsidiaries had an aggregate of
$1,456,620 in unused credit lines with banks, part of which is subject to
achieving certain levels of operating performance. In addition, the Company had
an aggregate $186,874 in cash and cash equivalents at December 31, 1999 which
combined with the Company's unused credit lines with banks aggregated to
$1,643,494. Based upon the results of operations of subsidiaries for the quarter
ended December 31, 1999, approximately $1,262,472 of available assets could have
been transferred to Adelphia at December 31, 1999, under the most restrictive
covenants of the subsidiaries' credit agreements. In addition, subsequent to
December 31, 1999, certain subsidiaries and affiliates of Adelphia have received
commitments and subscriptions for a new $2,500,000 bank credit facility. This
bank credit facility will consist of both reducing revolving credit portion and
a term loan portion and is expected to close in April 2000. The subsidiaries
also have the ability to sell, dividend or distribute certain assets to other
subsidiaries or Adelphia, which would have the net effect of increasing
availability. At December 31, 1999, the Company's unused credit lines were
provided by reducing revolving credit facilities whose revolver periods expire
through December 31, 2007. The Company's scheduled maturities of debt are
currently $390,746 for the year ending December 31, 2000.
<PAGE>
At December 31, 1999, the Company's total outstanding debt aggregated
$9,291,732, which included $2,777,919 of parent debt and $6,513,813 of
subsidiary debt. Bank debt interest rates are based upon one or more of the
following rates at the option of Adelphia: prime rate plus 0% to 1.5%;
certificate of deposit rate plus 1.25% to 2.75%; or LIBOR plus .625% to 2.5%.
The Company's weighted average interest rate on notes payable to banks and
institutions was approximately 7.89% at December 31, 1998, compared to 7.72% at
December 31, 1999. At December 31, 1999, approximately 26.2% of subsidiary debt
with banks and institutions was subject to fixed interest rates for at least one
year under the terms of such debt or applicable interest rate swap, cap and
collar agreements. Approximately 75.0% of the Company's total indebtedness was
at fixed interest rates as of December 31, 1999 after giving effect to certain
interest rate swaps and caps.
Adelphia has entered into interest rate swap, cap and collar agreements
with banks and affiliates to reduce the impact of changes in interest rates on
its debt. Adelphia enters into pay-fixed agreements to effectively convert a
portion of its variable-rate debt to fixed-rate debt. Adelphia enters into
receive-fixed agreements to effectively convert a portion of its fixed-rate debt
to variable-rate debt which is indexed to LIBOR. Interest rate cap and collar
agreements are used to reduce the impact of increases in interest rates on
variable rate debt. Adelphia is exposed to market risk in the event of
nonperformance by the banks and the affiliates. The Company does not expect any
such nonperformance. At December 31, 1999, Adelphia would have received
approximately $6,603 to settle its interest rate swap, cap and collar
agreements, representing the excess of fair market value over carrying value of
these agreements.
Financing Transactions
Adelphia, Excluding Adelphia Business Solutions (Cable and Other Segment)
During the nine months ended December 31, 1998, Adelphia issued a total of
$300,000 of Senior Notes.
Also, during the nine months ended December 31, 1998, Adelphia issued
8,190,315 shares of Class A common stock to the public and to the Rigas family
(principal shareholders and executive officers of Adelphia). Of this total,
4,100,000 shares were sold to the public. The remaining 4,090,315 shares were
sold to entities controlled by the Rigas family. In a related transaction on
September 14, 1998, the Company issued and sold 615,000 shares of Class A common
stock pursuant to the underwriters' over-allotment option. Net proceeds to the
Company for these transactions was approximately $268,000.
Proceeds from the sale of the Senior Notes and the Class A common stock
were used to repay subsidiaries' senior notes and revolving credit facility
borrowings.
On May 15, 1998, Adelphia redeemed the remaining $69,838 of the 12 1/2%
Senior Notes due 2002 at 103% of principal.
During the nine months ended December 31, 1998, Adelphia redeemed $137,200
aggregate principal amount of subsidiary notes to banks and institutions. As a
result of these transactions, Adelphia recognized an extraordinary loss on early
retirement of debt of $1,970.
During the nine months ended December 31, 1998, a majority owned
subsidiary closed on a $700,000, 8 1/2 year credit facility. The credit facility
consists of a $350,000 reducing revolving credit portion and a $350,000 term
loan portion. Proceeds from initial borrowings were used to repay existing
indebtedness.
During the year ended December 31, 1999, Adelphia issued a total of
$1,250,000 of Senior Notes.
During the year ended December 31, 1999, Adelphia issued 22,600,000 shares
of Class A common stock for cash to the public and the Rigas family. Of this
total, 18,600,000 shares were sold to the public. The remaining 4,000,000 shares
were sold to entities controlled by the Rigas family. Net proceeds from these
transactions to the Company were approximately $1,188,000.
Also, during the year ended December 31, 1999, Adelphia sold an aggregate
2,875,000 shares of 5 1/2% Series D convertible preferred stock with a
liquidation preference of $200 per share. The preferred stock accrues dividends
at $11 per share annually and is convertible at $81.45 per share into an
aggregate of 7,059,546 shares of Class A common stock of Adelphia. The preferred
stock is redeemable at the option of Adelphia on or after May 1, 2002 at 103% of
the liquidation preference. Net proceeds to the Company for this transaction
were approximately $557,000.
<PAGE>
On April 9, 1999 and October 1, 1999, Adelphia entered into stock purchase
agreements with Highland Holdings, a general partnership controlled by the Rigas
Family, pursuant to which Adelphia agreed to sell to Highland Holdings and
Highland Holdings agreed to purchase $375,000 and $137,500, of Adelphia's Class
B common stock, respectively. Closing under the April 9, 1999 agreement occurred
on January 21, 2000. The October 1, 1999 agreement is expected to close by July
2, 2000.
Proceeds from the sale of the Senior Notes, the Class A common stock and
the convertible preferred stock were used to repay subsidiaries' revolving
credit facilities of which a portion was reborrowed to fund the Acquisitions
which closed on October 1, 1999.
On January 29, 1999, Adelphia purchased from Telesat shares of Adelphia's
stock, owned by Telesat, for a price of $149,213. In the transaction, Adelphia
purchased 1,091,524 shares of Class A common stock and 20,000 shares of Series C
Cumulative convertible preferred stock which are convertible into an additional
2,358,490 shares of Class A common stock. These shares represent 3,450,014
shares of Class A common stock on a fully converted basis.
On February 16, 1999, Adelphia redeemed $154,500 of its 9 1/2% Senior
Pay-In-Kind Notes due 2004 at 103.56% of principal. As a result of this
transaction, Adelphia recognized an extraordinary loss on early retirement of
debt of $6,676.
On May 6, 1999, certain subsidiaries and affiliates of Adelphia closed on
an $850,000 credit facility. The credit facility consists of a $600,000, 8 1/2
year reducing revolving credit loan and a $250,000, 9 year term loan. Proceeds
from initial borrowings were held as cash and used to repay existing
indebtedness, which may be reborrowed and used for acquisitions, capital
expenditures, investments, and other general corporate purposes.
On December 15, 1999, Adelphia redeemed the entire $125,000 of its 11 7/8%
Senior Debentures due 2004 at 104.5% of principal amount plus accrued interest.
As a result of this transaction, Adelphia recognized an extraordinary loss on
early retirement of debt of $7,302.
Also, on December 7, 1999, a majority-owned joint venture of Adelphia
closed on a $1,000,000 credit facility. The credit facility consists of a
$500,000, 8 year reducing revolving credit loan and a $500,000, 8 year term
loan. Proceeds from the initial borrowings were used to pay existing
indebtedness.
Adelphia Business Solutions (CLEC Segment)
During the nine months ended December 31, 1998, Adelphia Business
Solutions successfully completed an IPO of Adelphia Business Solutions Class A
common stock ("ABIZ Stock"). As part of the offering, Adelphia purchased an
incremental 3,324,001 shares of ABIZ Stock for $49,900 and converted
indebtedness owed to the Company by Adelphia Business Solutions into 3,642,666
shares of ABIZ Stock. In addition, Adelphia purchased warrants issued by
Adelphia Business Solutions to MCI Metro Access Transmission Services, Inc., and
purchased shares of Adelphia Business Solutions Class B common stock from
certain executive officers of Adelphia Business Solutions for a total purchase
price of approximately $12,580 and $3,000, respectively. Additional net proceeds
of $191,411 to Adelphia Business Solutions were received as a result of the sale
of 12,500,000 shares of ABIZ Stock to the public. In a related transaction on
June 5, 1998, Adelphia Business Solutions issued and sold 350,000 shares of ABIZ
Stock at the $16.00 IPO price pursuant to the underwriters' over allotment
option in the IPO. As a result of the IPO, Adelphia's additional paid-in capital
increased approximately $147,000 and minority interests increased approximately
$45,000. Net proceeds from this transaction have been used primarily to fund
capital expenditures, working capital, increases in ownership interests in
existing networks and for general corporate purposes.
On March 2, 1999 Adelphia Business Solutions issued $300,000 of 12% Senior
Subordinated Notes due 2007 (the "Subordinated Notes"). An entity controlled by
members of the Rigas family purchased $100,000 of the Subordinated Notes
directly from Adelphia Business Solutions at a price equal to the aggregate
principal amount less the discount to the initial purchasers. The net proceeds
of approximately $295,000 were used to fund Adelphia Business Solutions'
acquisition of interests held by local partners in certain of its markets and
were used to fund capital expenditures and investments in its networks and for
general corporate and working capital purposes.
During November 1999, Adelphia Business Solutions issued and sold
8,750,000 shares of ABIZ Stock at a price to the public of $30.00 per share,
prior to the exercise of any underwriters' over-allotment option.
Simultaneously, Adelphia purchased 5,181,350 shares of Adelphia Business
Solutions Class B Common Stock at a price equal to the public offering price
less the underwriting discount in the public offering. These transactions raised
approximately $403,000 of net proceeds to continue the expansion of Adelphia
Business Solutions' existing markets and to build new markets. At December 31,
1999, Adelphia owned approximately 60% of the Adelphia Business Solutions'
outstanding common stock and approximately 90% of the total voting power. As a
result of this offering, Adelphia's additional paid-in-capital increased
approximately $109,015 and minority interests increased approximately $144,000.
For additional information regarding Adelphia's and Adelphia Business
Solutions' financing transactions, see Notes 3, 4 and 6 to Adelphia's
Consolidated Financial Statements.
Acquisitions
Adelphia, excluding Adelphia Business Solutions (Cable and Other Segment)
On January 21, 1999, Adelphia acquired Verto Communications, Inc.
("Verto") pursuant to a merger agreement between Adelphia, Verto and Verto's
shareholders. These systems served approximately 56,000 subscribers in the
greater Scranton, PA area at the date of acquisition. In connection with the
Verto acquisition, Adelphia issued 2,561,024 shares of its Class A common stock
to the former owners of Verto and assumed approximately $35,000 of net
liabilities of Verto. The acquisition was accounted for under the purchase
method of accounting. Accordingly, the financial results of the acquired systems
are included in the consolidated results of Adelphia effective from the date
acquired.
On October 1, 1999, the redemption of the partnership interests in
Olympus held by Telesat Cablevision, Inc., a subsidiary of FPL Group, Inc. was
completed. The redemption was made in exchange for non cash assets of Olympus of
approximately $100,000.
On October 1, 1999, Adelphia acquired Century through a merger whereby
Century was merged with and into a wholly owned subsidiary of Adelphia, Arahova,
pursuant to an agreement and plan of merger, dated as of March 5, 1999, and as
amended on July 12, 1999 and as further amended on July 29, 1999. In connection
with the closing of the Century acquisition, Adelphia issued approximately
47,800,000 new shares of Adelphia Class A common stock and paid approximately
$811,900 to the stockholders of Century, and assumed approximately $1,700,000 of
debt. This transaction was approved by Century and Adelphia stockholders at
their respective stockholders' meetings on October 1, 1999. As of August 31,
1999, Century had approximately 1,610,000 basic subscribers after giving effect
to Century's pending joint venture with AT&T, which closed on December 7, 1999.
At the effective time of the merger, Adelphia also purchased Citizens Cable
Company's 50% interest in the Citizens/Century Cable Television Joint Venture,
one of Century's 50% owned joint ventures, for a purchase price of approximately
$131,900, comprised of approximately $27,700 in cash, approximately 1,850,000
shares of Adelphia Class A common stock and the assumption of indebtedness. This
joint venture serves approximately 92,300 basic subscribers in California and
was jointly owned by Century and Citizens Cable Company, a subsidiary of
Citizens Utilities Company. Accordingly, the financial results of the acquired
systems are included in the consolidated results of Adelphia effective from the
date acquired.
On October 1, 1999, Adelphia acquired FrontierVision. As of October 1,
1999, FrontierVision served approximately 710,000 basic subscribers primarily in
Ohio, Kentucky, New England and Virginia. In connection with the acquisition,
Adelphia issued 7,000,000 shares of its Class A common stock, assumed debt of
approximately $1,150,000 and paid cash of approximately $543,300. Accordingly,
the financial results of the acquired systems are included in the consolidated
results of Adelphia effective from the date acquired.
On October 1, 1999, Adelphia acquired Harron Communications Corp.
("Harron"). As of October 1, 1999, Harron served approximately 296,000 basic
subscribers primarily in Southeastern Pennsylvania, Michigan, Massachusetts and
New Hampshire and were purchased for an aggregate purchase price of
approximately $1,211,704. Accordingly, the financial results of the acquired
systems are included in the consolidated results of Adelphia effective from the
date acquired.
On December 7, 1999, subsidiaries of Arahova consummated a transaction
with AT&T to form a joint venture limited partnership in the Los Angeles, CA
area. Pursuant to this agreement, the Company, Arahova and AT&T contributed
cable systems that served approximately 800,000 basic subscribers. Arahova and
Adelphia hold a combined interest of 75% and AT&T holds a 25% interest in the
partnership. As part of this transaction, Arahova and AT&T exchanged cable
systems owned by Arahova in certain communities in northern California for
certain cable systems owned by AT&T in southern California, allowing each of
them to unify operations in existing service areas. AT&T exchanged its East San
Fernando Valley cable system serving approximately 103,500 basic subscribers for
Arahova's northern California cable systems (San Pablo, Benecia, Fairfield and
Rohnert Park, California), which serve approximately 96,500 basic subscribers.
No gain or loss was recognized on this system swap due to the Company's
application of purchase accounting in connection with the Arahova merger.
In addition to the acquisitions mentioned above, for the year ended
December 31, 1999, Adelphia completed several other acquisitions. These
acquisitions served approximately 136,700 basic subscribers at the date of
acquisition primarily in Ohio, Virginia, Kentucky, Pennsylvania, California and
West Virginia and were purchased for an aggregate price of approximately
$539,200. Accordingly, the financial results of the acquired systems are
included in the consolidated results of Adelphia effective from the date
acquired.
Adelphia Business Solutions (CLEC Segment)
During March 1999, Adelphia Business Solutions consummated purchase
agreements with subsidiaries of Multimedia, Inc. and MediaOne of Colorado Inc.
to acquire their respective interests in jointly owned networks located in the
Wichita, KS, Jacksonville, FL and Richmond, VA markets for an aggregate of
approximately $89,800. The agreements increased Adelphia Business Solutions'
ownership interest in each of these networks to 100%. Accordingly, the financial
results of the acquired networks are included in the consolidated results of
Adelphia Business Solutions effective from the date acquired.
During June 1999, Adelphia Business Solutions consummated a purchase
agreement with Entergy Corporation ("Entergy"), the parent of its local partner
in the Baton Rouge, LA, Little Rock, AR, and Jackson, MS markets, whereby
Entergy received approximately $36,500 for its ownership interests in these
markets. The agreements increased Adelphia Business Solutions' ownership
interest in each of these networks to 100%. Accordingly, the financial results
of the acquired networks are included in the consolidated results of Adelphia
Business Solutions effective from the date acquired.
Resources
The Company plans to continue to explore and consider new commitments,
arrangements or transactions to refinance existing debt, increase the Company's
liquidity or decrease the Company's leverage. These could include, among other
things, the future issuance by Adelphia, or its subsidiaries, of public or
private equity or debt and the negotiation of new or amended credit facilities.
These could also include entering into acquisitions, joint ventures or other
investment or financing activities, although no assurance can be given that any
such transactions will be consummated. The Company's ability to borrow under
current credit facilities and to enter into refinancings and new financings is
limited by covenants contained in Adelphia's indentures and its subsidiaries'
credit agreements, including covenants under which the ability to incur
indebtedness is in part a function of applicable ratios of total debt to cash
flow.
The Company believes that cash and cash equivalents, internally generated
funds, borrowings under existing credit facilities, and future financing sources
will be sufficient to meet its short-term and long-term liquidity and capital
requirements. Although in the past the Company has been able to refinance its
indebtedness or obtain new financing, there can be no assurance that the Company
will be able to do so in the future or that the terms of such financings would
be favorable.
Management believes that the telecommunications industry, including the
cable television and telephone industries, continues to be in a period of
consolidation characterized by mergers, joint ventures, acquisitions, sales of
all or part of cable companies or their assets, and other partnering and
investment transactions of various structures and sizes involving cable or other
telecommunications companies. The Company continues to evaluate new
opportunities that allow for the expansion of its business through the
acquisition of additional cable television systems in geographic proximity to
its existing regional markets or in locations that can serve as a basis for new
market areas. The Company, like other telecommunications companies, has
participated from time to time and is participating in preliminary discussions
with third parties regarding a variety of potential transactions, and the
Company has considered and expects to continue to consider and explore potential
transactions of various types with other cable and telecommunications companies.
However, no assurances can be given as to whether any such transaction may be
consummated or, if so, when.
Affiliates
Olympus. On October 1, 1999, the remaining 50% partnership interest in
Olympus was redeemed and Olympus became a consolidated, wholly owned subsidiary
of Adelphia as of that date. Therefore, all intercompany accounts and
transactions have been eliminated subsequent to October 1, 1999. Prior to
October 1, 1999, the Company served as the managing general partner of Olympus
and held $5 of voting general partnership interests representing, in the
aggregate, 50% of the voting interests of Olympus. The Company also held
nonvoting PLP interests in Olympus, which entitled the Company to a 16.5% per
annum priority return. The remaining equity in Olympus consisted of voting and
non-voting partnership interests held by Telesat, which were redeemed on October
1, 1999.
On January 29, 1999, Adelphia purchased from Telesat shares of Adelphia's
stock owned by Telesat for a price of $149,213. In the transaction, Adelphia
purchased 1,091,524 shares of Class A common stock and 20,000 shares of Series C
Cumulative convertible preferred stock which are convertible into an additional
2,358,490 shares of Class A common stock. These shares represent 3,450,014
shares of Class A common stock on a fully converted basis. Adelphia and Telesat
also agreed to a redemption of Telesat's interests in Olympus for approximately
$100,000. The redemption occurred on October 1, 1999.
During the year ended March 31, 1998, the nine months ended December 31,
1998 and the nine months ended September 30, 1999, the Company made net
investments in and advances to Olympus totaling $11,466, $222,610 and $350,053,
respectively. The increase in the investments and advances to Olympus for the
nine months ended September 30, 1999 is due primarily to advances used to pay
down subsidiary credit facilities with banks and institutions. During the year
ended March 31, 1998, the nine months ended December 31, 1998, and the nine
months ended September 30, 1999, the Company received priority investment income
from Olympus of $47,765, $36,000 and $36,000, respectively.
During the year ended March 31, 1998 and the nine months ended December
31, 1998, Olympus acquired several cable and security systems, adding
approximately 128,000 subscribers for approximately $269,900. No significant
acquisitions occurred during the year ended December 31, 1999. For additional
information regarding Olympus acquisitions and financings, see Olympus' Annual
Report on Form 10-K for the year ended December 31, 1999, also filed with the
SEC.
Managed Partnerships. During the years ended March 31, 1998 and December
31, 1999, the Company made advances in the net amounts of $21,458 and $134,469,
respectively, to these and other related parties, primarily for capital
expenditures and working capital purposes. During the nine months ended December
31, 1998, the Managed Partnerships and other related parties repaid advances in
the net amount of $8,150.
<PAGE>
Recent Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Management of the Company has not completed its evaluation of the
impact of SFAS No. 133 on the Company's consolidated financial statements. In
July 1999, SFAS No. 137 was issued to delay the effective date of SFAS No. 133
to fiscal quarters of fiscal years beginning after June 15, 2000.
At its January 2000 meeting, the Emerging Issues Task Force ("EITF")
reached consensus with respect to issues related to EITF 98-3, "Determining
Whether a Transaction is an Exchange of Similar Productive Assets or a Business
Combination." As a result of this consensus, Adelphia will be required to
account for cable system swaps as a purchase and a disposition of a business at
fair value. Management of the Company will monitor the impact of EITF 98-3 as it
relates to future transactions of the Company.
Inflation
In the year ended March 31, 1998, the nine months ended December 31, 1998
and the year ended December 31, 1999, inflation did not have a significant
effect on the Company. Periods of high inflation could have an adverse effect to
the extent that increased borrowing costs for floating-rate debt may not be
offset by increases in subscriber rates. At December 31, 1999, after giving
effect to interest rate hedging agreements, approximately $3,010,981 of the
Company's total debt was subject to floating interest rates.
Regulatory and Competitive Matters
The cable television operations of the Company may be adversely affected
by changes and developments in governmental regulation, competitive forces and
technology. The cable television industry and the Company are subject to
extensive regulation at the federal, state and local levels. The 1992 Cable Act
significantly expanded the scope of regulation of certain subscriber rates and a
number of other matters in the cable industry, such as mandatory carriage of
local broadcast stations and retransmission consent, and increased the
administrative costs of complying with such regulations. The FCC has adopted
rate regulations that establish, on a system-by-system basis, maximum allowable
rates for (i) basic and cable programming services (other than programming
offered on a per-channel or per-program basis), based upon a benchmark
methodology, and (ii) associated equipment and installation services based upon
cost plus a reasonable profit. Under the FCC rules, franchising authorities are
authorized to regulate rates for basic services and associated equipment and
installation services, and the FCC will regulate rates for regulated cable
programming services in response to complaints filed with the agency. The 1996
Act ended FCC regulation of cable programming service tier rates on March 31,
1999.
Rates for basic services are set pursuant to a benchmark formula.
Alternatively, a cable operator may elect to use a cost-of-service methodology
to show that rates for basic services are reasonable. Refunds with interest will
be required to be paid by cable operators who are required to reduce regulated
rates. The FCC has reserved the right to reduce or increase the benchmarks it
has established. The rate regulations also limit increases in regulated rates to
an inflation indexed amount plus increases in certain costs such as taxes,
franchise fees, costs associated with specific franchise requirements and
increased programming costs. Cost-based adjustments to these capped rates can
also be made in the event a cable operator adds or deletes channels or completes
a significant system rebuild or upgrade. Because of the limitation on rate
increases for regulated services, future revenue growth from cable services will
rely to a much greater extent than has been true in the past on increased
revenues from unregulated services and new subscribers than from increases in
previously unregulated rates.
The FCC has adopted regulations implementing all of the requirements of
the 1992 Cable Act. The FCC is also likely to continue to modify, clarify or
refine the rate regulations. Adelphia cannot predict the effect of the 1996 Act
or future rulemaking proceedings or changes to the rate regulations.
Cable television companies operate under franchises granted by local
authorities which are subject to renewal and renegotiation from time to time.
Because such franchises are generally non-exclusive, there is a potential for
competition with the systems from other operators of cable television systems,
including public systems operated by municipal franchising authorities
themselves, and from other distribution systems capable of delivering television
programming to homes. The 1992 Cable Act and the 1996 Act contain provisions
which encourage competition from such other sources. The Company cannot predict
the extent to which competition will materialize from other cable television
operators, local telephone companies, other distribution systems for delivering
television programming to the home, or other potential competitors, or, if such
competition materializes, the extent of its effect on the Company.
The 1996 Act repealed the prohibition on CLECs from providing video
programming directly to customers within their local exchange areas other than
in rural areas or by specific waiver of FCC rules. The 1996 Act also authorized
CLECs to operate "open video systems" ("OVS") without obtaining a local cable
franchise, although CLECs operating such a system can be required to make
payments to local governmental bodies in lieu of cable franchise fees. Where
demand exceeds capacity, up to two-thirds of the channels on an OVS must be
available to programmers unaffiliated with the CLEC. The statute states that the
OVS scheme supplants the FCC's "video dialtone" rules. The FCC has promulgated
rules to implement the OVS concept, and New Jersey Bell Telephone Company has
been granted permission to convert its video dialtone authorization in Dover
Township, New Jersey to an OVS authorization.
The Company believes that the provision of video programming by telephone
companies in competition with the Company's existing operations could have an
adverse effect on the Company's financial condition and results of operations.
At this time, the impact of any such effect is not known or estimable.
The Company also competes with DBS service providers. DBS has been
available to consumers since 1994. A single DBS satellite can provide more than
100 channels of programming. DBS service can be received virtually anywhere in
the United States through the installation of a small outdoor antenna. DBS
service is being heavily marketed on a nationwide basis by several service
providers. At this time, any impact of DBS competition on the Company's future
results is not known or estimable.
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
(Dollars in thousands)
The Company uses fixed and variable rate debt to fund its working capital
requirements, capital expenditures and acquisitions. These debt arrangements
expose the Company to market risk related to changes in interest rates. The
Company enters into pay-fixed agreements to effectively convert a portion of its
variable-rate debt to fixed-rate debt to reduce the risk of incurring higher
interest costs due to rising interest rates. As of December 31, 1999, the
Company had interest rate swap agreements covering notional principal of
$115,000 that expire through 2008 and that fix the interest rate at an average
of 6.68%. The Company also enters into receive-fixed agreements to effectively
convert a portion of its fixed-rate debt to a variable-rate debt which is
indexed to LIBOR to reduce the risk of incurring higher interest costs in
periods of falling interest rates. As of December 31, 1999, the Company had
interest rate swap agreements covering notional principal of $80,000 that expire
through 2003 and that have a variable rate at an average of 5.86%. The Company
enters into interest rate caps to reduce the risk of incurring higher interest
costs due to rising interest rates. As of December 31, 1999, the Company had
interest rate cap agreements covering a notional amount of $400,000, which
expire in 2002 and cap rates at an average rate of 6.88%. As of December 31,
1999, the Company had interest rate collar agreements covering a notional amount
of $200,000, with $100,000 expiring in each of 2001 and 2002. The interest rate
collar agreements have average floor rates of 5.95% and 6.30% and average cap
rates of 5.95% and 6.30%, respectively. These agreements also have maximum cap
rates of 6.64% and maximum floor rates of 4.65% and 4.95%, respectively. The
Company does not enter into any interest rate swap, cap or collar agreements for
trading purposes. The Company is exposed to market risk in the event of
non-performance by the banks. No such non-performance is expected. The table
below summarizes the fair values and contract terms of the Company's financial
instruments subject to interest rate risk as of December 31, 1999.
<TABLE>
<CAPTION>
Expected Maturity
-------------------------------------------------------- Fair
2000 2001 2002 2003 2004 Thereafter Total Value
----------- ---------- ---------- ----------- ---------- ----------- ----------- ----------
Debt and Redeemable
Preferred Stock:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate $ 282,375 $ 23,000 $ 545,000 $ 897,840 $ 531,847 $ 4,899,506 $7,179,506 $6,625,411
Average Interest Rate 9.86% 9.87% 9.88% 9.87% 9.86% 9.78%
Variable Rate 108,371 262,401 341,571 443,350 387,300 1,553,574 3,096,567 3,096,567
Average Interest Rate 7.97% 8.50% 8.62% 8.62% 8.64% 8.45%
Interest Rate Swaps, Caps
and Collars:
Variable to Fixed Swaps $ 40,000 $ -- $ -- $ -- $ -- $ 75,000 $ 115,000 $ 5,287
Average Pay Rate 6.68% -- -- -- -- 6.68%
Average Receive Rate 6.24% -- -- -- -- 7.32%
Fixed to Variable Swaps -- -- 35,000 45,000 -- -- 80,000 (2,113)
Average Pay Rate -- -- 5.86% 5.86% -- --
Average Receive Rate -- -- 7.08% 7.10% -- --
Interest Rate Caps -- -- 400,000 -- -- -- 400,000 3,470
Average Cap Rate -- -- 6.88% -- -- --
Interest Rate Collars -- 100,000 100,000 -- -- -- 200,000 (41)
Maximum Cap Rate -- 6.64% 6.64% -- -- -- -- --
Average Cap and Floor Rate -- 5.95% 6.30% -- -- -- -- --
Minimum Floor Rate -- 4.65% 4.95% -- -- -- -- --
</TABLE>
Interest rates on variable debt are estimated by us using the average
implied forward London Interbank Offer Rate ("LIBOR") rates for the year of
maturity based on the yield curve in effect at December 31, 1999, plus the
borrowing margin in effect at December 31, 1999. Average receive rates on the
variable to fixed swaps are estimated by us using the average implied forward
LIBOR rates for the year of maturity based on the yield curve in effect at
December 31, 1999.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of Adelphia and related notes
thereto and independent auditors' report follow.
<PAGE>
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS OF ADELPHIA COMMUNICATIONS CORPORATION
AND SUBSIDIARIES
<S> <C>
Independent Auditors' Report 52
Consolidated Balance Sheets, December 31, 1998 and 1999 53
Consolidated Statements of Operations, Year Ended March 31, 1998, Nine Months Ended
December 31, 1998 and Year Ended December 31, 1999 54
Consolidated Statements of Convertible Preferred Stock, Common Stock and Other Stockholders' Equity
(Deficiency), Year Ended March 31, 1998, Nine Months Ended December 31, 1998 and
Year Ended December 31, 1999 55
Consolidated Statements of Cash Flows, Year Ended March 31, 1998, Nine Months Ended
December 31, 1998 and Year Ended December 31, 1999 57
Notes to Consolidated Financial Statements 58
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Adelphia Communications Corporation:
We have audited the accompanying consolidated balance sheets of Adelphia
Communications Corporation and subsidiaries as of December 31, 1998 and 1999,
and the related consolidated statements of operations, of convertible preferred
stock, common stock and other stockholders' equity (deficiency), and of cash
flows for the year ended March 31, 1998, the nine months ended December 31, 1998
and the year ended December 31, 1999. Our audits also included the financial
statement schedules listed in the Index at Item 14. These financial statements
and financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Adelphia Communications
Corporation and subsidiaries at December 31, 1998 and 1999, and the results of
their operations and their cash flows for the year ended March 31, 1998, the
nine months ended December 31, 1998 and the year ended December 31, 1999 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 29, 2000
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
December 31,
1998 1999
--------------- --------------
ASSETS:
<S> <C> <C>
Property, plant and equipment--net $ 1,207,655 $ 3,972,329
Intangible assets--net 1,029,159 12,095,873
Cash and cash equivalents 398,644 186,874
U.S. government securities--pledged 58,054 29,899
Investments 196,893 280,874
Subscriber receivables--net 53,911 194,399
Prepaid expenses and other assets--net 114,625 328,675
Investment in and amounts due from Olympus (Note 1) 191,408 --
Related party receivables--net 44,108 178,577
-------------- --------------
Total $ 3,294,457 $ 17,267,500
============== ==============
LIABILITIES, PREFERRED STOCK, COMMON STOCK AND
OTHER STOCKHOLDERS' EQUITY (DEFICIENCY):
Subsidiary debt $ 1,717,240 $ 6,513,813
Parent debt 1,810,212 2,777,919
Accounts payable 96,985 442,561
Subscriber advance payments and deposits 19,377 57,651
Accrued interest and other liabilities 137,131 495,564
Deferred income taxes 109,609 2,113,097
-------------- --------------
Total liabilities 3,890,554 12,400,605
-------------- --------------
Minority interests 48,784 736,497
-------------- --------------
Adelphia Business Solutions redeemable exchangeable preferred stock 228,674 260,848
-------------- --------------
13% Series B cumulative redeemable exchangeable preferred stock 148,191 148,363
-------------- --------------
Commitments and contingencies (Note 5)
Convertible preferred stock, common stock and other stockholders' equity
(deficiency):
8 1/8% Series C convertible preferred stock ($100,000 liquidation preference) 1 1
5 1/2% Series D convertible preferred stock ($575,000 liquidation preference) -- 29
Class A common stock, $.01 par value, 200,000,000 and 1,200,000,000 shares
authorized, 31,258,843 and 113,051,118 shares outstanding, respectively 313 1,131
Class B common stock, $.01 par value, 25,000,000 and 300,000,000 shares
authorized, respectively, 10,834,476 shares outstanding 108 108
Additional paid-in capital 738,102 5,863,633
Accumulated other comprehensive income -- 3,239
Accumulated deficit (1,760,270) (1,997,553)
Treasury stock, at cost, 1,091,524 shares of Class A common stock and
20,000 shares of 8 1/8% Series C convertible preferred stock -- (149,401)
-------------- --------------
Convertible preferred stock, common stock and other
stockholders' equity (deficiency) (1,021,746) 3,721,187
-------------- --------------
Total $ 3,294,457 $ 17,267,500
============== ==============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
1998 1998 1999
-------------- ------------- -------------
<S> <C> <C> <C>
Revenues $ 524,889 $ 496,014 $ 1,287,968
------------- ------------- -------------
Operating expenses:
Direct operating and programming 167,288 167,963 432,612
Selling, general and administrative 95,731 107,249 340,579
Depreciation and amortization 145,041 140,823 370,836
Merger and integration costs -- -- 4,736
------------- ------------- -------------
Total 408,060 416,035 1,148,763
------------- ------------- -------------
Operating income 116,829 79,979 139,205
------------- ------------- -------------
Other income (expense):
Priority investment income from Olympus 47,765 36,000 36,000
Interest expense - net (Note 1) (243,554) (180,452) (359,585)
Equity in loss of Olympus and other joint ventures (66,089) (48,891) (60,618)
Equity in loss of Adelphia Business Solutions joint ventures (12,967) (9,580) (7,758)
Minority interest in net losses of subsidiaries -- 25,772 38,699
Adelphia Business Solutions preferred stock dividends (12,682) (21,536) (32,173)
Other 2,538 1,113 1,865
------------- ------------- -------------
Total (284,989) (197,574) (383,570)
------------- ------------- -------------
Loss before income taxes and extraordinary loss (168,160) (117,595) (244,365)
Income tax benefit 5,606 6,802 14,493
------------- ------------- -------------
Loss before extraordinary loss (162,554) (110,793) (229,872)
Extraordinary loss on early retirement of debt (net of income taxes
of $7,200 in 1999) (11,325) (4,337) (10,658)
------------- ------------- -------------
Net loss (173,879) (115,130) (240,530)
Dividend requirements applicable to preferred stock (18,850) (20,718) (41,963)
------------- ------------- -------------
Net loss applicable to common stockholders (192,729) (135,848) (282,493)
Other comprehensive income - unrealized gain on available-for-sale
securities (net of income tax benefit of $2,237) -- -- 3,239
------------- ------------- -------------
Comprehensive income $ (192,729) $ (135,848) $ (279,254)
============= ============= =============
Basic and diluted loss per weighted average share of common
stock before extraordinary loss $ (6.07) $ (3.63) $ (3.73)
Basic and diluted extraordinary loss on early retirement of debt per
weighted average share of common stock (0.38) (0.12) (0.15)
------------- ------------- -------------
Basic and diluted net loss per weighted average share of common stock $ (6.45) $ (3.75) $ (3.88)
============= ============= =============
Weighted average shares of common stock outstanding (in thousands) 29,875 36,226 72,824
============= ============= =============
See notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, COMMON STOCK
AND OTHER STOCKHOLDERS' EQUITY (DEFICIENCY)
(Dollars in thousands)
Series C Series D Accumulated
Convertible Convertible Class A Class B Additional Other
Preferred Preferred Common Common Paid-In Comprehensive Accumulated Treasury
Stock Stock Stock Stock Capital Income Deficit Stock Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1997 $ -- $ -- $ 161 $ 109 $ 219,408 $ -- $(1,473,559) $ -- $(1,253,881)
Issuance of Class A common
stock for cable television
assets -- -- 39 -- 33,792 -- -- -- 33,831
Issuance of Series C convertible
preferred stock 1 -- -- -- 96,999 -- -- -- 97,000
Dividend requirements applicable
to exchangeable
preferred stock -- -- -- -- (14,246) -- -- -- (14,246)
Dividend requirements applicable
to convertible preferred stock -- -- -- -- (4,604) -- -- -- (4,604)
Other -- -- -- -- (86) -- -- -- (86)
Net loss -- -- -- -- -- -- (173,879) -- (173,879)
--------------------------------------------------------------------------------------------
Balance, March 31, 1998 1 -- 200 109 331,263 -- (1,647,438) -- (1,315,865)
--------------------------------------------------------------------------------------------
Adelphia Business Solutions
issuance of
Class A common stock -- -- -- -- 146,440 -- -- -- 146,440
Issuance of Class A common stock -- -- 88 -- 267,838 -- -- -- 267,926
Dividend requirements applicable
to exchangeable preferred stock -- -- -- -- (14,625) -- -- -- (14,625)
Dividend requirements applicable
to convertible preferred stock -- -- -- -- (6,093) -- -- -- (6,093)
Issuance of Class A common stock
for affiliate cable television
assets -- -- 23 -- 77,085 -- -- -- 77,108
Excess of purchase price over
carrying value of cable
television assets purchased
from affiliate -- -- -- -- (63,676) -- -- -- (63,676)
Conversion of Class B common
stock into Class A common stock -- -- 1 (1) -- -- -- -- --
Other -- -- 1 -- (130) -- 2,298 -- 2,169
Net loss -- -- -- -- -- -- (115,130) -- (115,130)
--------------------------------------------------------------------------------------------
Balance, December 31, 1998 $ 1 $ -- $ 313 $ 108 $ 738,102 $ -- $(1,760,270) $ -- $(1,021,746)
============================================================================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK, COMMON STOCK
AND OTHER STOCKHOLDERS' EQUITY (DEFICIENCY) (continued)
(Dollars in thousands)
Series C Series D Accumulated
Convertible Convertible Class A Class B Additional Other
Preferred Preferred Common Common Paid-In Comprehensive Accumulated Treasury
Stock Stock Stock Stock Capital Income Deficit Stock Total
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 $ 1 $ - $ 313 $ 108 $ 738,102 $ - $(1,760,270) $ -- $(1,021,746)
-----------------------------------------------------------------------------------------------
Net proceeds from issuance of
Class A common stock -- -- 225 -- 1,186,290 -- -- -- 1,186,515
Net proceeds from issuance of
Series D
Convertible Preferred stock -- 29 -- -- 557,430 -- -- -- 557,459
Adelphia Business Solutions
Issuance of Class A common stock -- -- -- -- 109,015 -- -- -- 109,015
Treasury stock purchase -- -- -- -- -- -- -- (149,401) (149,401)
Dividend requirements applicable to
exchangeable preferred stock -- -- -- -- (19,500) -- -- -- (19,500)
Dividend requirements applicable to
convertible preferred stock -- -- -- -- (22,239) -- -- -- (22,239)
Issuance of Class A common stock in
connection with acquisitions -- -- 593 -- 3,336,145 -- -- -- 3,336,738
Net unrealized gain on
available-for-sale
securities -- -- -- -- -- 3,239 -- -- 3,239
Other -- -- -- -- (21,610) -- 3,247 -- (18,363)
Net loss -- -- -- -- -- -- (240,530) -- (240,530)
-----------------------------------------------------------------------------------------------
Balance, December 31, 1999 $ 1 $ 29 $1,131 $ 108 $5,863,633 $3,239 $(1,997,553)$(149,401) $3,721,187
===============================================================================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
1998 1998 1999
--------------- ---------------- ----------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $ (173,879) $ (115,130) $ (240,530)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 145,041 140,823 370,836
Noncash interest expense 37,430 23,663 52,068
Noncash dividends 12,682 21,536 32,173
Equity in loss of Olympus and other joint ventures 66,089 48,891 60,618
Equity in loss of Adelphia Business Solutions joint ventures 12,967 9,580 7,758
Gain on sale of investments (2,538) -- (2,354)
Minority interest in losses of subsidiaries -- (25,772) (38,699)
Extraordinary loss on early retirement of debt -
net of income tax benefit 11,325 4,337 10,658
Decrease in deferred taxes, net of effects of acquisitions (6,305) (6,510) (18,179)
Changes in operating assets and liabilities, net of
effects of acquisitions:
Subscriber receivables (4,351) (19,874) (70,110)
Prepaid expenses and other (23,437) (6,942) 210,381
Accounts payable 4,282 31,029 232,991
Subscriber advance payments and deposits 658 1,678 (14,594)
Accrued interest and other (13,694) 31,051 (260,878)
-------------- --------------- ---------------
Net cash provided by operating activities 66,270 138,360 332,139
-------------- --------------- ---------------
Cash flows used for investing activities:
Acquisitions , net of cash acquired (146,546) (403,851) (2,178,037)
Expenditures for property, plant and equipment (183,586) (255,797) (819,197)
Investments in Adelphia Business Solutions joint ventures (64,260) (69,018) (24,496)
Investments in other joint ventures (22,591) (12,540) (31,869)
Purchase of minority interest in Adelphia Business Solutions -- (15,580) --
Investment in U.S. government securities--pledged (83,400) -- --
Sale of U.S. government securities - pledged 15,653 15,312 30,626
Amounts invested in and advanced to Olympus
and related parties (91,468) (274,216) (521,649)
Proceeds from sale of investments 12,678 -- --
Other -- -- 22,400
-------------- --------------- ---------------
Net cash used for investing activities (563,520) (1,015,690) (3,522,222)
-------------- --------------- ---------------
Cash flows from financing activities:
Proceeds from debt 1,298,137 836,176 3,184,579
Repayments of debt (977,591) (269,778) (1,971,534)
Costs associated with debt financings (20,498) (7,125) (35,562)
Premium paid on early retirement of debt (12,153) (3,634) (13,566)
Issuance of Adelphia Business Solutions Class A common stock -- 205,599 262,413
Issuance of Class A common stock -- 275,880 1,215,999
Costs associated with issuances of common stock -- (22,196) (30,366)
Issuance of redeemable exchangeable preferred stock 147,976 -- --
Issuance of convertible preferred stock 97,000 -- 557,649
Issuance of Adelphia Business Solutions
redeemable exchangeable preferred stock 194,522 -- --
Payments to acquire treasury stock -- -- (149,401)
Preferred stock dividends paid (14,787) (15,843) (41,898)
-------------- --------------- ---------------
Net cash provided by financing activities 712,606 999,079 2,978,313
-------------- --------------- ---------------
Increase (decrease) in cash and cash equivalents 215,356 121,749 (211,770)
Cash and cash equivalents, beginning of period 61,539 276,895 398,644
-------------- --------------- ---------------
Cash and cash equivalents, end of period $ 276,895 $ 398,644 $ 186,874
============== =============== ===============
Supplemental disclosure of cash flow activity - cash payments for interest $ 220,888 $ 162,113 $ 331,427
============== =============== ===============
See notes to consolidated financial
statements.
</TABLE>
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
1. The Company and Summary of Significant Accounting Policies:
The Company and Basis for Consolidation
Adelphia Communications Corporation and subsidiaries ("Adelphia") owns,
operates and manages cable television systems and other related
telecommunications businesses. Adelphia's operations consist primarily of
selling video programming which is distributed to subscribers for a monthly fee
through a network of fiber optic and coaxial cables. These services are offered
in the respective franchise areas under the name Adelphia. Adelphia Business
Solutions, Inc. (formerly Hyperion Telecommunications, Inc.) and subsidiaries
("Adelphia Business Solutions" or "ABIZ") is a consolidated subsidiary of
Adelphia which owns, operates and manages entities which provide competitive
local exchange carrier ("CLEC") telecommunications services under the name
Adelphia Business Solutions.
On March 30, 1999, the Board of Directors of Adelphia changed Adelphia's
fiscal year from March 31 to December 31. The decision was made to conform to
general industry practice and for administrative purposes. The change became
effective for the nine months ended December 31, 1998.
On October 25, 1999, the shareholders of Hyperion Telecommunications, Inc.
elected to change the name Hyperion to Adelphia Business Solutions, Inc. The
name change was effective October 25, 1999.
The consolidated financial statements include the accounts of Adelphia,
its majority owned subsidiaries and subsidiaries that are 50% owned and
controlled by Adelphia. All significant intercompany accounts and transactions
have been eliminated in consolidation.
During the year ended March 31, 1998, the nine months ended December 31,
1998 and the year ended December 31, 1999, Adelphia consummated several
acquisitions, each of which was accounted for using the purchase method.
Accordingly, the financial results of each acquisition have been included in the
consolidated results of Adelphia effective from the date acquired.
On September 12, 1997, Adelphia Business Solutions consummated an
agreement with Time Warner Entertainment-Advance/Newhouse ("TWEAN") to exchange
interests in four New York CLEC networks. As a result of the transaction,
Adelphia Business Solutions paid TWEAN $7,638 and increased its ownership in the
networks serving Buffalo and Syracuse, New York to 60% and 100%, respectively,
and eliminated its interest in the Albany and Binghamton networks, which became
wholly owned by TWEAN.
On December 3, 1997, Adelphia exchanged its interest in Oxford, North
Carolina, a system which served approximately 4,400 subscribers, for TWEAN's
interest in its DuBois, Pennsylvania system, which served approximately 3,800
subscribers.
On February 12, 1998, Adelphia Business Solutions issued a warrant for
731,624 shares of Adelphia Business Solutions Class A Common Stock to its 50%
partner in Adelphia Business Solutions of Harrisburg in exchange for such
partnership interest.
On February 12, 1998, Adelphia Business Solutions acquired the remaining
partnership interests in its Buffalo, NY, Louisville, KY and Lexington, KY
networks for approximately $18,300.
On February 12, 1998, Adelphia Business Solutions acquired the remaining
partnership interests in its Morristown and New Brunswick, NJ networks for
approximately $26,328.
On March 6, 1998, Adelphia exercised its option to purchase the remaining
15% of its Northeast Cable, Inc. system. Adelphia issued 341,220 shares of Class
A common stock to the sellers in connection with this purchase.
In addition to the acquisitions mentioned above, during the year ended
March 31, 1998, Adelphia completed several other acquisitions. Systems acquired
served approximately 65,500 basic subscribers at the date of acquisition
primarily in Virginia, western New York, Pennsylvania, Maryland and West
Virginia and were purchased for an aggregate price of approximately $107,000 in
cash and 3,571,428 shares of Adelphia Class A common stock.
On April 1, 1998, Adelphia exchanged its interest in its Mansfield, Ohio
area systems, which served approximately 64,400 subscribers, and approximately
$11,000 cash for Time Warner Entertainment's interests in systems adjacent to
systems owned or managed by Adelphia in Virginia, New England and New York,
which served approximately 70,200 subscribers.
On July 31, 1998, Adelphia consummated its transaction with AT&T to form a
joint venture limited partnership in the Western New York region (the "Western
New York Partnership"). Pursuant to this agreement, Adelphia contributed its
Western New York and Lorain, Ohio systems totaling approximately 298,000
subscribers and certain programming assets and $440,000 in debt. Subsidiaries of
AT&T contributed their cable systems in Buffalo, New York; Erie, Pennsylvania;
and Ashtabula and Lake County, Ohio, totaling approximately 171,000 subscribers
and $228,000 in debt. Adelphia and AT&T hold a 66.7% and 33.3% interest,
respectively, in the partnership. Adelphia manages the partnership.
On September 30, 1998, Adelphia merged one of its subsidiaries with the
subsidiary of AT&T that held an interest in Syracuse Hilton Head Holdings, L.P.
("SHHH, L.P."), an Adelphia managed partnership controlled by the Rigas family,
principal stockholders of Adelphia. Pursuant to the merger agreement, AT&T
received 2,250,000 newly issued shares of Adelphia's Class A common stock.
Simultaneously, SHHH, L.P. distributed certain cable systems, which served
approximately 34,100 subscribers, in Virginia and North Carolina to Adelphia, in
exchange for the interest acquired by Adelphia from AT&T as described above,
Adelphia's preferred equity investment in Managed Partnership and certain
affiliate receivables owed to Adelphia.
In addition to the acquisitions mentioned above, for the nine months ended
December 31, 1998, Adelphia completed several other acquisitions. These
acquisitions served approximately 75,250 basic subscribers at the date of
acquisition primarily in southern New York, western Pennsylvania, Connecticut
and Vermont and were purchased for an aggregate price of approximately $163,500.
On January 21, 1999, Adelphia acquired Verto Communications, Inc.
("Verto") pursuant to a merger agreement among Adelphia, Verto and Verto's
shareholders. These systems served approximately 56,000 subscribers in the
greater Scranton, PA area at the date of acquisition. In connection with the
Verto acquisition, Adelphia issued 2,561,024 shares of its Class A common stock
to the former owners of Verto and assumed approximately $35,000 of net
liabilities of Verto.
On March 31, 1999, Adelphia Business Solutions consummated purchase
agreements with subsidiaries of MediaOne of Colorado, Inc. ("MediaOne"), its
local partner in the Jacksonville, FL and Richmond, VA networks, whereby
MediaOne received approximately $81,520 in cash for MediaOne's ownership
interests in these networks. In addition, Adelphia Business Solutions will be
responsible for the payment of fiber lease liabilities due to MediaOne in the
amount of approximately $14,500 over the next ten years. As a result of the
transactions, Adelphia Business Solutions' ownership interest in each of these
networks increased to 100%.
On October 1, 1999, the partnership interests of Olympus held by Telesat
Cablevision, Inc., a subsidiary of FPL Group, Inc. were redeemed. The redemption
was made in exchange for noncash assets of Olympus of approximately $100,000. As
a result of this transaction, Adelphia's ownership in Olympus increased to 100%
and Adelphia began to consolidate Olympus into its financial statements
effective October 1, 1999.
On October 1, 1999, Adelphia acquired Century Communications Corp.,
("Century") through a merger whereby Century was merged with and into a wholly
owned subsidiary of Adelphia, Arahova Communications, Inc., ("Arahova") pursuant
to an agreement and plan of merger, dated as of March 5, 1999, and as amended on
July 12, 1999 and as further amended on July 29, 1999. In connection with the
closing of the Century acquisition, Adelphia issued approximately 47,800,000 new
shares of Adelphia Class A common stock and paid approximately $811,900 to the
stockholders of Century, and assumed approximately $1,700,000 of debt. This
transaction was approved by Century and Adelphia stockholders at their
respective stockholders' meetings on October 1, 1999. As of October 1, 1999,
Century had approximately 1,610,000 basic subscribers primarily in California,
Puerto Rico, and throughout the United States after giving effect to Century's
pending joint venture with AT&T, which closed on December 7, 1999. At the
effective time of the merger, Adelphia also purchased Citizens Cable Company's
50% interest in the Citizens/Century Cable Television Joint Venture, one of
Century's 50% owned joint ventures, for a purchase price of approximately
$131,900, comprised of approximately $27,700 in cash, approximately 1,850,000
shares of Adelphia Class A common stock and the assumption of indebtedness. This
joint venture serves approximately 92,300 basic subscribers in California and
was jointly owned by Century and Citizens Cable Company, a subsidiary of
Citizens Utilities Company.
On October 1, 1999, Adelphia acquired FrontierVision Partners, L.P.
("FrontierVision"). As of October 1, 1999, FrontierVision served approximately
710,000 basic subscribers primarily in Ohio, Kentucky, New England and Virginia.
In connection with the acquisition, Adelphia issued 7,000,000 shares of its
Class A common stock, assumed debt of approximately $1,150,000 and paid cash of
approximately $543,300.
On October 1, 1999, Adelphia acquired Harron Communications Corp.
("Harron"). As of October 1, 1999, Harron served approximately 296,000 basic
subscribers primarily in southeastern Pennsylvania, Michigan, Massachusetts and
New Hampshire and were purchased for an aggregate price of approximately
$1,211,704.
On December 7, 1999, subsidiaries of Arahova consummated a transaction
with AT&T to form a joint venture limited partnership in the Los Angeles, CA
area. Pursuant to this agreement, Arahova, Adelphia and AT&T contributed cable
systems that served approximately 800,000 basic subscribers. Arahova and
Adelphia hold a combined interest of 75% and AT&T holds a 25% interest in the
partnership. As part of this transaction, Arahova and AT&T exchanged cable
systems owned by Arahova in certain communities in northern California for
certain cable systems owned by AT&T in southern California, allowing each of
them to unify operations in existing service areas. AT&T exchanged its East San
Fernando Valley cable system serving approximately 103,500 basic subscribers for
Arahova's northern California cable systems (San Pablo, Benecia, Fairfield and
Rohnert Park, California), serving approximately 96,500 basic subscribers. No
gain or loss was recognized on this system swap due to the Company's application
of purchase accounting in connection with the Arahova merger.
In addition to the acquisitions mentioned above, for the year ended
December 31, 1999, Adelphia completed several other acquisitions. These
acquisitions served approximately 136,700 basic subscribers at the date of
acquisition primarily in Ohio, Virginia, Kentucky, Pennsylvania, California and
West Virginia and were purchased for an aggregate price of approximately
$539,200.
The approximate aggregate purchase price for the significant 1999
acquisitions was comprised of the following:
<TABLE>
<S> <C>
Cash, net of cash acquired $ 1,992,000
Assumed debt 4,530,000
Adelphia Class A common stock 3,337,000
-------------------
$ 9,859,000
===================
</TABLE>
The value assigned to the Adelphia Class A common stock was based on the
average closing price of Adelphia Class A common stock a few days before and
after the respective acquisitions were agreed to and announced.
The Company has made a preliminary allocation of the purchase price based
on estimated fair values. A final allocation of the purchase price will be made
upon receipt of final third party appraisals. The preliminary allocation was as
follows:
<TABLE>
<S> <C>
Property, plant and equipment $ 1,983,000
Intangible assets (primarily franchise) 10,473,000
Other (2,597,000)
-------------------
$ 9,859,000
===================
</TABLE>
The following unaudited financial information assumes that the
acquisitions that were consummated during the year ended December 31, 1999 had
occurred on April 1, 1997.
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
1998 1998 1999
---------------- -------------- --------------
<S> <C> <C> <C>
Revenues $ 1,875,023 $ 1,583,431 $ 2,486,645
Loss before extraordinary loss 522,659 369,721 351,858
Net loss 553,385 439,229 405,083
Basic and diluted net loss per weighted
average share of common stock 6.21 4.60 3.51
</TABLE>
Investment in Olympus Joint Venture Partnership
As described above, Adelphia's ownership in Olympus increased to 100%
effective October 1, 1999, at which time Adelphia began to consolidate Olympus
into its financial statements. Prior to October 1, 1999, Adelphia's investment
in the partnership comprised both limited and general partner interests. The
general partner interest represented a 50% voting interest in Olympus and was
being accounted for using the equity method. Under this method, Adelphia's
investment, initially recorded at the historical cost of contributed property,
was adjusted for subsequent capital contributions and its share of the losses of
the partnership as well as its share of the accretion requirements of the
partnership's interests. The limited partner interest represented a preferred
interest ("PLP interests") entitled to a 16.5% annual return. At March 31, 1998
and December 31, 1998, Adelphia owned $325,911 and $366,861 in Olympus PLP
interests, respectively.
The PLP interests were nonvoting, were senior to claims of certain other
partner interests, and provided for an annual priority return of 16.5%. Olympus
was not required to pay the entire 16.5% return currently and priority return on
PLP interests was recognized as income by Adelphia when received.
Correspondingly, equity in net loss of Olympus excludes accumulated unpaid
priority return (Note 2). After October 1, 1999, all such investments and
returns eliminate in the consolidation of Adelphia.
Subscriber Revenues
Subscriber revenues are recorded in the month the service is provided.
Property, Plant and Equipment
Property, plant and equipment, at cost, are comprised of the following:
<TABLE>
<CAPTION>
December 31,
1998 1999
-------------- --------------
<S> <C> <C>
Operating plant and equipment $ 1,317,467 $ 3,427,724
Telecommunications networks 59,764 139,248
Network monitoring 165,697 431,078
Real estate and improvements 81,934 194,983
Support equipment 30,533 92,438
Construction in progress 283,133 825,265
-------------- --------------
1,938,528 5,110,736
Accumulated depreciation (730,873) (1,138,407)
-------------- --------------
$ 1,207,655 $ 3,972,329
============== ==============
</TABLE>
Depreciation is computed on the straight-line method using estimated
useful lives of 5 to 12 years for operating plant and equipment and 3 to 20
years for support equipment and real estate. Additions to property, plant and
equipment are recorded at cost which includes amounts for material, applicable
labor and overhead, and interest. Depreciation expense amounted to $93,688,
$98,699 and $222,158 for the year ended March 31, 1998, the nine months ended
December 31, 1998 and the year ended December 31, 1999, respectively.
Capitalized interest amounted to $5,985, $11,285 and $25,135 for the year ended
March 31, 1998, the nine months ended December 31, 1998 and the year ended
December 31, 1999, respectively.
Intangible Assets
Intangible assets, at cost, net of accumulated amortization, are comprised
of the following:
<TABLE>
<CAPTION>
December 31,
1998 1999
------------ --------------
<S> <C> <C>
Purchased franchises $ 828,410 $ 9,480,123
Goodwill 119,012 2,390,050
Non-compete agreements 8,922 15,383
Purchased subscribers lists 72,815 210,317
------------ --------------
$ 1,029,159 $ 12,095,873
============ ==============
</TABLE>
A portion of the aggregate purchase price of systems acquired has been
allocated to purchased franchises, purchased subscriber lists, goodwill and
non-compete agreements. Purchased franchises and goodwill are amortized on the
straight-line method over 40 years. Purchased subscriber lists are amortized on
the straight-line method over periods which range from 5 to 10 years.
Non-compete agreements are amortized on the straight-line method over their
contractual lives which range from 4 to 12 years. Accumulated amortization of
intangible assets amounted to $249,618 and $615,772 at December 31, 1998 and
1999, respectively.
Cash and Cash Equivalents
Adelphia considers all highly liquid investments with original maturities
of three months or less to be cash equivalents. Interest income on liquid
investments was $13,383, $10,752 and $31,809 for the year ended March 31, 1998,
the nine months ended December 31, 1998 and the year ended December 31, 1999,
respectively. Book overdrafts of $7,855 and $35,000 existed at December 31, 1998
and 1999, respectively. These book overdrafts were reclassified as accrued
interest and other liabilities and accounts payable.
U.S. Government Securities - Pledged
U.S. Government Securities - Pledged consist of highly liquid investments
which will be used to pay the first six semi-annual interest payments of the
Adelphia Business Solutions 12 1/4% Senior Secured Notes. Such investments are
classified as held-to-maturity and the carrying value approximates market value.
Investments
The equity method of accounting is generally used to account for
investments which are greater than 20% but not more than 50% owned. Under this
method, Adelphia's initial investment is recorded at cost and subsequently
adjusted for the amount of its equity in the net income or losses of its
investees. Dividends or other distributions are recorded as a reduction of
Adelphia's investment. Investments accounted for using the equity method
generally reflect Adelphia's equity in the investee's underlying assets.
Investments in entities in which Adelphia's ownership is 20% or less are
generally accounted for using the cost method. Under the cost method, Adelphia's
initial investment is recorded at cost and subsequently adjusted for the excess,
if any, of dividends or other distributions received over its share of
cumulative earnings. Dividends received in excess of earnings subsequent to the
date the investment was made are recorded as reductions of the cost of the
investment.
<PAGE>
Adelphia's nonconsolidated investments are as follows:
<TABLE>
<CAPTION>
Investments accounted for using the equity method: December 31,
Gross investment: 1998 1999
--------------- --------------
<S> <C> <C>
Adelphia Business Solutions' joint ventures $ 138,614 $ 61,400
Mobile communications 18,249 19,865
Programming ventures 1,469 10,627
Other 2,308 1,430
--------------- --------------
Total 160,640 93,322
--------------- --------------
Investments accounted for using the cost method:
Niagara Frontier Hockey, L.P. 44,897 47,533
Benbow PCS Ventures, Inc. 17,170 17,192
Convertible preferred stock - 87,433
Other 6,787 12,972
--------------- --------------
Total 68,854 165,130
--------------- --------------
Investments accounted for as available-for-sale securities:
Common stock warrants -- 49,890
--------------- --------------
Total investments before cumulative equity in net losses 229,494 308,342
Cumulative equity in net losses (32,601) (27,468)
--------------- --------------
Total investments $ 196,893 $ 280,874
=============== ==============
</TABLE>
As a result of the acquisition of Arahova, Adelphia obtained approximately
113,983 shares of United International Holdings, Inc. ("UIH") Series B
convertible preferred stock. Each share of this stock is convertible into
approximately 21 shares of UIH Class A common stock, at a conversion price of
$10.625 per share. This equity instrument was recorded at its fair value of
$87,433 on October 1, 1999 in connection with purchase accounting.
As a result of a contract between Arahova and At Home Corporation
("@Home") to provide @Home high speed internet access on certain systems,
Adelphia has received a warrant contract to purchase up to 5,260,000 shares of
@Home Series A common stock at $5.25 per share. Deferred revenue is recorded for
the fair value of the warrants when earned with corresponding revenue recognized
over the remaining life of the contract, which expires in May 2004. The
investment in @Home warrants is classified as an available-for-sale security.
During 1999, Adelphia recognized revenue of $1,500 related to these warrants.
Adelphia's investment in @Home warrants of $34,366 at December 31, 1999 includes
$2,354 of unrealized loss.
Adelphia received warrants to purchase 325,000 shares of common stock in
connection with the purchase of digital converters. These warrants are recorded
at fair value as a reduction of the cost of such converters when earned. This
investment is classified as an available-for-sale security. Adelphia has 18
months to exercise these warrants once they are earned. Approximately 108,000 of
these warrants must be exercised by June 30, 2000 or they expire. As of December
31, 1999, Adelphia's investment in these warrants totaled $15,524 and includes
an unrealized gain of $7,830.
Certain members of the Rigas family have entered into an agreement to
acquire all the voting interests of Niagara Frontier Hockey, L.P. ("NFHLP").
Closing of the agreement is subject to third party approvals. Adelphia has
capital funding notes of NFHLP of $44,897 and $47,533 as of December 31, 1998
and 1999, respectively. The capital funding notes are convertible into
non-voting preferred equity of NFHLP at the option of Adelphia. These amounts
represent advances to NFHLP plus accrued return of 11.5% to 14.0%. The return on
these capital funding notes amounted to approximately $5,100, $4,400 and $3,800
for the year ended March 31, 1998, the nine months ended December 31, 1998 and
the year ended December 31, 1999, respectively. Adelphia advanced approximately
$7,500 and $14,700, respectively, during the nine months ended December 31, 1998
to fund working capital requirements of NFHLP. These amounts could be repaid by
NFHLP in the future or converted into programming rights to air future Buffalo
Sabres hockey games. NFHLP continues to generate net losses and working capital
deficiencies and is attempting to re-negotiate the terms of certain of its
operating and financial agreements. The ability of NFHLP to re-negotiate the
terms of certain operating and financial agreements will impact the ability of
NFHLP to generate positive operating cash flow in the future. Adelphia is unable
to predict the ability of NFHLP to successfully re-negotiate these agreements on
terms that are favorable to NFHLP. Management believes that all amounts advanced
to NFHLP and the related accrued return are recoverable.
On September 30, 1999, the FCC granted Adelphia Business Solutions'
request to transfer, and Adelphia Business Solutions transferred 195 31-Ghz
licenses from Baker Creek Communications (an equity method investment) to a
wholly owned subsidiary of Adelphia Business Solutions. At December 31, 1999,
$44,605 related to the licenses are included in prepaid expenses and other
assets - net on the Consolidated Balance Sheet at December 31, 1999.
Subscriber Receivables
An allowance for doubtful accounts of $2,853 and $17,796 is recorded as a
reduction of subscriber receivables at December 31, 1998 and 1999, respectively.
Amortization of Other Assets and Debt Discounts
Deferred debt financing costs, included in prepaid expenses and other
assets, and debt discounts, a reduction of the carrying amount of the debt, are
amortized over the term of the related debt. The unamortized amounts of deferred
debt financing costs included in prepaid expenses and other assets were $47,542
and $117,838 at December 31, 1998 and 1999, respectively. The aggregate amount
by which fair value assigned in purchase accounting to debt and interest rate
swaps exceeded or was less than carrying value at the acquisition date is being
amortized over the respective remaining 1 to 18 year lives of the underlying
debt obligations.
Franchise Expense
The typical term of Adelphia's franchise agreements upon renewal is 10
years. Franchise fees range from 3% to 5% of certain subscriber revenues and are
expensed currently.
Basic and Diluted Net Loss Per Weighted Average Share of Common Stock
Basic net loss per weighted average share of common stock is computed
based on the weighted average number of common shares outstanding after giving
effect to dividend requirements on Adelphia's preferred stock. Diluted net loss
per weighted average common share is equal to basic net loss per weighted
average common share because Adelphia's convertible preferred stock had an
antidilutive effect for the periods presented; however, the convertible
preferred stock could have a dilutive effect on earnings per share in future
periods.
Asset Impairments
Adelphia periodically reviews the carrying value of its long-lived assets
for impairment whenever events or changes in circumstances indicate that the
carrying value of assets may not be recoverable. Measurement of any impairment
would include a comparison of estimated future operating cash flows anticipated
to be generated during the remaining life of the assets with their net carrying
value. An impairment loss would be recognized as the amount by which the
carrying value of the assets exceeds their fair value.
Noncash Financing and Investing Activities
Capital leases entered into during the year ended March 31, 1998, the nine
months ended December 31, 1998 and the year ended December 31, 1999 totaled
$2,842, $15,522 and $10,034, respectively, for Adelphia, excluding Adelphia
Business Solutions. Adelphia Business Solutions entered into capital leases
totaling $24,500, $1,156 and $5,772, respectively, during the year ended March
31, 1998, the nine months ended December 31, 1998 and the year ended December
31, 1999. Reference is made to Notes 1 and 6 for descriptions of additional
noncash financing and investing activities.
Interest Expense - Net
Interest expense - net includes interest income of $23,949, $20,952 and
$97,797 for the year ended March 31, 1998, the nine months ended December 31,
1998 and the year ended December 31, 1999, respectively. Interest income
includes interest income from affiliates on long-term loans and for
reimbursement of interest expense on revolving credit agreements, related to
short term borrowings by such affiliates (Note 11).
Interest Rate Swaps, Caps and Collar Agreements
Net settlement amounts under interest rate swaps, caps and collar
agreements are recorded as adjustments to interest expense during the period
incurred (Note 3).
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Comprehensive Income (Loss)
Comprehensive income is required to be presented when a company has items
of other comprehensive income during the periods presented. In 1999, other
comprehensive income consisted of net unrealized gains on available-for-sale
securities. Items of other comprehensive income are excluded from net loss and
are included in arriving at comprehensive income (loss).
Recent Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. Management of the Company has not completed its evaluation of the
impact of SFAS No. 133 on the Company's consolidated financial statements. In
July 1999, SFAS No. 137 was issued to delay the effective date of SFAS No. 133
to fiscal quarters of fiscal years beginning after June 15, 2000.
At its January 2000 meeting, the Emerging Issues Task Force ("EITF")
reached consensus with respect to issues related to EITF 98-3, "Determining
Whether a Transaction is an Exchange of Similar Productive Assets or a Business
Combination." As a result of this consensus, Adelphia will be required to
account for cable system swaps as a purchase and a disposition of a business at
fair value. Management of the Company will monitor the impact of EITF 98-3 as it
relates to future transactions of the Company.
Reclassifications
Certain March 31, 1998 and December 31, 1998 amounts have been
reclassified to conform with the December 31, 1999 presentation.
2. Related Party Investments and Receivables:
Related party receivables--net represent advances to managed partnerships
(Note 11), John J. Rigas and certain members of his immediate family
(collectively, the "Rigas family"), including entities they own or control (the
"Managed Partnerships"). No related party advances are collateralized.
<PAGE>
As described in Note 1, effective October 1, 1999, Adelphia's ownership
interest in Olympus increased to 100%. The information below is as of and for
the year ended December 31, 1998, when Adelphia accounted for Olympus under the
equity method. Investment in and amounts due from Olympus is comprised of the
following:
<TABLE>
<CAPTION>
December 31,
1998
---------------
<S> <C>
Cumulative equity in loss over investment in Olympus (102,888)
Amounts due from Olympus 294,296
---------------
$ 191,408
===============
</TABLE>
The major components of the financial position of Olympus as of December
31, 1998 and its results of operations for the years ended December 31, 1997 and
1998 were as follows:
<TABLE>
<CAPTION>
December 31,
1998
---------------
Balance Sheet Data:
<S> <C>
Property, plant and equipment - net $ 355,470
Total assets 1,011,999
Subsidiary debt 519,443
Parent debt 200,000
Total liabilities 1,147,946
Limited partners' interests 570,298
General partners' equity (deficiency) (706,245)
</TABLE>
<TABLE>
<CAPTION>
December 31,
1997 1998
--------------- ---------------
Statement of Operations Data:
<S> <C> <C>
Revenues $ 176,363 $ 215,642
Operating income 34,392 38,944
Net loss (19,802) (16,074)
Net loss of general and limited partners
after priority return (95,695) (105,530)
</TABLE>
On October 6, 1993, Adelphia purchased the preferred Class B Limited
Partnership Interest in SHHH, L.P., a managed partnership, for a price of
$18,338 from Robin Media Group. The Class B Limited Partnership Interest had a
preferred return annually which was payable on a current basis at the option of
SHHH, L.P., and was senior in priority to the partnership interests of the Rigas
family and TCI. Preferred return on the Class B Limited Partner Interest in
SHHH, L.P. totaled $3,750 and $2,017 and is included in revenues for the year
ended March 31, 1998 and the nine months ended December 31, 1998, respectively.
On September 30, 1998, the Class B Limited Partner Interest was redeemed (Note
1).
3. Debt:
<TABLE>
<CAPTION>
Subsidiary Debt
December 31,
1998 1999
-------------- --------------
<S> <C> <C>
Notes to banks and institutions $ 1,200,970 $ 3,088,477
Subsidiary public debt 470,784 3,337,376
Other debt 45,486 87,960
-------------- --------------
Total subsidiary debt $ 1,717,240 $ 6,513,813
============== ==============
</TABLE>
<PAGE>
Notes to Banks and Institutions
The amount of borrowings available to Adelphia under its revolving credit
agreements is generally based upon the subsidiaries achieving certain levels of
operating performance. Adelphia had an aggregate of $1,456,620 in unused credit
lines with banks, part of which is subject to achieving certain levels of
operating performance, at December 31, 1999 which expire through December 31,
2007. Adelphia pays commitment fees of up to 0.5% of unused principal.
Borrowings under most of these credit arrangements of subsidiaries are
collateralized by a pledge of the stock in their respective subsidiaries, and,
in some cases, by other assets. These agreements limit, among other things,
additional borrowings, investments, transactions with affiliates and other
subsidiaries, and the payment of dividends and fees by the subsidiaries. The
agreements also require maintenance of certain financial ratios by the
subsidiaries. Several of the subsidiaries' agreements, along with the notes of
the parent company, contain cross default provisions. At December 31, 1999,
approximately $1,262,472 of the net assets of subsidiaries would be permitted to
be transferred to the parent company in the form of dividends, priority return
and loans without the prior approval of the lenders based upon the results of
operations of such subsidiaries for the quarter ended December 31, 1999. The
subsidiaries are permitted to pay management fees to the parent company or other
subsidiaries. Such fees are limited to a percentage of the subsidiaries'
revenues.
Certain subsidiaries of Adelphia are co-borrowers with Managed
Partnerships under credit facilities for borrowings of up to $1,025,000. Each of
the co-borrowers is liable for all borrowings under the credit agreements,
although the lenders have no recourse against Adelphia other than against
Adelphia's interest in such subsidiaries.
Notes to banks and institutions mature at various dates through 2007. Bank
debt interest rates are based upon one or more of the following rates at the
option of Adelphia: prime rate plus 0% to 1.5%; certificate of deposit rate plus
1.25% to 2.75%; or LIBOR plus .625% to 2.5%. Total bank debt with interest rates
under these options was approximately $1,173,220 and $3,073,102 at December 31,
1998 and 1999, respectively. At December 31, 1998 and 1999, the weighted average
interest rate on notes payable to banks and institutions was 7.89% and 7.72%,
respectively. At December 31, 1998 and 1999, the rates on 35.9% and 26.2%,
respectively, of Adelphia's notes payable to banks and institutions were fixed
for at least one year through the terms of the notes or interest rate swap, cap
or collar agreements.
During the nine months ended December 31, 1998 and the year ended December
31, 1999, Adelphia redeemed $137,200 and $37,815 aggregate principal amount of
subsidiary notes to banks and institutions. As a result of these transactions,
Adelphia recognized an extraordinary loss on early retirement of debt of $1,970
and $2,441, respectively.
Subsidiary Public Debt
Interest on subsidiary public debt is due semi-annually. The subsidiary
public debt is effectively subordinated to all liabilities of subsidiary notes
to banks and institutions and is senior to the parent debt. The subsidiary
public debt agreements contain restrictions on, among other things, the
incurrence of indebtedness, mergers and sale of assets, certain restricted
payments, investments in affiliates and certain other affiliate transactions.
The agreements also require maintenance of certain financial ratios.
<TABLE>
<CAPTION>
The following table summarizes the subsidiary public debt:
Outstanding as of
Interest Issue Amount December 31, December 31, Maturity First Call First Call
Subsidiary Rate Date Issued 1998 1999 (a) Date Date Rate
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ABIZ 13.000% 04/15/96 329,000 $ 220,784 $ 253,860 04/15/03 04/15/01 106.500%
ABIZ 12.250% 08/27/97 250,000 250,000 250,000 09/01/04 09/01/01 106.125%
ABIZ 12.000% 03/02/99 300,000 -- 300,000 11/01/07 11/01/03 106.000%
Olympus 10.625% 11/12/96 200,000 -- 203,537 11/15/06 11/15/01 105.313%
FrontierVision 11.000% 10/02/96 200,000 -- 212,541 10/15/06 10/15/01 105.500%
FrontierVision 11.875% 09/16/97 237,650 -- 205,979 09/15/07 09/15/01 107.917%
FrontierVision 11.875% 12/02/98 91,298 -- 78,522 09/15/07 09/15/01 107.917%
Arahova 9.500% 08/14/92 150,000 -- 148,773 08/15/00 N/A N/A
Arahova 9.750% 02/15/92 200,000 -- 201,172 02/15/02 N/A N/A
Arahova Zero coupon 04/01/93 444,000 -- 318,234 03/15/03 N/A N/A
Arahova 9.500% 03/06/95 250,000 -- 250,852 03/01/05 N/A N/A
Arahova 8.875% 01/17/97 250,000 -- 242,542 01/15/07 N/A N/A
Arahova 8.750% 09/23/97 225,000 -- 216,105 10/01/07 N/A N/A
Arahova 8.375% 11/07/97 100,000 -- 94,048 11/15/17 N/A N/A
Arahova 8.375% 12/04/97 100,000 -- 94,106 12/15/07 N/A N/A
Arahova Discount
notes 01/08/98 605,000 -- 267,105 01/15/08 N/A N/A
--------------- -------------
$ 470,784 $ 3,337,376
=============== =============
<FN>
(a) Amounts outstanding include discounts or premiums recorded as a result of
purchase accounting, as applicable.
</FN>
</TABLE>
<PAGE>
Other Subsidiary Debt
As of December 31, 1998 and 1999, other debt consists primarily of capital
leases incurred in connection with the acquisition of, and are collateralized
by, certain equipment. The interest rate on such debt is based on the Federal
Funds rate plus 1.4% or the U.S. Treasury rate plus 2.8%.
Parent Debt
Interest on the Parent Debt is due semi-annually. The Parent Debt is
effectively subordinated to all liabilities of the subsidiaries and the
agreements contain restrictions on, among other things, the incurrence of
indebtedness, mergers and sale of assets, certain restricted payments by
Adelphia, investments in affiliates and certain other affiliate transactions.
The agreements further require that Adelphia maintain a ratio of debt to
annualized operating cash flow not greater than 8.75 to 1.00, based on the
latest fiscal quarter. Net proceeds from the issuance of notes during the nine
months ended December 31, 1998 and the year ended December 31, 1999 were used to
reduce amounts outstanding on Adelphia's subsidiaries' notes payable to banks
and to purchase, redeem or otherwise retire all or a portion of the 9 1/2%
Senior Notes Paid-In-Kind due 2004 and 11 7/8% Senior Debentures due 2004.
<TABLE>
<CAPTION>
Outstanding as of
Interest Issue Amount December 31, December 31, Maturity First Call First Call
Rate Date Issued 1998 1999 Date Date Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 1/4% 07/28/93 $ 110,000 $ 99,653 $ 99,872 07/15/00 Non-call N/A
9 1/4% 09/25/97 325,000 325,000 325,000 10/01/02 Non-call N/A
9 1/2% (a) 02/15/94 150,000 186,347 31,847 02/15/04 2/15/99 103.56%
10 1/2% 07/07/97 150,000 150,000 150,000 07/15/04 Non-call N/A
11 7/8% (b) 09/10/92 125,000 124,613 -- 09/15/04 9/15/99 104.50%
9 7/8% 03/11/93 130,000 128,531 128,711 03/01/05 Non-call N/A
9 7/8% 02/26/97 350,000 347,586 347,791 03/01/07 Non-call N/A
8 3/8% 01/21/98 150,000 149,197 149,259 02/01/08 Non-call N/A
8 3/8% 11/12/98 150,000 150,000 150,000 02/01/08 Non-call N/A
8 1/8% 07/02/98 150,000 149,285 149,419 07/15/03 Non-call N/A
7 1/2% 01/13/99 100,000 -- 100,000 01/15/04 Non-call N/A
7 3/4% 01/13/99 300,000 -- 300,000 01/15/09 Non-call N/A
7 7/8% 04/28/99 350,000 -- 350,000 05/01/09 Non-call N/A
9 3/8% 11/16/99 500,000 -- 496,020 11/15/09 Non-call N/A
--------------- ---------------
$ 1,810,212 $ 2,777,919
=============== ===============
<FN>
(a) These Senior Notes are Pay-in-Kind with respect to interest payments at the
option of Adelphia. On February 15, 1999, Adelphia redeemed $154,500
aggregate principal amount of notes at 103.56% of principal. As a result,
Adelphia recognized an extraordinary loss on early retirement of debt of
$6,676.
(b) On December 15, 1999, Adelphia redeemed $125,000 aggregate principal amount
of 11 7/8% Senior Debentures at 104.5% of principal. As a result, Adelphia
recognized an extraordinary loss on early retirement of debt of $7,302.
</FN>
</TABLE>
<PAGE>
Maturities of Debt
The following table sets forth the mandatory reductions in principal under
all debt agreements for each of the next five years based on amounts outstanding
at December 31, 1999:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C> <C>
2000 $ 390,746
2001 285,401
2002 886,571
2003 1,341,190
2004 919,147
</TABLE>
Adelphia intends to fund its requirements for maturities of debt through
borrowings under new and existing credit arrangements and internally generated
funds. Changing conditions in the financial markets may have an impact on how
Adelphia will refinance its debt in the future.
Interest Rate Swaps, Caps and Collar Agreements
Adelphia has entered into interest rate swaps, caps and collar agreements
with banks, Olympus (prior to October 1, 1999) and Managed Partnerships (Note
11) to reduce the impact of changes in interest rates on its debt. Several of
Adelphia's credit arrangements include provisions which require interest rate
protection for a portion of its debt. Adelphia enters into pay-fixed agreements
to effectively convert a portion of its variable-rate debt to fixed-rate debt to
reduce the risk of incurring higher interest costs due to rising interest rates.
Adelphia enters into receive-fixed agreements to effectively convert a portion
of its fixed-rate debt to variable-rate debt which is indexed to LIBOR to reduce
the risk of incurring higher interest costs in periods of falling interest
rates. Interest rate cap and collar agreements are used to reduce the impact of
increases in interest rates on variable-rate debt. Adelphia is exposed to market
risk in the event of nonperformance by the banks or by the Managed Partnerships.
Adelphia does not expect any such nonperformance.
The following table summarizes the notional amounts outstanding and
weighted average interest rate data, based on variable rates in effect at
December 31, 1998 and 1999, for these swaps, caps and collar agreements, which
expire through 2008.
<TABLE>
<CAPTION>
December 31,
Pay Fixed Swaps: 1998 1999
----------------------------
<S> <C> <C>
Notional amount $ 650,000 $ 115,000
Average receive rate 5.33% 6.24%
Average pay rate 6.55% 6.68%
Receive Fixed Swaps:
Notional amount $ 45,000 $ 80,000
Average receive rate 5.98% 6.35%
Average pay rate 5.32% 5.86%
Interest Rate Caps:
Notional amount $ 140,000 $ 400,000
Average cap rate 7.82% 6.88%
Interest Rate Collars:
Notional amount $ -- $ 200,000
Average cap and floor rate -- 6.13%
Maximum cap rate -- 6.64%
Maximum floor rate -- 4.80%
</TABLE>
<PAGE>
On September 17, 1999, a subsidiary of Adelphia terminated a $400,000
interest rate swap agreement with a financial institution, which resulted in a
$15,200 gain that has been deferred and included in accrued interest and other
liabilities in the accompanying 1999 consolidated balance sheet. The
amortization of the deferred gain, which amounted to $558 in 1999, is being
recognized as an adjustment to interest expense over the term of the related
debt.
4. Redeemable Preferred Stock:
12 7/8% Adelphia Business Solutions Redeemable Exchangeable Preferred Stock
On October 9, 1997, Adelphia Business Solutions issued $200,000 aggregate
liquidation preference of 12 7/8% Senior Exchangeable Redeemable Preferred Stock
due October 15, 2007. Dividends are payable quarterly commencing January 15,
1998 at 12 7/8% of the liquidation preference of outstanding preferred stock.
Through October 15, 2002, dividends are payable in cash or additional shares of
preferred stock at Adelphia Business Solutions' option. Subsequent to October
15, 2002, dividends are payable in cash. The preferred stock ranks junior in
right of payment to all indebtedness of Adelphia Business Solutions, its
Subsidiaries and Joint Ventures. On or before October 15, 2000, and subject to
certain restrictions, Adelphia Business Solutions may redeem, at it option, up
to 35% of the initial aggregate liquidation preference of the preferred stock
originally issued with the net cash proceeds of one or more Qualified Equity
Offerings (as defined in the Certificate of Designation) at a redemption price
equal to 112.875% of the liquidation preference per share of the preferred
stock, plus, without duplication, accumulated and unpaid dividends to the date
of redemption; provided that, after any such redemption, there are remaining
outstanding shares of preferred stock having an aggregate liquidation preference
of at least 65% of the initial aggregate liquidation preference of the preferred
stock originally issued. On or after October 15, 2002, Adelphia Business
Solutions may redeem, at its option, all or a portion of the preferred stock at
106.438% of the liquidation preference thereof declining to 100% of the
liquidation preference in 2005. Adelphia Business Solutions is required to
redeem all of the shares of preferred stock outstanding on October 15, 2007 at a
redemption price equal to 100% of the liquidation preference thereof, plus,
without duplication, accumulated and unpaid dividends to the date of redemption.
Preferred stock contains restrictions and covenants similar to subsidiary public
debt.
Adelphia Business Solutions may, at its option, on any dividend payment
date, exchange in whole, but not in part, the then outstanding shares of
preferred stock for 12 7/8% Senior Subordinated Debentures due October 15, 2007
which have provisions consistent with the provisions of the preferred stock.
Adelphia Business Solutions may satisfy, and has to date satisfied, the dividend
requirements on this preferred stock by issuing additional shares.
13% Redeemable Exchangeable Preferred Stock
On July 7, 1997, Adelphia issued $150,000 aggregate liquidation preference
of 13% Cumulative Exchangeable Preferred Stock due July 15, 2009. Dividends are
payable semi-annually commencing January 15, 1998 at 13% of the liquidation
preference of outstanding preferred stock. Dividends are payable in cash with
any accumulated unpaid dividends bearing interest at 13% per annum. The
preferred stock ranks junior in right of payment to all indebtedness of
Adelphia. On or before July 15, 2000, Adelphia may redeem, at its option, up to
33% of the initial aggregate liquidation preference of the preferred stock
originally issued with the net cash proceeds of one or more common equity
offerings at a redemption price equal to 113% of the liquidation preference per
share of the preferred stock, plus, without duplication, accumulated and unpaid
dividends to the date of redemption; provided that, after any such redemption,
there are remaining outstanding shares of preferred stock having an aggregate
liquidation preference of at least 67% of the initial aggregate liquidation
preference of the preferred stock originally issued. On or after July 15, 2002,
Adelphia may redeem, at its option, all or a portion of the preferred stock at
106.500% of the liquidation preference thereof declining to 100% of the
liquidation preference in 2008. Adelphia is required to redeem all of the shares
of preferred stock outstanding on July 15, 2009 at a redemption price equal to
100% of the liquidation preference thereof, plus, without duplication,
accumulated and unpaid dividends to the date of redemption. The preferred stock
contains restrictions and covenants similar to Adelphia's parent debt.
Adelphia may, at its option, on any dividend payment date, exchange in
whole or in part (subject to certain restrictions), the then outstanding shares
of preferred stock for 13% Senior Subordinated Exchange Debentures due July 15,
2009 which have provisions consistent with the provisions of the preferred
stock. Adelphia paid cash dividends on this preferred stock of $10,183, $9,750
and $19,500 during the year ended March 31, 1998, the nine months ended December
31, 1998 and the year ended December 31, 1999, respectively.
No mandatory redemptions of redeemable preferred stock of Adelphia are
required for the next five years as of December 31, 1999.
5. Commitments and Contingencies:
Adelphia rents office and studio space, tower sites, and space on utility
poles under leases with terms which are generally less than one year or under
agreements that are generally cancelable on short notice. Total rental expense
under all operating leases aggregated $7,420, $8,054 and $27,713 for the year
ended March 31, 1998, the nine months ended December 31, 1998 and the year ended
December 31, 1999, respectively.
In connection with certain obligations under franchise agreements,
Adelphia obtains surety bonds guaranteeing performance to municipalities and
public utilities. Payment is required only in the event of nonperformance.
Management believes Adelphia has fulfilled all of its obligations such that no
payments under surety bonds have been required.
As of December 31, 1999, Adelphia has purchase commitments for certain
digital convertors aggregating $105,000.
Adelphia Business Solutions has entered into a series of agreements with
several local and long-haul fiber optic network providers that will allow
Adelphia Business Solutions to accelerate its national expansion. These
agreements, totaling approximately $288,867, provide Adelphia Business Solutions
with ownership or an IRU to over 25,000 route miles of local and long-haul fiber
optic cable. Through December 31, 1999, Adelphia Business Solutions has paid
$108,903 of the total due under the agreements, which was included in property,
plant and equipment. Management of Adelphia Business Solutions believes this
will allow it to expand its business strategy to include on-net provisioning of
regional, local and long distance, internet and data communications and to
cost-effectively further interconnect most of its 53 existing markets and to
enter and interconnect approximately 150 new markets by the end of 2001.
The estimated obligations under these arrangements as of December 31, 1999
are approximately:
<TABLE>
<CAPTION>
Period ending December 31,
<S> <C> <C>
2000 $ 149,911
2001 16,039
2002 453
2003 453
2004 453
Thereafter 12,655
</TABLE>
The cable television industry and Adelphia are subject to extensive
regulation at the federal, state and local levels. Pursuant to the 1992 Cable
Act, which significantly expanded the scope of regulation of certain subscriber
rates and a number of other matters in the cable industry the FCC adopted rate
regulations that establish, on a system-by-system basis, maximum allowable rates
for (i) basic and cable programming services (other than programming offered on
a per-channel or per-program basis), based upon a benchmark methodology, or, in
the alternative, a cost of service showing, and (ii) associated equipment and
installation services based upon cost plus a reasonable profit. Under the FCC
rules, franchising authorities are authorized to regulate rates for basic
services and associated equipment and installation services, and the FCC will
regulate rates for regulated cable programming services in response to
complaints filed with the agency. The original rate regulations became effective
on September 1, 1993. Several amendments to the rate regulations have
subsequently been added.
The FCC has adopted regulations implementing all of the requirements of
the 1992 Cable Act. The FCC is also likely to continue to modify, clarify or
refine the rate regulations. The Telecommunications Act of 1996 (the "1996 Act")
deregulated the rates for cable programming services on March 31, 1999. Adelphia
cannot predict the effect or outcome of the future rulemaking proceedings,
changes to the rate regulations, or litigation.
In February 2000, the Company settled all disputes and claims arising out
of a summons and complaint filed in the United States District Court for the
Northern District of New York, Case Number 99-CV-268, against the Company by
Hyperion Solutions Corporation ("Solutions"), which is described in the
complaint as a company in the business of developing, marketing and supporting
comprehensive computer software tools, executive information systems and
applications that companies use to improve their business performance. The
complaint alleged, among other matters, that the Company's use of the name
"Hyperion" in its business infringed upon various trademarks and service marks
of Solutions in violation of federal trademark laws and violated various New
York business practices, advertising and business reputation laws. Management of
the Company believes that the Company had meritorious defenses to the complaint
and has vigorously defended this lawsuit including filing a counterclaim against
Solutions. As part of the settlement, Solutions' complaint and the Company's
counterclaim were dismissed with prejudice and both the Company and Solutions
entered into mutual releases regarding the complaint and counterclaim.
Management believes that this matter will not have a material adverse effect
upon the Company.
On or about March 10, 1999, Robert Lowinger, on behalf of himself and all
others similarly situated (the "Plaintiff") commenced an action by filing a
Class Action Complaint (the "Complaint") in the Superior Court of Connecticut,
Judicial District of Stamford/Norwalk against Century, all of its directors, and
Adelphia Communications Corporation ("Adelphia"). The Plaintiff, claiming that
he owns shares of Class A Common Stock of Century, alleged that in connection
with the proposed merger of Century with Adelphia, holders of Class B Common
Stock of Century (which has superior voting rights to the Class A Common Stock
of Century) will receive consideration for their shares that exceeds by $4.00
per share the consideration to be paid to Century's Class A shareholders
resulting in the Century's Class B shareholders receiving approximately $170,000
more than if they held the equivalent number of the Century's Class A shares.
The Plaintiff claimed that the individual defendants breached their fiduciary
duties of loyalty, good faith, and due care to Century's Class A shareholders by
approving the higher payment to Century's Class B shareholders and that Century
and Adelphia aided and abetted these alleged breaches of fiduciary duty. The
Plaintiff seeks certification of a class of Century's Class A shareholders and
seeks recovery on behalf of himself and the class of unspecified damages,
profits, and special benefits alleged to have been wrongfully obtained by the
defendants, as well as all costs, expenses and attorney's fees. On October 21,
1999, Adelphia and Century filed motions to strike the Complaint, and several of
the individual defendants moved to dismiss all counts in the Complaint against
them for lack of personal jurisdiction over each of them. On January 3, 2000,
the court dismissed all counts in the Complaint as to two of the individual
defendants. On January 13, 2000, the court granted defendants' motions to strike
and dismissed Plaintiff's complaint in its entirety for failure to state a claim
upon which relief can be granted. The court entered judgment on February 16,
2000. To the Company's knowledge the Plaintiff has not filed an appeal in this
action within the time provided by local court rules for the filing of an
appeal.
On May 26, 1999, the Company announced that it had agreed to swap certain
cable systems with Comcast Corporation ("Comcast") and Jones Intercable, Inc.
("Jones") in a geographic rationalization of the companies' respective markets.
Adelphia will add approximately 440,000 subscribers in the Los Angeles, CA area
and the West Palm/Fort Pierce, FL area. In exchange, Comcast and Jones will
receive systems currently owned or managed serving approximately 464,000
subscribers in suburban Philadelphia, PA, Ocean County, NJ, Ft. Myers, FL,
Michigan, New Mexico and Indiana. All systems involved in the transactions will
be valued by agreement between the parties or, following a failure to reach
agreement, by independent appraisals, with any difference in relative value to
be funded with cash or additional cable systems. The system swaps are subject to
customary closing conditions and regulatory approvals and are expected to close
by mid-2000.
In December 1999, the Company entered into definitive agreements under
which Cablevision Systems Corporation will sell its cable systems in the greater
Cleveland metropolitan area to Adelphia for approximately $1,530,000 in cash and
securities. As of December 31, 1999, these systems served approximately 307,350
basic subscribers. The transaction is subject to customary closing conditions
and regulatory approval and is expected to close by mid-2000.
Adelphia expects to close its October 1, 1999 direct placement of
2,500,000 shares of Adelphia Class B common stock with Highland Holdings, a
general partnership controlled by the Rigas family, by mid-2000. The offering
price is $55 per share, plus an interest factor.
Adelphia and certain subsidiaries are defendants in several putative
subscriber class action suits in state courts in Vermont, Pennsylvania and
Mississippi initiated during 1999. The suits all challenge the propriety of late
fees charged by the subsidiaries to customers who fail to pay for services in a
timely manner. The suits seek injunctive relief and various formulations of
damages under various claimed causes of action under various bodies of state
law. These actions are in various stages of defense and, in one case, the
Company was required to refund the late fees, however, Adelphia has appealed
this decision. All of these actions are being defended vigorously. The outcome
of these matters cannot be predicted at this time.
During July 1999, Adelphia Business Solutions purchased the naming rights
to the NFL Football Tennessee Titans stadium in Nashville, Tennessee. The term
of the naming rights contract is for 15 years and requires Adelphia Business
Solutions to pay $2,000 per year.
There are no other material pending legal proceedings, other than routine
litigation incidental to the business, to which Adelphia is a part of or which
any of its property is subject.
6. Convertible Preferred Stock, Common Stock and Other Stockholders' Equity
(Deficiency):
Series C Convertible Preferred Stock
On July 7, 1997, Adelphia issued 100,000 shares of 8 1/8% Series C
Cumulative Convertible Preferred Stock with a par value of $.01 per share and an
aggregate liquidation preference of $100,000 of which $80,000 was sold to a
Rigas family affiliate and the remainder was sold to Telesat. The preferred
stock accrues dividends at the rate of 8 1/8% of the liquidation preference per
annum, and is convertible at $8.48 per share into an aggregate of 11,792,450
shares of Class A common stock of Adelphia. The preferred stock is redeemable at
the option of Adelphia on or after August 1, 2000 at 104% of the liquidation
preference declining to 100% of the liquidation preference in 2002. Adelphia
paid cash dividends on this preferred stock of $4,605, $6,093 and $6,500 during
the year ended March 31, 1998, the nine months ended December 31, 1998 and the
year ended December 31, 1999, respectively. On January 29, 1999, Adelphia
purchased from Telesat the 20,000 shares of Series C cumulative convertible
preferred stock.
Series D Convertible Preferred Stock
On April 30, 1999, and, in a related transaction on May 14, 1999, Adelphia
sold an aggregate 2,875,000 shares of 5 1/2% Series D convertible preferred
stock with a liquidation preference of $200 per share. The preferred stock
accrues dividends at $11 per share annually and is convertible at $81.45 per
share into an aggregate of 7,059,546 shares of Class A common stock of Adelphia.
The preferred stock is redeemable at the option of Adelphia on or after May 1,
2002 at 103% of the liquidation preference. Net proceeds from the convertible
preferred stock offering were approximately $557,000 after deducting underwriter
discounts and commissions and offering expenses. Adelphia used the net proceeds
to repay borrowings under subsidiary credit agreements, a portion of which the
Company reborrowed to fund the acquisitions which closed on October 1, 1999.
Adelphia Common Stock Issued
On June 20, 1997, Adelphia issued 3,571,428 shares of Class A common stock
in connection with an acquisition (Note 1).
On March 6, 1998, Adelphia issued 341,220 shares of Class A common stock
in connection with exercising its option to purchase the remaining 15% of its
Northeast Cable, Inc. system (Note 1).
On August 18, 1998, Adelphia issued 8,190,315 shares of Class A common
stock to the public and to the Rigas family. Of this total, 4,100,000 shares
were sold to the public at a price of $32.00 per share, with an underwriter
discount of $1.44 per share. The remaining 4,090,315 shares were sold to
entities controlled by the Rigas family at the public offering price less the
underwriters discount. In a related transaction on September 14, 1998, the
Company issued and sold 615,000 shares of Class A common stock at the offering
price of $32.00, with an underwriter discount of $1.44 per share pursuant to the
underwriters' over-allotment option. Adelphia realized aggregate net proceeds of
$267,926 after deducting underwriter and other fees.
On September 30, 1998, Adelphia issued 2,250,000 shares of Class A common
stock in connection with the acquisition of AT&T interests in SHHH, L.P. (Note
1).
On January 14, 1999, Adelphia completed offerings totaling 8,600,000
shares of its Class A common stock. In those offerings, Adelphia sold 4,600,000
newly issued shares of Class A common stock to Goldman, Sachs & Co. at $43.25
per share and it also sold 4,000,000 shares of its Class A common stock at
$43.25 per share to entities controlled by the Rigas family. Adelphia used the
proceeds of approximately $372,000 from these offerings to repay subsidiary bank
debt.
On January 21, 1999, Adelphia issued 2,561,024 shares of Class A common
stock in connection with the acquisition of Verto (Note 1).
On April 28, 1999, Adelphia sold 8,000,000 shares of its Class A common
stock to the public. Net proceeds of the offering, after deducting offering
expenses, were approximately $485,500. Adelphia used the net proceeds to repay
borrowings under subsidiary credit agreements, a portion of which the Company
reborrowed to fund the acquisitions which closed on October 1, 1999.
On October 1, 1999, Adelphia issued 47,800,000, 1,850,000 and 7,000,000
shares of Class A common stock in connection with the acquisitions of Century,
the remaining 50% of the Citizens/Century Joint Venture and FrontierVision,
respectively. (Note 1).
On October 6, 1999, Adelphia sold 6,000,000 shares of its Class A common
stock. Net proceeds of the offering, after deducting offering expenses, were
approximately $330,000. Adelphia initially invested the net proceeds in cash
equivalents and advanced or contributed a portion of the remaining net proceeds
to certain subsidiaries to repay borrowings under subsidiary credit agreements.
The Certificate of Incorporation of Adelphia authorizes two classes of
common stock, Class A and Class B. Holders of Class A common stock and Class B
common stock vote as a single class on all matters submitted to a vote of the
stockholders, with each share of Class A common stock entitled to one vote and
each share of Class B common stock entitled to ten votes, except (i) for the
election of directors and (ii) as otherwise provided by law. In the annual
election of directors, the holders of Class A common stock voting as a separate
class, are entitled to elect one of Adelphia's directors. In addition, each
share of Class B common stock is automatically convertible into a share of Class
A common stock upon transfer, subject to certain limited exceptions. In the
event a cash dividend is paid, the holders of Class A common stock will be paid
105% of the amount payable per share for each share of Class B common stock.
Upon liquidation, dissolution or winding up of Adelphia, the holders of
Class A common stock are entitled to a preference of $1.00 per share. After such
amount is paid, holders of Class B common stock are entitled to receive $1.00
per share. Any remaining amount would then be shared ratably by both classes.
Treasury Stock
On January 29, 1999, Adelphia purchased from Telesat shares of Adelphia's
stock, owned by Telesat, for a price of $149,213. In the transaction, Adelphia
purchased 1,091,524 shares of Class A common stock and 20,000 shares of Series C
cumulative convertible preferred stock which are convertible into an additional
2,358,490 shares of Class A common stock. These shares represent 3,450,014
shares of common stock on a fully converted basis.
Adelphia Business Solutions Common Stock Issued
On May 8, 1998, Adelphia Business Solutions completed an IPO of its Class
A common stock ("ABIZ Stock"). As part of the offering, Adelphia purchased an
incremental 3,324,001 shares of ABIZ Stock for $49,900 and converted
indebtedness owed to the Company by Adelphia Business Solutions into 3,642,666
shares of ABIZ Stock. In addition, Adelphia purchased warrants issued by
Adelphia Business Solutions to MCI Metro Access Transmission Services, Inc., and
purchased shares of Adelphia Business Solutions Class B common stock from
certain executive officers of Adelphia Business Solutions for a total purchase
price of approximately $12,580 and $3,000, respectively. Additional net proceeds
of $191,411 to Adelphia Business Solutions were received as a result of the sale
of 12,500,000 shares of ABIZ Stock to the public. In a related transaction on
June 5, 1998, Adelphia Business Solutions issued and sold 350,000 shares of its
Class A common stock at the $16.00 IPO price pursuant to the underwriters' over
allotment option in the IPO. As a result of the IPO, Adelphia's additional
paid-in capital increased approximately $147,000 and minority interests
increased approximately $45,000.
On November 30, 1999, Adelphia Business Solutions issued and sold
8,750,000 shares of Class A common stock at a price to the public of $30.00 per
share. Simultaneously with the closing of this transaction, Adelphia Business
Solutions issued and sold 5,181,350 shares of its Class B common stock to
Adelphia at a price equal to the public offering price less the underwriting
discount for the Class A common stock (collectively "the Secondary Offering").
The Secondary Offering raised net proceeds of approximately $403,000 to continue
the expansion of Adelphia Business Solutions' existing markets and to build new
markets. At December 31, 1999, Adelphia owned approximately 60% of the Adelphia
Business Solutions' outstanding common stock and approximately 88% of the total
voting power. As a result of the Secondary Offering, Adelphia's additional
paid-in-capital increased approximately $109,015 and minority interests
increased approximately $144,000.
<PAGE>
7. Employee Benefit Plans:
Savings Plan
Adelphia has a 401(k) and stock value plan (the "Plan") which provides
that eligible full-time employees may contribute from 2% to 16% of their pre-tax
compensation subject to certain limitations. The Plan also provides for certain
stock incentive awards on an annual basis. Adelphia makes matching contributions
not exceeding 1.5% of each participant's pre-tax compensation. Adelphia's
contributions amounted to $687, $605 and $1,732 for the year ended March 1998,
the nine months ended December 31, 1998, and the year ended December 31, 1999,
respectively.
Adelphia Long-Term Incentive Compensation Plan
On October 6, 1998, Adelphia adopted its 1998 Long-Term Incentive
Compensation Plan (the "1998 Plan"). The 1998 Plan provides for the granting of
(i) options which qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, (ii) options which
do not so qualify, (iii) share awards (with or without restrictions on vesting),
(iv) stock appreciation rights and (v) stock equivalent or phantom units. The
number of shares of Adelphia Class A common stock available for issuance under
the 1998 Plan is 3,500,000. Options, awards and units may be granted under the
1998 Plan to directors, officers, employees and consultants of Adelphia. The
1998 Plan provides that incentive stock options must be granted with an exercise
price of not less than the fair market value of the underlying Adelphia common
stock on the date of the grant. Options outstanding under the Plan may be
exercised by paying the exercise price per share through various alternative
settlement methods. During 1999, Adelphia granted phantom units to certain
management employees which represent compensation bonuses based on Adelphia
Class A common stock performance. Such awards vest over three years from the
date of grant. During the year ended December 31, 1999, Adelphia recorded
compensation expense of $2,621 related to these grants.
The following table summarizes Adelphia stock option activity as a
result of the Century acquisition:
<TABLE>
<CAPTION>
Weighted
Number of average
shares subject exercise price
to options per share
----------------- ----------------
<S> <C> <C>
Outstanding, December 31, 1998 -- $ --
Granted 337,922 11.68
Exercised 77,942 12.02
----------------- ----------------
Outstanding, December 31, 1999 259,980 $ 11.58
================= ================
</TABLE>
The following table summarizes information about the Adelphia stock
options outstanding and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
Weighted average Weighted average
Number remaining exercise price
of shares contractual life per share
Exercise price per share (years)
------------------------------- ---------- ------------------- ------------------
<S> <C> <C> <C> <C>
$5.15 - $31.99 259,980 6.49 $ 11.58
</TABLE>
<PAGE>
Adelphia Business Solutions Long-Term Incentive Compensation Plan
On October 3, 1996, the Board of Directors and stockholders of Adelphia
Business Solutions approved its 1996 Long-Term Incentive Compensation Plan (the
"1996 Plan"). The 1996 Plan provides for the grant of (i) options which qualify
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, (ii) options which do not so qualify, (iii)
share awards (with or without restrictions on vesting), (iv) stock appreciation
rights and (v) stock equivalent or phantom units. The number of shares of
Adelphia Business Solutions' Class A common stock available for issuance
initially was 5,687,500. Such number is to increase each year by 1% of
outstanding shares of all classes of Adelphia Business Solutions' common stock,
up to a maximum of 8,125,000 shares. Options, awards and units may be granted
under the 1996 Plan to directors, officers, employees and consultants. The 1996
Plan provides the incentive stock options must be granted with an exercise price
of not less than the fair market value of the underlying common stock on the
date of grant. Options outstanding under the Plan may be exercised by paying the
exercise price per share through various alternative settlement methods.
In August 1999, Adelphia Business Solutions issued under the 1996 Plan to
each of John J. Rigas, Michael J. Rigas, Timothy J. Rigas and James P. Rigas (i)
stock options (the "Rigas Options") covering 100,000 shares of Adelphia Business
Solutions' Class A common stock, which options will vest in equal one-third
amounts on the third, fourth and fifth year anniversaries of grant (vesting
conditioned on continued service as an employee or director) and which shall be
exercisable at $16.00 per share and (ii) stock awards (the "Rigas Grants")
covering 100,000 shares of Adelphia Business Solutions' Class A common stock,
which stock awards will vest in equal one-third amounts on the third, fourth and
fifth year anniversaries of grant (vesting conditioned on continued service as
an employee or director).
In addition to the Rigas Options, certain employees have been granted
options to purchase shares of ABIZ Class A common stock at prices equal to the
fair market value of the shares on the date the option was granted. Options are
exercisable beginning from immediately after granting and have a maximum term of
ten years...
The following table summarizes stock option activity under Adelphia
Business Solutions:
<TABLE>
<CAPTION>
Weighted
Number of average
shares subject exercise price
to options per share
<S> <C> <C> <C> <C>
Outstanding, December 31, 1998 -- $ --
Granted 600,417 15.13
----------------- ----------------
Outstanding, December 31, 1999 600,417 $ 15.13
================= ================
</TABLE>
The following table summarizes information about Adelphia Business
Solutions' stock options outstanding and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
Options outstanding Options exercisable
Weighted average Weighted average Weighted average Weighted
Number remaining exercise price Number remaining average
Exercise price per of shares contractual life per share of shares contractual life exercise
share (years) (years) price per
share
- ----------------------- ---------- ------------------- ------------------ ---------- -------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 12.125 - $ 16.00 600,417 5.2 $ 15.13 200,417 6.3 $ 13.38
</TABLE>
SFAS No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123")
requires the Company to disclose pro forma information regarding option grants
made to its employees. SFAS 123 specifies certain valuation techniques that
produce estimated compensation charges that are included in the pro forma
results below. These amounts have not been reflected in the Company's statement
of operations, because Adelphia applies the provisions of APB 25, "Accounting
for Stock Issued to Employees," which specifies that no compensation charge
arises when the exercise price of the employees' stock options equals or exceeds
the market value of the underlying stock at the grant date, as in the case of
options granted to Adelphia employees.
SFAS 123 pro forma numbers are as follows:
<TABLE>
<CAPTION>
Year Ended
December 31,
1999
----------------
<S> <C>
Net loss-as reported $ (282,493)
Net loss-Pro forma applying SFAS 123 (284,827)
Basic and diluted net loss per common share-as reported under ABP 25 (3.88)
Basic and diluted net loss per common share-pro forma under SFAS 123 (3.91)
</TABLE>
Under SFAS 123, the fair value of each option grant is estimated on the
date of the grant using the Black-Scholes option pricing model with the
following weighted average assumptions:
<TABLE>
<CAPTION>
Employee
Stock Options
Year Ended
December 31,
1999
---------------
<S> <C>
Expected dividend yield 0%
Risk-free interest rate 6.93%
Expected volatility 50%
Expected life (in years) 5.2
</TABLE>
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because Adelphia Business Solutions' employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion the existing models do not
necessarily provide a reliable single measure of the fair value of Adelphia
Business Solutions' options.
In addition to the stock options and Rigas Grants, Adelphia Business
Solutions issued 58,500 shares of Adelphia Business Solutions' Class A common
stock to certain employees for both the year ended March 31,1998 and the nine
months ended December 31,1998 resulting in the recognition of $27 and $761 of
compensation expense, respectively.
8. Taxes on Income:
Adelphia and its corporate subsidiaries file federal income tax returns,
which include their share of the subsidiary partnerships and joint venture
partnership results of operations. At December 31, 1999, Adelphia and its
corporate subsidiaries had net operating loss carryforwards for federal income
tax purposes of approximately $2,000,000 expiring through 2019. Depreciation and
amortization expense differs for tax and financial statement purposes due to the
use of prescribed periods rather than useful lives for tax purposes and also as
a result of differences between tax basis and book basis of certain
acquisitions.
The tax effects of significant items comprising Adelphia's net deferred
tax liability are as follows:
<TABLE>
<CAPTION>
December 31,
1998 1999
------------ --------------
<S> <C> <C>
Deferred tax liabilities:
Differences between book and tax basis of
property, plant and equipment and
intangible assets $ 251,289 $ 2,738,740
------------ --------------
Deferred tax assets:
Tax credits and other assets 102,472 23,911
Operating loss carryforwards 478,488 855,377
------------ --------------
580,960 879,288
Valuation allowance (439,280) (253,645)
------------ --------------
Subtotal 141,680 625,643
------------ --------------
Net deferred tax liability $ 109,609 $ 2,113,097
============ ==============
</TABLE>
The net change in the valuation allowance from operations for the nine
months ended December 31, 1998 and the year ended December 31, 1999 was an
increase of $31,220 and $71,133, respectively. There was also a decrease in the
valuation allowance of $256,768 due to acquisitions during the period ended
December 31, 1999.
<PAGE>
Income tax benefit is as follows:
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
1998 1998 1999
------------ ------------ --------------
<S> <C> <C> <C>
Current $ (699) $ 60 $ (1,950)
Deferred 6,305 6,742 16,443
------------ ------------ --------------
Total $ 5,606 $ 6,802 $ 14,493
============ ============ ==============
</TABLE>
A reconciliation of the statutory federal income tax rate and Adelphia's
effective income tax rate is as follows:
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
1998 1998 1999
------------ ------------- -------------
<S> <C> <C> <C>
Statutory federal income tax rate 35% 35% 35%
Change in federal valuation allowance (30) (26) (23)
Preferred stock dividends of subsidiaey (3) (6) (5)
State taxes, net of federal benefit (2) 1 --
Goodwill -- -- (2)
Other 3 2 1
------------ ------------- -------------
Effective income tax rate 3% 6% 6%
============ ============= =============
</TABLE>
9. Disclosures about Fair Value of Financial Instruments:
Included in Adelphia's financial instrument portfolio are cash, U.S.
government securities, investments in marketable securities,fixed and variable
rate notes payable to banks and institutions, debentures, redeemable preferred
stock and interest rate swaps, caps and collars. The carrying values of variable
rate notes payable to banks and institutions and investments in marketable
securities approximate their fair values at December 31, 1998 and 1999. The
carrying value of the fixed rate notes payable to banks and institutions
publicly traded notes, debentures and redeemable preferred stock at December 31,
1998 and 1999 were $2,657,861 and $6,604,376, respectively. At December 31, 1998
and 1999, the fair value exceeded the carrying value by $139,970 and $21,035,
respectively. At December 31, 1998, Adelphia would have been required to pay
approximately $27,227 to settle its interest rate swap and cap agreements,
representing the excess of carrying cost over fair value of these agreements. At
December 31, 1999, Adelphia would have received approximately $6,603 to settle
its interest rate swap, cap and collar agreements, representing the excess of
fair value over carrying values of these agreements. The fair values of the
debt, redeemable preferred stock and interest rate swaps, caps and collars were
based upon quoted market prices of similar instruments or on rates available to
Adelphia for instruments of the same remaining maturities.
10. Business Segment Information:
Refer to Item 6 of this Annual Report on Form 10-K for information
regarding business segments as of and for the year ended March 31, 1998, as of
and for the nine months ended December 31, 1998 and as of and for the year ended
December 31, 1999.
11. Other Related Party Transactions:
Adelphia currently manages cable television systems which are principally
owned by limited partnerships in which certain of Adelphia's principal
shareholders who are executive officers have equity interests.
Adelphia has agreements with Olympus and the Managed Partnerships which
provide for the payment of fees to Adelphia. The aggregate fee revenues from
Olympus and the Managed Partnerships amounted to $3,960, $2,022 and $5,033 for
the year ended March 31, 1998, the nine months ended December 31, 1998 and the
year ended December 31, 1999, respectively. In addition, Adelphia was reimbursed
by Olympus and the Managed Partnerships for allocated corporate costs of $6,436,
$7,548 and $7,785 for the year ended March 31, 1998, the nine months ended
December 31, 1998 and the year ended December 31, 1999, respectively, which have
been recorded as a reduction of selling, general and administrative expenses.
After October 1, 1999, any fees received from Olympus eliminate in Adelphia's
consolidation.
<PAGE>
Interest expense - net includes interest income from affiliates for long
term borrowings of $7,129, $5,221 and $41,148 for the year ended March 31, 1998,
the nine months ended December 31, 1998 and the year ended December 31, 1999,
respectively, and for short term borrowings of $9,340, $9,339 and $15,571 for
the year ended March 31, 1998, the nine months ended December 31, 1998 and the
year ended December 31, 1999, respectively.
At March 31, 1998, Adelphia had interest rate swaps with affiliates for a
notional amount of $175,000, which expired during the nine months ended December
31, 1998. The net effect of these interest rate swaps was to increase interest
expense by $128 and $2,049 for the year ended March 31, 1998 and the nine months
ended December 31, 1998, respectively.
During the years ended March 31, 1998, the nine months ended December 31,
1998 and the year ended December 31, 1999, Adelphia paid $2,485, $3,422 and
$11,227, respectively, to entities owned by certain shareholders of Adelphia
primarily for property, plant and equipment and services that management of the
Company believes are at market rates.
12. Quarterly Financial Data (Unaudited):
The following tables summarize the financial results of Adelphia for each
of the quarters in the nine months ended December 31, 1998 and the year ended
December 31, 1999. In the opinion of management, such financial results reflect
all adjustments (consisting only of normal and recurring adjustments) necessary
to fairly present the data for such interim period.
<TABLE>
<CAPTION>
Three Months Ended
June 30 September 30 December 31
------------ ------------ -------------
Nine Months Ended December 31, 1998:
<S> <C> <C> <C>
Revenues $ 141,791 $ 165,922 $ 188,301
------------ ------------ -------------
Operating expenses:
Direct operating and programming 48,738 56,595 62,630
Selling, general and administrative 29,111 33,043 45,095
Depreciation and amortization 38,559 46,083 56,181
------------ ------------ -------------
Total 116,408 135,721 163,906
------------ ------------ -------------
Operating income 25,383 30,201 24,395
------------ ------------ -------------
Other income (expense):
Priority investment income from Olympus 12,000 12,000 12,000
Interest expense - net (59,780) (59,852) (60,820)
Equity in loss of Olympus and other joint ventures (18,316) (14,803) (15,772)
Equity in loss of Adelphia Business Solutions joint ventures (3,190) (2,614) (3,776)
Minority interest in losses of subsidiaries 5,460 8,543 11,769
Adelphia Business Solutions preferred stock dividends (6,946) (7,166) (7,424)
Other income 1,000 113 --
------------ ------------ -------------
Total (69,772) (63,779) (64,023)
------------ ------------ -------------
Loss before income taxes and extraordinary loss (44,389) (33,578) (39,628)
Income tax benefit (expense) 5,614 (852) 2,040
------------ ------------ -------------
Loss before extraordinary loss (38,775) (34,430) (37,588)
Extraordinary loss on early retirement of debt (2,604) (1,733) --
------------ ------------ -------------
Net loss (41,379) (36,163) (37,588)
Dividend requirements applicable to preferred stock (6,906) (6,906) (6,906)
------------ ------------ -------------
Net loss applicable to common stockholders $ (48,285) $ (43,069) $ (44,494)
============ ============ =============
Basic and diluted loss per weighted average share of common stock
before extraordinary loss $ (1.48) $ (1.16) $ (1.06)
Basic and diluted extraordinary loss per weighted average share on
early retirement of debt (0.08) (0.05) --
------------ ------------ -------------
Basic and diluted net loss per weighted average share of common stock $ (1.56) $ (1.21) $ (1.06)
============ ============ =============
Weighted average shares of common stock outstanding (in thousands) 30,988 35,533 42,093
============ ============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
March 31 June 30 September 30 December 31
------------ ------------ ------------ -------------
Year Ended December 31, 1999:
<S> <C> <C> <C> <C>
Revenues $ 201,604 $ 218,786 $ 232,305 $ 635,273
------------ ------------ ------------ -------------
Operating expenses:
Direct operating and programming 67,295 72,635 79,623 213,059
Selling, general and administrative 49,111 61,616 75,303 154,549
Depreciation and amortization 56,815 63,736 65,639 184,646
Merger and integration costs -- -- -- 4,736
------------ ------------ ------------ -------------
Total 173,221 197,987 220,565 556,990
------------ ------------ ------------ -------------
Operating income 28,383 20,799 11,740 78,283
------------ ------------ ------------ -------------
Other income (expense):
Priority investment income from Olympus 12,000 12,000 12,000 --
Interest expense - net (67,464) (52,215) (51,961) (187,945)
Equity in loss of Olympus and other joint ventures (14,861) (23,074) (22,305) (378)
Equity in loss of Adelphia Business Solutions joint
ventures (3,803) (3,291) (246) (418)
Minority interest in losses of subsidiaries 12,914 13,146 12,755 (116)
Adelphia Business Solutions preferred stock dividends (7,619) (7,860) (8,108) (8,586)
Other 2,354 -- -- (489)
------------ ------------ ------------ -------------
Total (66,479) (61,294) (57,865) (197,932)
------------ ------------ ------------ -------------
Loss before income taxes and extraordinary loss (38,096) (40,495) (46,125) (119,649)
Income tax (expense) benefit 2,897 1,149 3,580 6,867
------------ ------------ ------------ -------------
Loss before extraordinary loss (35,199) (39,346) (42,545) (112,782)
Extraordinary loss on early retirement of debt, net of income
taxes (8,589) (1,438) -- (631)
------------ ------------ ------------ -------------
Net loss (43,788) (40,784) (42,545) (113,413)
Dividend requirements applicable to preferred stock (6,500) (6,500) (14,332) (14,631)
------------ ------------ ------------ -------------
Net loss applicable to common stockholders $ (50,288) $ (47,284) $ (56,877) $ (128,044)
============ ============ ============ =============
Basic and diluted loss per weighted average share of common
stock before extraordinary loss $ (0.80) $ (0.79) $ (0.95) $ (1.05)
Basic and diluted extraordinary loss per weighted average
share on early retirement of debt (0.17) (0.02) -- --
------------ ------------ ------------ -------------
Basic and diluted net loss per weighted average share of
common stock $ (0.97) $ (0.81) $ (0.95) $ (1.05)
============ ============ ============ =============
Weighted average shares of common stock outstanding (in
thousands) 52,019 58,141 60,163 121,769
============ ============ ============ =============
</TABLE>
13. Subsequent Events:
The Company has entered into a definitive agreement under which Prestige
Communications of NC, Inc. will sell its cable systems in Virginia, North
Carolina and Maryland to Adelphia for approximately $700,000. These systems
serve approximately 120,000 basic subscribers. This transaction is subject to
customary closing conditions and regulatory approval and is expected to close by
mid-2000.
Subsequent to December 31, 1999, certain subsidiaries and affiliates of
Adelphia have received commitments and subscriptions for a new $2,500,000 bank
credit facility. This bank credit facility will consist of both a reducing
revolving credit portion and a term loan portion and is expected to close in
April 2000.
On January 21, 2000, Adelphia closed the April 9, 1999 direct placement of
$375,000 of Adelphia Class B common stock with Highland Holdings, a general
partnership controlled by the Rigas family.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information set forth above in Part I under the caption "Executive
Officers of the Registrant" is incorporated herein by reference. The other
information required by this item is incorporated herein by reference to the
information set forth under the caption "Election of Directors - Description of
Board of Directors"; the information set forth under the caption "Election of
Directors - Nominee for Election by Holders of Class A Common Stock"; the
information set forth under the caption "Election of Directors - Nominees for
Election by Holders of Class A Common Stock and Class B Common Stock"; and the
information, if any, under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance," in the Company's definitive proxy statement for the 2000
Annual Meeting of Stockholders to be filed pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended, or by reference to a filing
amending this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference
to the information set forth under the caption "Executive Compensation" in the
Company's definitive proxy statement for the 2000 Annual Meeting of Stockholders
to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934,
as amended, or by reference to a filing amending this Annual Report on Form
10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference
to the information set forth under the caption "Principal Stockholders" in the
Company's definitive proxy statement for the 2000 Annual Meeting of Stockholders
to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934,
as amended, or by reference to a filing amending this Annual Report on Form
10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference
to the information set forth under the caption "Certain Transactions" in the
Company's definitive proxy statement for the 2000 Annual Meeting of Stockholders
to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934,
as amended, or by reference to a filing amending this Annual Report on Form
10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Financial statements, schedules and exhibits not listed have been omitted
where the required information is included in the consolidated financial
statements or notes thereto, or is not applicable or required.
(a)(1) A listing of the consolidated financial statements, notes and
independent auditors' report required in Item 8 are listed in
the index in Item 8 of this Report on Form 10-K.
(2) Financial statement schedules:
The following are included in this Report:
Schedule I -- Condensed Financial Information of the Registrant
Schedule II -- Valuation and Qualifying Accounts
(3) Exhibits
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.01 Agreement and Plan of Merger by and among Adelphia Communications
Corporation, Adelphia Acquisition Subsidiary, Inc., and Century
Communications Corp., dated as of March 5, 1999 (Incorporated
herein by reference is Exhibit 2.01 to the Registrant's Current
Report on Form 8-K for the event dated February 22, 1999.) (File
No. 0-16014).
2.02 Purchase Agreement, dated as of February 22, 1999, among
FrontierVision Partners, L. P., FVP GP, L. P., and certain direct
and indirect Limited Partners of FrontierVision Partners, L. P., as
sellers, and Adelphia Communications Corporation, as buyer
(Incorporated herein by reference is Exhibit 2.02 to the
Registrant's Current Report on Form 8-K for the event dated
February 22, 1999.) (File No. 0-16014).
2.03 Stock Purchase Agreement dated April 9, 1999 between Adelphia
Communications Corporation and the shareholders of Harron
Communications Corp. (Incorporated herein by reference is Exhibit
2.01 to the Registrant's Current Report on Form 8-K for the event
dated April 9, 1999.) (File No. 0-16014).
2.04 First Amendment to Agreement and Plan of Merger dated as of
July 12, 1999 with respect to merger with Century Communications
Corp. (Incorporated herein by reference is Exhibit 2.01 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
2.05 Second Amendment to Agreement and Plan of Merger dated as of
July 29, 1999 with respect to merger with Century Communications
Corp. (Incorporated herein by reference is Exhibit 2.02 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
3.01 Certificate of Incorporation of Adelphia Communications
Corporation, as amended (Incorporated herein by reference is
Exhibit 3.01 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999.) (File No. 0-16014).
3.02 Bylaws of Adelphia Communications Corporation, as amended
(Incorporated herein by reference is Exhibit 3.02 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.) (File No. 0-16014).
4.01 Certificate of Designations for 13% Series A and Series B
Cumulative Exchangeable Preferred Stock (Contained in Exhibit 3.01
to the Registrant's Current Report on Form 8-K dated July 24, 1997,
which is incorporated herein by reference.) (File No. 0-16014).
4.02 Certificate of Designations for Series C Convertible Preferred
Stock (Contained in Exhibit 3.01 to the Registrant's Current Report
on Form 8-K dated July 24, 1997, which is incorporated herein by
reference.) (File No. 0-16014).
4.03 Form of Indenture, with respect to the Registrant's 13% Senior
Subordinated Exchange Debentures due 2009, between the Registrant
and the Bank of Montreal Trust Company (Contained in Exhibit 3.01
as Annex A to Registrant's Current Report on Form 8-K dated July
24, 1997, which is incorporated herein by reference.) (File No.
0-16014).
4.04 Form of Certificate for 13% Cumulative Exchangeable Preferred
Stock (Incorporated herein by reference is Exhibit 4.06 to the
Registrant's Current Report on Form 8-K dated July 24, 1997.) (File
No. 0-16014).
4.05 Form of Certificate for Series C Convertible Preferred Stock
(Incorporated herein by reference is Exhibit 4.07 to the
Registrant's Current Report on Form 8-K dated July 24, 1997.) (File
No. 0-16014).
4.06 Indenture, dated as of January 13, 1999, with respect to the
Registrant's 7-1/2% Senior Notes due 2004 and 7-3/4% Senior Notes
due 2009, between the Registrant and the Bank of Montreal Trust
Company (Incorporated by reference herein is Exhibit 4.03 to the
Registrant's Current Report on Form 8-K filed on January 28, 1999.)
(File No. 0-16014).
4.07 Registration Rights Agreement between Adelphia Communications
Corporation and the Initial Purchaser, dated January 13, 1999,
regarding the Registrant's 7-1/2% Senior Notes due 2004 and 7-3/4%
Senior Notes due 2009 (Incorporated by reference herein is Exhibit
4.04 to the Registrant's Current Report on Form 8-K, filed on
January 28, 1999.) (File No. 0-16014).
4.08 Form of 7-1/2% Senior Note due 2004 (Contained in Exhibit 4.07).
4.09 Form of 7-3/4% Senior Note due 2009 (Contained in Exhibit 4.07).
4.10 Indenture dated as of March 2, 1999, with respect to Hyperion
Telecommunications, Inc. 12% Senior Subordinated Notes due 2007,
between Hyperion and the Bank of Montreal Trust Company
(Incorporated by reference herein is Exhibit 4.01 to the
Registrant's Current Report on Form 8-K filed on March 10, 1999.)
(File No. 0-16014).
4.11 Form of 12% Senior Subordinated Notes due 2007 (Contained in
Exhibit 4.10).
4.12 Registration Rights Agreement between Hyperion Telecommunications,
Inc. and the Initial Purchasers, dated March 2, 1999, regarding
Hyperion's 12% Senior Subordinated Notes due 2007 (Incorporated by
reference herein is Exhibit 10.04 to the Registrant's Current
Report on Form 8-K filed on March 10, 1999.) (File No. 0-16014).
4.13 Base Indenture, dated as of April 28, 1999, with respect to the
Registrant's Senior Indebtedness, between the Registrant and The
Bank of Montreal Trust Company (Incorporated by reference herein is
Exhibit 4.01 to the Registrant's Current Report on Form 8-K filed
on April 28, 1999.) (File No. 0-16014).
4.14 First Supplemental Indenture, dated as of April 28, 1999, to April
28, 1999 Base Indenture, with respect to the Registrant's 7-7/8%
Senior Notes due 2009, between the Registrant and The Bank of
Montreal Trust Company (Incorporated by reference herein is Exhibit
4.02 to the Registrant's Current Report on Form 8-K filed on April
28, 1999.) (File No. 0-16014).
4.15 Form of 7-7/8% Senior Note due 2009 (Contained in Exhibit 4.14).
4.16 Second Supplemental Indenture, dated as of November 16, 1999, to
April 28, 1999 Base Indenture, with respect to the Registrant's
9-3/8% Senior Notes due 2009, between Harris Trust Company and the
Registrant (Filed herewith.).
4.17 Form of 9-3/8% Senior Note due 2009 (Contained in Exhibit 4.16.).
4.18 Certificate of Designations with respect to the Registrant's
5 1/2% Series D Convertible Preferred Stock (incorporated by
reference herein is Exhibit 3.01 to the Current Report on Form 8-K
of the Registrant for the event dated April 28, 1999.) (File No.
0-16014).
10.01 Class B Common Stockholders Agreement (Incorporated herein by
reference is Exhibit 10.01 to Registration Statement No. 33-6974 on
Form S-1.).
10.02 Joinder to Class B Common Stockholders Agreement (Incorporated
herein by reference is Exhibit 10.02 to Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994.) (File No.
0-16014).
10.03 Registration Rights Agreement and Amendment to Registration Rights
Agreement (Incorporated herein by reference are Exhibit 10.02 to
Registration Statement No. 33-6974 on Form S-1 and Exhibit 10.35 to
Registration Statement No. 33-25121 on Form S-1.).
10.04 Form of Management Agreement for Managed Companies (Incorporated
herein by reference is Exhibit 10.04 to the Registrant's Annual
Report on Form 10-K for fiscal year ended March 31, 1996.) (File
No. 0-16014).
10.05 Management Agreement - Montgomery Cablevision Associates, L.P.
(Incorporated herein by reference is Exhibit 10.08 to Registration
Statement No. 33-6974 on Form S-1.).
10.06 Management Agreement - Adelphia Cablevision Associates of
Radnor, L.P. (Incorporated herein by reference is Exhibit 10.09 to
Registration Statement No. 33-6974 on Form S-1.).
10.07 Business Opportunity Agreement (Incorporated herein by reference is
Exhibit 10.13 to Registration Statement No. 33-3674 on Form S-1.).
10.08* Employment Agreement between the Company and John J. Rigas
(Incorporated herein by reference is Exhibit 10.14 to Registration
Statement No. 33-6974 on Form S-1.).
10.09* Employment Agreement between the Company and Timothy J. Rigas
(Incorporated herein by reference is Exhibit 10.16 to Registration
Statement No. 33-6974 on Form S-1.).
10.10* Employment Agreement between the Company and Michael J. Rigas
(Incorporated herein by reference is Exhibit 10.17 to Registration
Statement No. 33-6974 on Form S-1.).
10.11* Employment Agreement between the Company and James P. Rigas
(Incorporated herein by reference is Exhibit 10.18 to Registration
Statement No. 33-6974 on Form S-1.).
10.12 Olympus Communications, L.P. ("Olympus") Second Amended and
Restated Limited Partnership Agreement, dated as of February 28,
1995 (Incorporated herein by reference is Exhibit 10.32 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1995.) File No. 0-16014).
10.13 Revolving Credit Facility among Adelphia Cable Partners, L.P.,
Southwest Florida Cable, Inc., West Boca Acquisition Limited
Partnership and Toronto-Dominion (Texas), Inc., as Administrative
Agent, dated May 12, 1995 (Incorporated herein by reference is
Exhibit 10.03 to the Registrant's Current Report on Form 8-K dated
June 30, 1995.) (File No. 0-16014).
10.14 Credit Agreement, dated as of April 12, 1996, among Chelsea
Communications, Inc., Kittanning Cablevision Inc., Robinson/Plum
Cablevision L.P., the several banks and financial institutions
parties thereto, and Toronto Dominion (Texas), Inc. as
Administrative Agent (Incorporated herein by reference is Exhibit
10.36 to Registrant's Current Report on Form 8-K dated June 3,
1996.) (File No. 0-16014).
10.15 Warrant Agreement dated as of April 15, 1996, by and among Hyperion
Telecommunications, Inc. ("Hyperion," now known as Adelphia
Business Solutions, Inc.) and Bank of Montreal Trust Company
(Incorporated by reference is Exhibit 10.13 to Registration
Statement No. 333-06957 on Form S-4 for Hyperion
Telecommunications, Inc.).
10.16 Warrant Registration Rights Agreement dated as of April 15, 1996,
by and among Hyperion Telecommunications, Inc. and the Initial
Purchasers (Incorporated by reference is Exhibit 10.14 to
Registration Statement No. 333-06957 on Form S-4 for Hyperion
Telecommunications, Inc.).
10.17* Hyperion Telecommunications, Inc. 1996 Long-Term Incentive
Compensation Plan (Incorporated herein by reference is Exhibit
10.17 to Hyperion Telecommunications, Inc.'s Registration Statement
No. 333-13663 on Form S-1.).
10.18 Registration Rights Agreement among Charles R. Drenning, Paul D.
Fajerski, Randolph S. Fowler, Adelphia Communications Corporation
and Hyperion Telecommunications, Inc. (Incorporated herein by
reference is Exhibit 10.18 to Hyperion Telecommunications, Inc.'s
Registration Statement No. 333-13663 on Form S-1.).
10.19 Registration Rights Agreement between Adelphia Communications
Corporation and Hyperion Telecommunications, Inc. (Incorporated
herein by reference is Exhibit 10.19 to Hyperion
Telecommunications, Inc.'s Registration Statement No. 333-13663 on
Form S-1.).
10.20 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated September 1, 1995
(Incorporated herein by reference is Exhibit 10.33 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1996.) (File No. 0-16014).
10.21 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated March 29, 1996
(Incorporated herein by reference is Exhibit 10.34 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1996.) (File No. 0-16014).
10.22 Second Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated June 27, 1996
(Incorporated herein by reference is Exhibit 10.35 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1996.) (File No.0-16014).
10.23 Extension Agreement dated as of January 8, 1997, among Hyperion
Telecommunications, Inc., Adelphia Communications Corporation,
Charles R. Drenning, Paul D. Fajerski, Randolph S. Fowler, and six
Trusts named therein (Incorporated herein by reference is Exhibit
10.04 to Adelphia Communications Corporation's Current Report on
Form 8-K dated May 1, 1997.) (File No. 0-16014).
10.24 Registration Rights Agreement among Adelphia Communications
Corporation, Highland Holdings and Telesat Cablevision, Inc., dated
July 7, 1997 (Incorporated herein by reference is Exhibit 10.04 to
the Registrant's Current Report on Form 8-K dated July 24, 1997.)
(File No. 0-16014).
10.25 Series C Preferred Stock Purchase Agreement among Adelphia
Communications Corporation, Highland Holdings and Telesat
Cablevision, Inc., dated June 22, 1997 (Incorporated herein by
reference is Exhibit 10.06 to the Registrant's Current Report on
Form 8-K dated July 24, 1997.) (File No. 0-16014).
10.26 Pledge Agreement between Hyperion and the Bank of Montreal Trust
Company as Collateral Agent, dated as of August 27, 1997
(Incorporated by reference herein is Exhibit 4.03 to Hyperion's
Current Report on Form 8-K dated August 27, 1997.) (File No.
0-21605).
10.27 Pledge, Escrow and Disbursement Agreement, between Hyperion and th
Bank of Montreal Trust Company dated as of August 27, 1997
(Incorporated by reference herein to Exhibit 4.05 to Hyperion's
Current Report on Form 8-K dated August 27, 1997.) (File No.
0-21605).
10.28 Purchase Agreement among Adelphia Communications Corporation and
Salomon Brothers Inc. dated January 15, 1998 (Incorporated by
reference herein is Exhibit 10.01 to the Registrant's Current
Report on Form 8-K dated January 21, 1998.) (File No. 0-16014).
10.29* Management Services Agreement dated as of April 10, 1998, between
the Registrant and Hyperion Telecommunications, Inc. (Incorporated
herein by reference is Exhibit 10.23 to Registration Statement No.
333-48209 on Form S-1 filed by Hyperion Telecommunications, Inc.).
10.30 Letter Agreement dated April 10, 1998, among Hyperion
Telecommunications, Inc., the Registrant and MCImetro Access
Transmission Services, Inc. (Incorporated herein by reference is
Exhibit 10.24 to Registration Statement No. 333-48209 on Form S-1
filed by Hyperion Telecommunications, Inc.).
10.31 Amendment to Registration Rights Agreement dated as of April
15, 1998, between Hyperion Telecommunications, Inc. and the
Registrant (Incorporated herein by reference is Exhibit 10.25 to
Registration Statement No. 333-48209 on Form S-1 filed by Hyperion
Telecommunications, Inc.).
10.32 Letter Agreement dated as of April 9, 1998, between Hyperion
Telecommunications, Inc. and the Registrant regarding the purchase
of Hyperion's Class A Common Stock (Incorporated herein by
reference is Exhibit 10.26 to Registration Statement No. 333-48209
on Form S-1 filed by Hyperion Telecommunications, Inc.).
10.33 U.S. Underwriting Agreement dated May 4, 1998 among Hyperion
Telecommunications, Inc. and the Representatives named therein
(Incorporated herein by reference is Exhibit 10.01 to Hyperion
Telecommunications, Inc.'s Current Report on Form 8-K dated June
24, 1998.) (File No. 0-21605).
10.34 International Underwriting Agreement dated May 4, 1998 among
Hyperion Telecommunications, Inc. and the Representatives named
therein (Incorporated herein by reference is Exhibit 10.02 to
Hyperion Telecommunications, Inc.'s Current Report on Form 8-K
dated June 24, 1998.) (File No. 0-21605).
10.35 Warrant issued by Hyperion Telecommunications, Inc. to MCI dated
May 8, 1998 (Incorporated herein by reference is Exhibit 10.03 to
Hyperion Telecommunications, Inc.'s Current Report on Form 8-K
dated June 24, 1998.) (File No. 0-21605).
10.36 Warrant issued by Hyperion Telecommunications, Inc. to the
Registrant dated June 5, 1998 (Incorporated herein by reference is
Exhibit 10.04 to Hyperion Telecommunications, Inc.'s Current Report
on Form 8-K dated June 24, 1998.) (File No. 0-21605).
10.37 Purchase Agreement among Adelphia Communications Corporation and
Barclays Capital, Inc. dated June 29, 1998 (Incorporated herein by
reference is Exhibit 10.01 to the Registrant's Current Report on
Form 8-K dated July 23, 1998.).
10.38 U.S. Underwriting Agreement between the Registrant and the
Representatives of the U.S. Underwriters named therein, dated
August 12, 1998 (Incorporated herein by reference is Exhibit 10.01
to the Form 8-K of the Registrant for the event dated August 18,
1998.) (File No. 0-16014).
10.39 International Underwriting Agreement between the Registrant and
the Lead Managers of the Managers named therein, dated August 12,
1998 (Incorporated herein by reference is Exhibit 10.02 to the Form
8-K of the Registrant for the event dated August 18, 1998.) (File
No. 0-16014).
10.40 Direct Purchase Agreement between the Registrant and Highland
Communications, L.L.C., dated August 12, 1998 (Incorporated herein
by reference is Exhibit 10.03 to the Form 8-K of the Registrant for
the event dated August 18, 1998.) (File No. 0-16014).
10.41* Adelphia Communications Corporation 1998 Long-Term Incentive
Compensation Plan (Incorporated herein by reference is Exhibit A to
the Registrant's Proxy Statement for the Annual Meeting of
Stockholders on October 6, 1998.) (File No. 0-16014).
10.42 Distribution Agreement dated as of August 31, 1998 among Syracuse
Hilton Head Holdings, L.P., Adelphia Communications Corporation and
SHHH Acquisition Corp. (Incorporated herein by reference is Exhibit
10.05 to the Form 10-Q of the Registrant for the quarter ended
September 30, 1998.) (File No. 0-16014).
10.43 Second Amendment to Credit Agreement, dated as of April 12, 1996,
among Chelsea Communications, Inc., Kittanning Cablevision Inc.,
Robinson/Plum Cablevision L. P., the several banks and financial
institutions parties thereto, and Toronto Dominion (Texas), Inc. as
Administrative Agent (Incorporated herein by reference is Exhibit
10.06 to the Form 10-Q of the Registrant for the quarter ended
September 30, 1998.) (File No. 0-16014).
10.44 Purchase Agreement among Adelphia Communications Corporation and
Barclays Capital, Inc. (the "Initial Purchaser") dated November 6,
1998 (Incorporated by reference herein is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K, filed January 28, 1999.)
(File No. 0-16014).
10.45 Purchase Agreement among Adelphia Communications Corporation and
Salomon Smith Barney, Inc., Credit Suisse First Boston Corporation,
Goldman Sachs & Co., Lehman Brothers, Inc. and NationsBank
Montgomery Securities LLC (the "Initial Purchasers") dated January
6, 1999 (Incorporated by reference herein is Exhibit 10.02 to the
Registrant's Current Report on Form 8-K, filed January 28, 1999.)
(File No. 0-16014).
10.46 Credit Agreement, dated as of December 30, 1998, among Parnassos,
L.P. as the Borrower, various financial institutions as the
Lenders, the Bank of Nova Scotia as the Administrative Agent,
Nationsbank, N.A. as the Documentation Agent, and TD Securities
(USA) Inc. as the Syndication Agent (Incorporated by reference
herein is Exhibit 10.03 to the Registrant's Current Report on Form
8-K, filed January 28, 1999.) (File No. 0-16014).
10.47 Registration Rights Agreement among Adelphia Communications
Corporation, Doris Holdings, L.P. and Highland Holdings II dated
January 14, 1999 (Incorporated by reference herein is Exhibit 10.04
to the Registrant's Current Report on Form 8-K, filed January 28,
1999.) (File No. 0-16014).
10.48 Underwriting Agreement dated January 11, 1999 between the
Registrant and Goldman, Sachs & Co. (Incorporated by reference
herein is Exhibit 1.01 to the Registrant's Current Report on Form
8-K, filed January 13, 1999.) (File No. 0-16014).
10.49 Purchase Agreement between the Registrant and Highland Holdings II
dated January 11, 1999 (Incorporated by reference herein is Exhibit
10.01 to the Registrant's Current Report on Form 8-K, filed January
13, 1999.) (File No. 0-16014).
10.50 Stock Purchase Agreement dated January 28, 1999 (Incorporated
herein by reference is Exhibit 13 to Amendment No. 3 to Schedule
13D filed February 8, 1999 on behalf of FPL Group, Inc.).
10.51 Class B Voting Agreement, dated as of March 5, 1999, among Adelphia
Communications Corporation, Leonard Tow, The Claire Tow Trust, and
the Trust Created by Claire Tow under date of December 10, 1979
(Incorporated herein by reference is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K for the event dated
February 22, 1999.) (File No. 0-16014).
10.52 Rigas Class B Voting Agreement , dated as of March 5, 1999, among
Century Communications Corp., John Rigas, Michael Rigas, Timothy
Rigas and James Rigas (Incorporated herein by reference is Exhibit
10.02 to the Registrant's Current Report on Form 8-K for the event
dated February 22, 1999.) (File No. 0-16014).
10.53 Purchase Agreement between Hyperion Telecommunications, Inc. and
the Initial Purchasers named therein, dated as of February 25,
1999, regarding Hyperion's 12% Senior Subordinated Notes due 2007
(Incorporated herein by reference is Exhibit 10.03 to the
Registrant's Current Report on Form 8-K for the event dated
February 22, 1999.) (File No. 0-16014).
10.54 Purchase Agreement between Hyperion Telecommunications, Inc. and
Highland Holdings, dated as of February 25, 1999, regarding
Hyperion's 12% Senior Subordinated Notes due 2007 (Incorporated
herein by reference is Exhibit 10.05 to the Registrant's Current
Report on Form 8-K for the event dated February 22, 1999.) (File
No. 0-16014).
10.55 Class B Common Stock Purchase Letter Agreement dated April 9, 1999
between Adelphia Communications Corporation and Highland Holdings
(Incorporated herein by reference is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K for the event dated April
9, 1999.) (File No. 0-16014).
10.56 Class A Common Stock Underwriting Agreement among Adelphia
Communications Corporation, Salomon Smith Barney Inc. and the other
underwriters named therein, as representatives of the Underwriters,
dated April 23, 1999 (Incorporated by reference herein is Exhibit
1.01 to the Current Report on Form 8-K of the Registrant for the
event dated April 28, 1999.) (File No. 0-16014).
10.57 7-7/8% Senior Notes Underwriting Agreement among Adelphia
Communications Corporation and Chase Securities Inc., as
representative of the Underwriters, dated April 23, 1999
(Incorporated by reference herein is Exhibit 1.02 to the Current
Report on Form 8-K of the Registrant for the event dated April 28,
1999.) (File No. 0-16014).
10.58 5-1/2% Series D Convertible Preferred Stock Underwriting Agreement
among Adelphia Communications Corporation and Salomon Smith Barney
Inc., as representative of the Underwriters, dated April 26, 1999
(Incorporated by reference herein is Exhibit 1.03 to the Current
Report on Form 8-K of the Registrant for the event dated April 28,
1999.) (File No. 0-16014).
10.59 Indenture, dated as of February 26, 1997, between the Registrant
and Bank of Montreal Trust Company with respect to the Registrant's
9-7/8% Senior Notes Due 2007 (Incorporated herein by reference is
Exhibit 4.01 to the Registrant's Current Report on Form 8-K dated
May 1, 1997.) (File No. 0-16014).
10.60 Indenture, dated as of April 15, 1996, between Hyperion
Telecommunications, Inc. and Bank of Montreal Trust Company
(Incorporated by reference is Exhibit 4.1 to Registration Statement
No. 333-06957 on Form S-4 filed for Hyperion Telecommunications,
Inc.).
10.61 First Supplemental Indenture, dated as of September 11, 1996,
between Hyperion Telecommunications, Inc. and Bank of Montreal
Trust Company (Incorporated herein be reference is Exhibit 4.2 to
Hyperion Telecommunications, Inc.'s Registration Statement No.
333-12619 on Form S-3, formerly on Form S-1.).
10.62 Indenture, dated as of November 12, 1996, between Olympus
Communications, L.P., Olympus Capital Corporation and Bank of
Montreal Trust Company (Incorporated herein by reference is Exhibit
10.02 to the Registrant's Current Report on Form 8-K dated December
16, 1996.) (File No. 0-16014).
10.63 Indenture, dated as of August 27, 1997, with respect to Hyperion
Telecommunications, Inc. ("Hyperion") 12-1/4% Senior Secured Notes
due 2004, between Hyperion and the Bank of Montreal Trust Company
(Incorporated herein by reference to Exhibit 4.01 to Hyperion's
Current Report on Form 8-K dated August 27, 1997.) (File No.
0-21605).
10.64 Second Supplemental Indenture, dated as of August 27, 1997, between
Hyperion and the Bank of Montreal Trust Company, regarding
Hyperion's 13% Senior Discount Notes due 2003 (Incorporated by
reference herein to Exhibit 4.06 to Hyperion's Current Report on
Form 8-K dated August 27, 1997.) (File No. 0-21605).
10.65 Indenture, dated as of September 25, 1997, with respect to the
Registrant's 9-1/4% Senior Notes due 2002, between the Registrant
and the Bank of Montreal Trust Company (Incorporated herein by
reference is Exhibit 4.01 to the Registrant's Current Report on
Form 8-K dated September 25, 1997.) (File No. 0-16014).
10.66 Indenture, dated as of January 21, 1998, with respect to the
Registrant's 8-3/8% Senior Notes due 2008, between the Registrant
and the Bank of Montreal Trust Company (Incorporated by reference
herein is Exhibit 4.01 to the Registrant's Current Report on Form
8-K dated January 21, 1998.) (File No. 0-16014).
10.67 First Supplemental Indenture, dated as of November 12, 1998, to
January 1998 Indenture with respect to the Registrant's 8-3/8%
Senior Notes due 2008, between the Registrant and the Bank of
Montreal Trust Company (Incorporated by reference herein is Exhibit
4.01 to the Registrant's Current Report on Form 8-K filed on
January 28, 1999.) (File No. 0-16014).
10.68 Registration Rights Agreement between Adelphia Communications
Corporation and the Initial Purchaser, dated November 12, 1998,
regarding the Registrant's 8-3/8% Senior Notes due 2008
(Incorporated by reference herein is Exhibit 4.02 to the
Registrant's Current Report on Form 8-K filed on January 28, 1999.)
(File No. 0-16014).
10.69 Registration Rights Agreement dated as of July 12, 1999, among
Adelphia, the Century Class B Holders and Ms. Claire Tow
(Incorporated herein by reference is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
10.70 Tag-Along Rights Agreement dated as of July 12, 1999, among
Adelphia, the Century Class B Holders, Ms. Claire Tow and the
holders of Adelphia Class B Common Stock named therein
(Incorporated herein by reference is Exhibit 10.02 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
10.71 Purchase Agreement dated as of July 12, 1999, between Adelphia and
Citizens Cable Company (Incorporated herein by reference is Exhibit
10.03 to the Registrant's Current Report on Form 8-K for the event
dated July 12, 1999.) (File No. 0-16014).
10.72 Underwriting Agreement dated October 1, 1999 regarding the sale of
6,000,000 shares of Class A common stock of Adelphia (Incorporated
herein by reference is Exhibit 1.01 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999.)
(File No. 0-16014).
10.73 Stock Purchase Agreement dated October 1, 1999 between Adelphia
Communications Corporation and Highland Holdings (Incorporated
herein by reference is Exhibit 10.01 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999.)
(File No. 0-16014).
10.74 Bank Credit Facility dated May 6, 1999 among the Registrant, other
borrowers and the lenders named therein (Incorporated herein by
reference to Exhibit 10.01 to Current Report on Form 8-K for the
event dated September 16, 1999 filed by Adelphia Communications
Corporation.) (File No. 0-16014).
10.75 Third Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated October 1, 1999
(Incorporated herein by reference is Exhibit 3.8 to Form 10-K of
Olympus for fiscal year ended December 31, 1999.) (File No.
333-19327).
10.76 Amended Credit Agreement, dated as of March 29, 1996, among
Highland Video Associates L.P., Telesat Acquisition Limited
Partnership, Global Acquisition Partners, L.P., the various
financial institutions as parties thereto, Bank of Montreal as
syndication agent, Chemical Bank as documentation agent, and the
Bank of Nova Scotia as administrative agent (Incorporated herein by
reference is Exhibit 10.37 to Adelphia Communications Corporation's
Current Report on Form 8-K dated June 19, 1996.) (File No.0-16014).
10.77 First Amendment, dated as of July 31, 1998 for the Amended and
Restated Credit Agreement dated of as March 29, 1996 (Incorporated
here in by reference is Exhibit 10.2 to Olympus' Form 8-K dated
April 2,
1999.) (File No. 333-19327).
10.78 Redemption Agreement between Olympus Communications, LP and
Cable GP, Inc., dated as of October 1, 1999 (Incorporated by
reference herein is Exhibit 10.6 to Form 10-K of Olympus for fiscal
year ended December 31, 1999.) (File No. 333-19327).
10.79 Underwriting Agreement dated as of November 23, 1999 among Adelphia
Business Solutions, Inc., Salomon Smith Barney Inc. and the several
other Underwriters named therein (Incorporated herein by reference
is Exhibit 1.01 to Adelphia Business Solutions' Form 8-K for the
event dated November 23, 1999.) (File No. 0-21605).
10.80 Stock Purchase Agreement dated November 23, 1999 between Adelphia
Business Solutions, Inc. and Adelphia Communications Corporation
(Incorporated herein by reference is Exhibit 10.01 to Adelphia
Business Solutions' Form 8-K for the event dated November 23,
1999.) (File No. 0-21605).
10.81 Amended Bank Credit Facility (Incorporated by reference herein is
Exhibit 10.1 to FrontierVision Operating Partners, L.P.'s and
FrontierVision Capital Corporation's Registration Statement on Form
S-1, Registration No. 333-9535.).
10.82 Amendment No. 1 to Amended Bank Credit Facility (Incorporated by
reference herein is Exhibit 10.14 to FrontierVision Operating
Partners, L.P.'s and FrontierVision Capital Corporation's
Registration Statement on Form S-1, Registration No. 333-9535.).
10.83 Consent and Amendment No. 2 to Amended Bank Credit Facility
(Incorporated by reference herein is Exhibit 10.15 to
FrontierVision Operating Partners, L.P.'s and FrontierVision
Capital Corporation's Quarterly Report on Form 10-Q, File No.
333-9535 for the quarter ended September 30, 1996.).
10.84 Amended Credit Facility (Incorporated by reference herein is
Exhibit 10.18 to FrontierVision Holdings, L.P.'s and FrontierVision
Holdings Capital Corporation's Annual Report on Form 10-K, File
No. 333-36519 for the year ended December 31, 1997.).
10.85 Indenture dated as of October 7, 1996, among FrontierVision
Operating Partners, L.P., FrontierVision Capital Corporation and
Colorado National Bank, as Trustee (Incorporated by reference
herein is Exhibit 4.1 to FrontierVision Operating Partners, L.P.'s
and FrontierVision Capital Corporation's Quarterly Report on Form
10-Q, File No. 333-9535 for the quarter ended September 30, 1996.).
10.86 Indenture dated as of September 19, 1997, among FrontierVision
Holdings, L.P., FrontierVision Holdings Capital Corporation and
U.S. Bank National Association d/b/a Colorado National Bank, as
Trustee (Incorporated by reference herein is Exhibit 4.2 to
FrontierVision Holdings, L.P.'s and FrontierVision Holdings Capital
Corporation's Registration Statement on Form S-4, Registration No.
333-36519.).
10.87 Indenture dated as of December 9, 1998, among FrontierVision
Holdings, L.P., FrontierVision Holdings Capital II Corporation and
U.S. Bank National Association, as Trustee (Incorporated by
reference herein is Exhibit 4.5 to FrontierVision Holdings, L.P.'s
and FrontierVision Holdings Capital II Corporation's Registration
Statement on Form S-4, Registration No. 333-75567.).
10.88 Purchase Agreement dated as of December 2, 1998, by and among
FrontierVision Holdings, L.P., FrontierVision Holdings Capital II
Corporation and J.P. Morgan Securities, Inc. and Chase Securities
Inc., as Initial Purchasers (Incorporated by reference herein is
Exhibit 4.6 to FrontierVision Holdings, L.P.'s and FrontierVision
Holdings Capital II Corporation's Registration Statement on Form
S-4, Registration No. 333-75567.).
10.89 Registration Rights Agreement dated as of December 9, 1998, by and
among Frontier Vision Holdings, L.P., FrontierVision Holdings
Capital II Corporation and J.P. Morgan Securities Inc., and Chase
Securities, Inc., as Initial Purchasers (Incorporated by reference
herein is Exhibit 4.7 to FrontierVision Holdings, L.P.'s and
FrontierVision Holdings Capital II Corporation's Registration
Statement on Form S-4, Registration No. 333-75567.).
10.90 Indenture, dated as of November 15, 1988, by and between Century
Communications Corp. ("Century," now known as Arahova
Communications, Inc.) and the Bank of Montreal Trust Company, as
Trustee (Filed as Exhibit 4(l) to Amendment No. 7 to Century's
Registration Statement on Form S-1 (File No. 33-21394), which is
incorporated herein by reference.).
10.91 Indenture, dated as of October 15, 1991, by and between Century and
the Bank of Montreal Trust Company, as Trustee (Filed as Exhibit
4.2 to Amendment No. 2 to Century's Registration Statement on Form
S-3 (File No. 33-33787), which is incorporated herein by
reference.).
10.92 First Supplemental Indenture, dated as of October 15, 1991, by and
between Century and the Bank of Montreal Trust Company, as Trustee
(Filed as Exhibit 7(2) to Century's current report on Form 8-K,
dated October 17, 1991 and incorporated herein by reference.) (File
No. 0-16899).
10.93 Indenture, dated as of February 15, 1992, by and between Century
and the Bank of America National Trust and Savings Association, as
Trustee (Filed as Exhibit 4.3 to Amendment No. 2 to Century's
Registration Statement on Form S-3 (File No. 33-33787), which is
incorporated herein by reference.).
10.94 First Supplemental Indenture, dated as of February 15, 1992, by and
between Century and the Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(t) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1992 and
incorporated herein by reference.) (File No. 0-16899).
10.95 Second Supplemental Indenture, dated as of August 15, 1992, by and
between Century and Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(u) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1992 and
incorporated herein by reference.) (File No. 0-16899).
10.96 Third Supplemental Indenture, dated as of April 1, 1993, by and
between Century and Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(v) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1993 and
incorporated herein by reference.) (File No. 0-16899).
10.97 Fourth Supplemental Indenture, dated as of March 6, 1995, by and
between Century and Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(w) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1995, and
incorporated herein by reference.) (File No. 0-16899).
10.98 Fifth Supplemental Indenture, dated as of January 23, 1997, by and
between Century and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee (Filed as Exhibit 4.10 to
Century's Annual Report on Form 10-K for the fiscal year ended May
31, 1997, and incorporated herein by reference.) (File No.
0-16899).
10.99 Sixth Supplemental Indenture, dated as of September 29, 1997,
between Century and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee (Filed as Exhibit 10.2 to
Century's Quarterly Report on Form 10-Q for the quarterly period
ended August 31, 1997, and incorporated herein by reference.) (File
No. 0-16899).
10.100 Seventh Supplemental Indenture dated as of November 13, 1997
between Century and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee (Filed as Exhibit 4.1 to
Century's Quarterly Report on Form 10-Q for the quarterly period
ended November 30, 1997, and incorporated herein by reference.)
(File No. 0-16899).
10.101 Eighth Supplemental Indenture dated as of December 10, 1997 between
Century and First Trust of California, National Association, as
Trustee (Incorporated by reference herein is Exhibit 4.13 to Form
10-K of Century for fiscal year ended May 31, 1999.) (File No.
0-16899).
10.102 Indenture, dated as of January 15, 1998 between Century and First
Trust of California, National Association, as Trustee (Filed as
Exhibit 4 to Century's Registration Statement on Form S-4 (File No.
333-47161), which is incorporated herein by reference.)
(File No. 0-16899).
10.103* Employment Agreement, dated as of January 1, 1997, between Century
and Scott N. Schneider (Filed as Exhibit 10.4 to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1997, and
incorporated herein by reference.) (File No. 0-16899).
10.104* 1994 Stock Option Plan of Century (Filed as Exhibit 10(v)(3) to
Century's Annual Report on Form 10-K for the fiscal year ended May
31, 1995, and incorporated herein by reference.) (File No.
0-16899).
10.105 Amendment No. 1 to Management Agreement and Joint Venture Agreement
(Century ML Venture), dated September 21, 1987, between Century
Texas and ML Media Partners, L.P., a Delaware limited partnership
(Filed as Exhibit 10(w) to Century's Annual Report on Form 10-K for
the fiscal year ended May 31, 1989 and incorporated herein by
reference.) (File No. 0-16899).
10.106 Management Agreement and Joint Venture Agreement (Century-ML Radio
Venture), dated as of February 15, 1989, between Century Texas and
ML Media Partners, L.P., a Delaware limited partnership (Filed as
Exhibit 10(x) to Century's Annual Report on Form 10-K for the
fiscal year ended May 31, 1989 and incorporated herein by
reference.) (File No. 0-16899).
10.107 Credit Agreement dated as of April 15, 1997 among Citizens Century
Cable Television Venture, Bank of America, National Trust and
Savings Association, as Syndication Agent, and Societe General, as
Agent, Corestates Bank, N.A., The First National Bank of Boston,
LTCB Trust Company, and PNC Bank, National Association, as
Co-Agents, and each of the bank parties thereto (Filed as Exhibit
10.41 to Century's Annual Report on Form 10-K for the fiscal year
ended May 31, 1997, and incorporated herein by reference.) (File
No. 0-16899).
10.108* Employment Agreement, dated as of January 1, 1997, between Century
and Bernard P. Gallagher (Filed as Exhibit 10.1 to Century's
Quarterly Report on Form 10-Q for the quarterly period ended August
31, 1997, and incorporated herein by reference.) (File No.
0-16899).
10.109* Modification Agreement, dated as of June 1, 1998, between Century
and Scott N. Schneider (Filed as Exhibit 10.44 to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1998 and
incorporated by reference.) (File No. 0-16899).
10.110* Modification Agreement, dated as of June 1, 1998, between Century
and Bernard P. Gallagher (Filed as Exhibit 10.45 to Century's
Annual Report on Form 10-K for the fiscal year ended May 31, 1998
and incorporated by reference.) (File No. 0-16899).
10.111* Employment Agreement, dated as of July 1, 1997, between Century and
Leonard Tow (Filed as Exhibit 10.48 to Century's Annual Report on
Form 10-K for the fiscal year ended May 31, 1998 and incorporated
by reference.) (File No. 0-16899).
10.112 Agreement and Plan of Merger, dated as of July 2, 1998, between
Centennial Cellular Corp. and CCW Acquisition Corp (Filed as
Exhibit 10.49 to Century's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998 and incorporated by reference.)
(File No. 0-16899).
10.113 Ninth Supplemental Indenture, dated as of October 1, 1999 between
Arahova Communications, Inc. ("Arahova") and U.S. Bank Trust
National Association (the "Trustee"), successor trustee to Bank of
America National Trust and Savings Association, to the Indenture,
dated as of February 15, 1992 between Century Communications Corp.
and the Trustee (Incorporated herein by reference is Exhibit 4.01
to Form 10-Q for Arahova for the quarter ended November 30, 1999.)
(File No. 0-16899).
10.114 First Supplemental Indenture, dated as of October 1, 1999 between
Arahova Communications, Inc. and U.S. Bank Trust National
Association (the "Trustee"), to the Indenture, dated as of January
15, 1998 between Century Communications Corp. and the Trustee
(Incorporated herein by reference is Exhibit 4.02 to Form 10-Q for
Arahova for the quarter ended November 30, 1999.) (File No.
0-16899).
10.115 Agreement of Limited Partnership of Century-TCI California
Communications, L.P., dated as of December 7, 1999 (Filed
herewith.).
10.116 Credit Agreement dated as of December 3, 1999 among Century-TCI
Califiornia, L.P., Certain Lenders, Societe Generale and Deutsche
Bank Securities Inc., as Co-Syndication Agents, Salomon Smith
Barney Inc. as Lead Arranger and Sole Book Manager, Mellon Bank,
N.A. as Documentation Agent and Citibank, N.A. as Administrative
Agent (Filed herewith.).
10.117 Agreement and Plan of Reorganization dated as of December 8, 1999,
by and among Cablevision of the Midwest, Inc., Cablevision of the
Midwest Holding Co., Inc. Adelphia General Holdings II, Inc. and
the Registrant. (Filed herewith.).
10.118 Asset Purchase Agreement dated as of December 8, 1999, by and among
Telerama, Inc., Cablevision of Cleveland, L.P. and the Registrant
(Filed herewith)
10.119 Revolving Credit and Term Loan Agreement dated as of October 5,
1999, among Harron Communications Corp, the Subsidiary Guarantors
named therein, and the Agents and Lenders named therein (Filed
herewith.).
10.120 Underwriting Agreement dated as of November 10, 1999, among the
Underwriters and Representatives named therein and the Registrant,
regarding the 9-3/8% Senior Notes due 2009 of the Registrant (Filed
herewith.).
10.121 Amendment No. 2 to Amended Credit Facility of FrontierVision
Operating Partners, L.P., dated as of July 15, 1999 (Incorporated
herein by reference is Exhibit 10.21 to Form 10-K of FrontierVision
Holdings, L.P. for the year ended December 31, 1999) (File No.
333-36519).
21.01 Subsidiaries of the Registrant (Filed herewith.).
23.01 Consent of Deloitte & Touche LLP (Filed herewith.).
27.01 Financial Data Schedule (Filed herewith.).
99.01 Material incorporated by reference into this Annual Report on Form
10-K of the Olympus Communications, L.P. and Olympus Capital
Corporation Form 10-K for the year ended December 31, 1998.
<FN>
* Denotes management contracts and compensatory plans and arrangements
required to be identified by Item 14(a)(3).
</FN>
</TABLE>
The Registrant will furnish to the Commission upon request copies of
instruments not filed herewith which authorize the issuance of long-term
obligations of Registrant or its Subsidiaries not in excess of 10% of the
Registrant's total assets on a consolidated basis.
(b) The Registrant filed Form 8-Ks dated September 30, October 1 (4 separate
filings), October 25, November 23 and December 8, 1999, which reported
information under Items 2, 5 and 7 thereof. No financial statements were
filed with such Form 8-K reports, except that financial statements for
acquired companies were filed under Item 7 in one at the Form 8-K reports
dated October 1, 1999
(c) The Company hereby files as exhibits to this Annual Report on Form 10-K the
exhibits set forth in Item 14(a)(3) hereof which are not incorporated by
reference.
(d) The Company hereby files as financial statement schedules to this Annual
Report on Form 10-K the financial statement schedules set forth in Item
14(a)(2) hereof.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I (Page 1 of 4)
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Information as to the Financial Position of the Registrant
(Dollars in thousands)
December 31,
1998 1999
---------------- ---------------
ASSETS:
Investment in and net advances to cable television
<S> <C> <C>
subsidiaries and related parties $ 1,123,615 $ 6,878,819
Property and equipment - net 28,889 26,854
Cash and cash equivalents 105 106
Other assets - net 67,346 372,678
-------------- --------------
Total $ 1,219,955 $ 7,278,457
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY):
Losses and distributions in excess of investments in and net advances
to cable television subsidiaries $ 201,636 $ 544,983
Parent debt 1,810,212 2,777,919
Other debt 2,096 1,707
Accrued interest and other liabilities 79,566 84,298
---------------- ---------------
Total liabilities 2,093,510 3,408,907
Redeemable exchangeable preferred stock 148,191 148,363
Stockholders' equity (deficiency) - see consolidated financial
statements included herein for details (1,021,746) 3,721,187
-------------- --------------
Total $ 1,219,955 $ 7,278,457
================ ===============
</TABLE>
See notes to condensed financial information of the Registrant.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I (Page 2 of 4)
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Information as to the Operations of the Registrant
(Dollars in thousands)
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
INCOME: 1998 1998 1999
----------------------------------------------
<S> <C> <C> <C>
Income from subsidiaries and affiliates $ 65,369 $ 68,011 $ 129,265
------------- ------------- --------------
EXPENSES:
Operating expenses and fees to subsidiaries 2,144 316 2,037
Depreciation and amortization 7,408 4,106 11,480
Interest expense to subsidiaries and affiliates 16,831 12,902 24,389
Interest expense to others 134,984 108,809 182,121
------------- ------------- --------------
Total 161,367 126,133 220,027
------------- ------------- --------------
Loss before gain on sale of investments, equity in
net loss of subsidiaries and extraordinary items (95,998) (58,122) (90,762)
Gain on sale of investments 1,927 -- 2,354
Equity in net loss of subsidiaries (68,483) (52,671) (141,464)
------------- ------------- --------------
Loss before extraordinary loss (162,554) (110,793) (229,872)
Extraordinary loss on early retirement of debt
(net of income taxes of $7,200 in 1999) (11,325) (4,337) (10,658)
------------- ------------- --------------
Net loss (173,879) (115,130) (240,530)
Dividend requirements applicable to preferred stock (18,850) (20,718) (41,963)
------------- ------------- --------------
Net loss applicable to common stockholders $ (192,729) $ (135,848) $ (282,493)
============= ============= ==============
See notes to condensed financial information of the
Registrant.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I (Page 3 of 4)
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Condensed Information as to the Cash Flows of the Registrant
(Dollars in thousands)
Nine Months
Year Ended Ended Year Ended
March 31, December 31, December 31,
1998 1998 1999
--------------- ---------------- ----------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $ (173,879) $ (115,130) $ (240,530)
Adjustments to reconcile net loss to net cash (used for)
provided by operating activities:
Equity in net loss of subsidiaries 68,483 52,671 141,464
Gain on sale of investments (1,927) -- (2,354)
Extraordinary loss on debt retirement 11,325 4,337 10,658
Depreciation and amortization 7,408 4,106 11,480
Noncash interest expense 9,389 545 (2,792)
Change in operating assets and liabilities:
Other assets 1,661 15,554 95,068
Accrued interest and other liabilities 2,814 22,062 9,858
--------------- ---------------- ----------------
Net cash (used for) provided by operating activities (74,726) (15,855) 22,852
--------------- ---------------- ----------------
Cash flows from investing activities:
Investments in and advances to subsidiaries
and related parties - net (539,459) (664,629) (2,801,906)
Expenditures for property, plant and equipment (722) (835) --
Proceeds from sale of investments 12,678 -- 2,400
--------------- ---------------- ----------------
Net cash used for investing activities (527,503) (665,464) (2,799,506)
--------------- ---------------- ----------------
Cash flows from financing activities:
Proceeds from debt 624,142 299,232 1,250,000
Repayments of debt (232,421) (70,488) (279,891)
Issuance of redeemable exchangeable preferred stock 147,976 -- --
Issuance of convertible preferred stock 97,000 -- --
Issuance of Adelphia Business Solutions Class A common stock -- 205,559 262,413
Issuance of Class A common stock -- 275,880 1,215,999
Issuance of Series D convertible preferred stock -- -- 557,649
Payments to acquire treasury stock -- -- (149,401)
Costs associated with issuance of Class A common stock -- (7,954) (20,991)
Preferred stock dividends paid (14,787) (15,843) (41,898)
Premium paid on early retirement of debt (12,153) (2,095) (5,603)
Debt financing costs (7,522) (2,970) (11,622)
--------------- ---------------- ----------------
Net cash provided by financing activities 602,235 681,321 2,776,655
--------------- ---------------- ----------------
Increase in cash and cash equivalents 6 2 1
Cash and cash equivalents, beginning of period 97 103 105
--------------- ---------------- ----------------
Cash and cash equivalents, end of period $ 103 $ 105 $ 106
=============== ================ ================
Supplemental disclosure of cash flow activity -
Cash payments for interest $ 134,805 $ 97,972 $ 330,781
=============== ================ ================
See notes to condensed financial information of the Registrant.
</TABLE>
<PAGE>
SCHEDULE I (Page 4 of 4)
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Condensed Financial Information of the Registrant
(Dollars in thousands)
1. Amounts advanced between Adelphia and related parties:
Adelphia Communications Corporation ("Adelphia") has periodically advanced
to and borrowed funds from subsidiaries and affiliates. Adelphia and its
subsidiaries and affiliates charge interest on such amounts at rates ranging
from 3% to 16% with principal due upon demand five years after December 31,
1999.
2. Reclassifications:
Certain prior period amounts have been reclassified to conform with the
current period presentation.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Balance at Charged to Balance
Beginning Costs and Deductions- at End
of Period Expenses Write-Offs Acquisitions of Period
-------------- -------------- -------------- -------------- --------------
Year Ended March 31, 1998
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts $ 1,345 $ 8,685 $ 8,864 $ -- $ 1,166
============== ============== ============== ============== ==============
Valuation allowance for deferred tax assets $ 359,285 $ 48,775 $ -- $ -- $ 408,060
============== ============== ============== ============== ==============
Nine Months Ended December 31, 1998
Allowance for doubtful accounts $ 1,166 $ 8,765 $ 7,078 $ -- $ 2,853
============== ============== ============== ============== ==============
Valuation allowance for deferred tax assets $ 408,060 $ 31,220 $ -- $ -- $ 439,280
============== ============== ============== ============== ==============
Year Ended December 31, 1999
Allowance for doubtful accounts $ 2,853 $ 12,642 $ 1,097 $ 3,398 $ 17,796
============== ============== ============== ============== ==============
Valuation allowance for deferred tax assets $ 439,280 $ 71,133 $ -- $ (256,768) $ 253,645
============== ============== ============== ============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ADELPHIA COMMUNICATIONS CORPORATION
March 30, 2000 By: /s/ John J. Rigas
John J. Rigas,
Chairman, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<S> <C>
March 30, 2000 /s/ John J. Rigas
John J. Rigas,
Director
March 30, 2000 /s/ Timothy J. Rigas
Timothy J. Rigas,
Executive Vice President, Chief Financial Officer,
Chief Accounting Officer, Treasurer and Director
March 30, 2000 /s/ Michael J. Rigas
Michael J. Rigas,
Executive Vice President, Operations and Director
March 30, 2000 /s/ James P. Rigas
James P. Rigas,
Executive Vice President, Strategic Planning and Director
March 30, 2000 /s/ Peter L. Venetis
Peter L. Venetis,
Director
March 30, 2000 /s/ Dennis P. Coyle
Dennis P. Coyle,
Director
March 30, 2000 /s/ Pete J. Metros
Pete J. Metros,
Director
March 30, 2000 /s/ Perry S. Patterson
Perry S. Patterson,
Director
March 30, 2000 /s/ Leslie J. Gelber
Leslie J. Gelber,
Director
March 30, 2000 /s/ Erland E. Kailbourne
Erland E. Kailbourne,
Director
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
2.01 Agreement and Plan of Merger by and among Adelphia Communications
Corporation, Adelphia Acquisition Subsidiary, Inc., and Century
Communications Corp., dated as of March 5, 1999 (Incorporated
herein by reference is Exhibit 2.01 to the Registrant's Current
Report on Form 8-K for the event dated February 22, 1999.) (File
No. 0-16014).
2.02 Purchase Agreement, dated as of February 22, 1999, among
FrontierVision Partners, L. P., FVP GP, L. P., and certain direct
and indirect Limited Partners of FrontierVision Partners, L. P., as
sellers, and Adelphia Communications Corporation, as buyer
(Incorporated herein by reference is Exhibit 2.02 to the
Registrant's Current Report on Form 8-K for the event dated
February 22, 1999.) (File No. 0-16014).
2.03 Stock Purchase Agreement dated April 9, 1999 between Adelphia
Communications Corporation and the shareholders of Harron
Communications Corp. (Incorporated herein by reference is Exhibit
2.01 to the Registrant's Current Report on Form 8-K for the event
dated April 9, 1999.) (File No. 0-16014).
2.04 First Amendment to Agreement and Plan of Merger dated as of
July 12, 1999 with respect to merger with Century Communications
Corp. (Incorporated herein by reference is Exhibit 2.01 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
2.05 Second Amendment to Agreement and Plan of Merger dated as of
July 29, 1999 with respect to merger with Century Communications
Corp. (Incorporated herein by reference is Exhibit 2.02 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
3.01 Certificate of Incorporation of Adelphia Communications
Corporation, as amended (Incorporated herein by reference is
Exhibit 3.01 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999.) (File No. 0-16014).
3.02 Bylaws of Adelphia Communications Corporation, as amended
(Incorporated herein by reference is Exhibit 3.02 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.) (File No. 0-16014).
4.01 Certificate of Designations for 13% Series A and Series B
Cumulative Exchangeable Preferred Stock (Contained in Exhibit 3.01
to the Registrant's Current Report on Form 8-K dated July 24, 1997,
which is incorporated herein by reference.) (File No. 0-16014).
4.02 Certificate of Designations for Series C Convertible Preferred
Stock (Contained in Exhibit 3.01 to the Registrant's Current Report
on Form 8-K dated July 24, 1997, which is incorporated herein by
reference.) (File No. 0-16014).
4.03 Form of Indenture, with respect to the Registrant's 13% Senior
Subordinated Exchange Debentures due 2009, between the Registrant
and the Bank of Montreal Trust Company (Contained in Exhibit 3.01
as Annex A to Registrant's Current Report on Form 8-K dated July
24, 1997, which is incorporated herein by reference.) (File No.
0-16014).
4.04 Form of Certificate for 13% Cumulative Exchangeable Preferred
Stock (Incorporated herein by reference is Exhibit 4.06 to the
Registrant's Current Report on Form 8-K dated July 24, 1997.) (File
No. 0-16014).
4.05 Form of Certificate for Series C Convertible Preferred Stock
(Incorporated herein by reference is Exhibit 4.07 to the
Registrant's Current Report on Form 8-K dated July 24, 1997.) (File
No. 0-16014).
4.06 Indenture, dated as of January 13, 1999, with respect to the
Registrant's 7-1/2% Senior Notes due 2004 and 7-3/4% Senior Notes
due 2009, between the Registrant and the Bank of Montreal Trust
Company (Incorporated by reference herein is Exhibit 4.03 to the
Registrant's Current Report on Form 8-K filed on January 28, 1999.)
(File No. 0-16014).
4.07 Registration Rights Agreement between Adelphia Communications
Corporation and the Initial Purchaser, dated January 13, 1999,
regarding the Registrant's 7-1/2% Senior Notes due 2004 and 7-3/4%
Senior Notes due 2009 (Incorporated by reference herein is Exhibit
4.04 to the Registrant's Current Report on Form 8-K, filed on
January 28, 1999.) (File No. 0-16014).
4.08 Form of 7-1/2% Senior Note due 2004 (Contained in Exhibit 4.07).
4.09 Form of 7-3/4% Senior Note due 2009 (Contained in Exhibit 4.07).
4.10 Indenture dated as of March 2, 1999, with respect to Hyperion
Telecommunications, Inc. 12% Senior Subordinated Notes due 2007,
between Hyperion and the Bank of Montreal Trust Company
(Incorporated by reference herein is Exhibit 4.01 to the
Registrant's Current Report on Form 8-K filed on March 10, 1999.)
(File No. 0-16014).
4.11 Form of 12% Senior Subordinated Notes due 2007 (Contained in
Exhibit 4.10).
4.12 Registration Rights Agreement between Hyperion Telecommunications,
Inc. and the Initial Purchasers, dated March 2, 1999, regarding
Hyperion's 12% Senior Subordinated Notes due 2007 (Incorporated by
reference herein is Exhibit 10.04 to the Registrant's Current
Report on Form 8-K filed on March 10, 1999.) (File No. 0-16014).
4.13 Base Indenture, dated as of April 28, 1999, with respect to the
Registrant's Senior Indebtedness, between the Registrant and The
Bank of Montreal Trust Company (Incorporated by reference herein is
Exhibit 4.01 to the Registrant's Current Report on Form 8-K filed
on April 28, 1999.) (File No. 0-16014).
4.14 First Supplemental Indenture, dated as of April 28, 1999, to April
28, 1999 Base Indenture, with respect to the Registrant's 7-7/8%
Senior Notes due 2009, between the Registrant and The Bank of
Montreal Trust Company (Incorporated by reference herein is Exhibit
4.02 to the Registrant's Current Report on Form 8-K filed on April
28, 1999.) (File No. 0-16014).
4.15 Form of 7-7/8% Senior Note due 2009 (Contained in Exhibit 4.14).
4.16 Second Supplemental Indenture, dated as of November 16, 1999, to
April 28, 1999 Base Indenture, with respect to the Registrant's
9-3/8% Senior Notes due 2009, between Harris Trust Company and the
Registrant (Filed herewith.).
4.17 Form of 9-3/8% Senior Note due 2009 (Contained in Exhibit 4.16.).
4.18 Certificate of Designations with respect to the Registrant's
5 1/2% Series D Convertible Preferred Stock (incorporated by
reference herein is Exhibit 3.01 to the Current Report on Form 8-K
of the Registrant for the event dated April 28, 1999.) (File No.
0-16014).
10.01 Class B Common Stockholders Agreement (Incorporated herein by
reference is Exhibit 10.01 to Registration Statement No. 33-6974 on
Form S-1.).
10.02 Joinder to Class B Common Stockholders Agreement (Incorporated
herein by reference is Exhibit 10.02 to Registrant's Annual Report
on Form 10-K for the fiscal year ended March 31, 1994.) (File No.
0-16014).
10.03 Registration Rights Agreement and Amendment to Registration Rights
Agreement (Incorporated herein by reference are Exhibit 10.02 to
Registration Statement No. 33-6974 on Form S-1 and Exhibit 10.35 to
Registration Statement No. 33-25121 on Form S-1.).
10.04 Form of Management Agreement for Managed Companies (Incorporated
herein by reference is Exhibit 10.04 to the Registrant's Annual
Report on Form 10-K for fiscal year ended March 31, 1996.) (File
No. 0-16014).
10.05 Management Agreement - Montgomery Cablevision Associates, L.P.
(Incorporated herein by reference is Exhibit 10.08 to Registration
Statement No. 33-6974 on Form S-1.).
10.06 Management Agreement - Adelphia Cablevision Associates of
Radnor, L.P. (Incorporated herein by reference is Exhibit 10.09 to
Registration Statement No. 33-6974 on Form S-1.).
10.07 Business Opportunity Agreement (Incorporated herein by reference is
Exhibit 10.13 to Registration Statement No. 33-3674 on Form S-1.).
10.08* Employment Agreement between the Company and John J. Rigas
(Incorporated herein by reference is Exhibit 10.14 to Registration
Statement No. 33-6974 on Form S-1.).
10.09* Employment Agreement between the Company and Timothy J. Rigas
(Incorporated herein by reference is Exhibit 10.16 to Registration
Statement No. 33-6974 on Form S-1.).
10.10* Employment Agreement between the Company and Michael J. Rigas
(Incorporated herein by reference is Exhibit 10.17 to Registration
Statement No. 33-6974 on Form S-1.).
10.11* Employment Agreement between the Company and James P. Rigas
(Incorporated herein by reference is Exhibit 10.18 to Registration
Statement No. 33-6974 on Form S-1.).
10.12 Olympus Communications, L.P. ("Olympus") Second Amended and
Restated Limited Partnership Agreement, dated as of February 28,
1995 (Incorporated herein by reference is Exhibit 10.32 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
March 31, 1995.) File No. 0-16014).
10.13 Revolving Credit Facility among Adelphia Cable Partners, L.P.,
Southwest Florida Cable, Inc., West Boca Acquisition Limited
Partnership and Toronto-Dominion (Texas), Inc., as Administrative
Agent, dated May 12, 1995 (Incorporated herein by reference is
Exhibit 10.03 to the Registrant's Current Report on Form 8-K dated
June 30, 1995.) (File No. 0-16014).
10.14 Credit Agreement, dated as of April 12, 1996, among Chelsea
Communications, Inc., Kittanning Cablevision Inc., Robinson/Plum
Cablevision L.P., the several banks and financial institutions
parties thereto, and Toronto Dominion (Texas), Inc. as
Administrative Agent (Incorporated herein by reference is Exhibit
10.36 to Registrant's Current Report on Form 8-K dated June 3,
1996.) (File No. 0-16014).
10.15 Warrant Agreement dated as of April 15, 1996, by and among Hyperion
Telecommunications, Inc. ("Hyperion," now known as Adelphia
Business Solutions, Inc.) and Bank of Montreal Trust Company
(Incorporated by reference is Exhibit 10.13 to Registration
Statement No. 333-06957 on Form S-4 for Hyperion
Telecommunications, Inc.).
10.16 Warrant Registration Rights Agreement dated as of April 15, 1996,
by and among Hyperion Telecommunications, Inc. and the Initial
Purchasers (Incorporated by reference is Exhibit 10.14 to
Registration Statement No. 333-06957 on Form S-4 for Hyperion
Telecommunications, Inc.).
10.17* Hyperion Telecommunications, Inc. 1996 Long-Term Incentive
Compensation Plan (Incorporated herein by reference is Exhibit
10.17 to Hyperion Telecommunications, Inc.'s Registration Statement
No. 333-13663 on Form S-1.).
10.18 Registration Rights Agreement among Charles R. Drenning, Paul D.
Fajerski, Randolph S. Fowler, Adelphia Communications Corporation
and Hyperion Telecommunications, Inc. (Incorporated herein by
reference is Exhibit 10.18 to Hyperion Telecommunications, Inc.'s
Registration Statement No. 333-13663 on Form S-1.).
10.19 Registration Rights Agreement between Adelphia Communications
Corporation and Hyperion Telecommunications, Inc. (Incorporated
herein by reference is Exhibit 10.19 to Hyperion
Telecommunications, Inc.'s Registration Statement No. 333-13663 on
Form S-1.).
10.20 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated September 1, 1995
(Incorporated herein by reference is Exhibit 10.33 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1996.) (File No. 0-16014).
10.21 First Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated March 29, 1996
(Incorporated herein by reference is Exhibit 10.34 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1996.) (File No. 0-16014).
10.22 Second Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated June 27, 1996
(Incorporated herein by reference is Exhibit 10.35 to the
Registrant's Annual Report on Form 10-K/A for the fiscal year ended
March 31, 1996.) (File No.0-16014).
10.23 Extension Agreement dated as of January 8, 1997, among Hyperion
Telecommunications, Inc., Adelphia Communications Corporation,
Charles R. Drenning, Paul D. Fajerski, Randolph S. Fowler, and six
Trusts named therein (Incorporated herein by reference is Exhibit
10.04 to Adelphia Communications Corporation's Current Report on
Form 8-K dated May 1, 1997.) (File No. 0-16014).
10.24 Registration Rights Agreement among Adelphia Communications
Corporation, Highland Holdings and Telesat Cablevision, Inc., dated
July 7, 1997 (Incorporated herein by reference is Exhibit 10.04 to
the Registrant's Current Report on Form 8-K dated July 24, 1997.)
(File No. 0-16014).
10.25 Series C Preferred Stock Purchase Agreement among Adelphia
Communications Corporation, Highland Holdings and Telesat
Cablevision, Inc., dated June 22, 1997 (Incorporated herein by
reference is Exhibit 10.06 to the Registrant's Current Report on
Form 8-K dated July 24, 1997.) (File No. 0-16014).
10.26 Pledge Agreement between Hyperion and the Bank of Montreal Trust
Company as Collateral Agent, dated as of August 27, 1997
(Incorporated by reference herein is Exhibit 4.03 to Hyperion's
Current Report on Form 8-K dated August 27, 1997.) (File No.
0-21605).
10.27 Pledge, Escrow and Disbursement Agreement, between Hyperion and th
Bank of Montreal Trust Company dated as of August 27, 1997
(Incorporated by reference herein to Exhibit 4.05 to Hyperion's
Current Report on Form 8-K dated August 27, 1997.) (File No.
0-21605).
10.28 Purchase Agreement among Adelphia Communications Corporation and
Salomon Brothers Inc. dated January 15, 1998 (Incorporated by
reference herein is Exhibit 10.01 to the Registrant's Current
Report on Form 8-K dated January 21, 1998.) (File No. 0-16014).
10.29* Management Services Agreement dated as of April 10, 1998, between
the Registrant and Hyperion Telecommunications, Inc. (Incorporated
herein by reference is Exhibit 10.23 to Registration Statement No.
333-48209 on Form S-1 filed by Hyperion Telecommunications, Inc.).
10.30 Letter Agreement dated April 10, 1998, among Hyperion
Telecommunications, Inc., the Registrant and MCImetro Access
Transmission Services, Inc. (Incorporated herein by reference is
Exhibit 10.24 to Registration Statement No. 333-48209 on Form S-1
filed by Hyperion Telecommunications, Inc.).
10.31 Amendment to Registration Rights Agreement dated as of April
15, 1998, between Hyperion Telecommunications, Inc. and the
Registrant (Incorporated herein by reference is Exhibit 10.25 to
Registration Statement No. 333-48209 on Form S-1 filed by Hyperion
Telecommunications, Inc.).
10.32 Letter Agreement dated as of April 9, 1998, between Hyperion
Telecommunications, Inc. and the Registrant regarding the purchase
of Hyperion's Class A Common Stock (Incorporated herein by
reference is Exhibit 10.26 to Registration Statement No. 333-48209
on Form S-1 filed by Hyperion Telecommunications, Inc.).
10.33 U.S. Underwriting Agreement dated May 4, 1998 among Hyperion
Telecommunications, Inc. and the Representatives named therein
(Incorporated herein by reference is Exhibit 10.01 to Hyperion
Telecommunications, Inc.'s Current Report on Form 8-K dated June
24, 1998.) (File No. 0-21605).
10.34 International Underwriting Agreement dated May 4, 1998 among
Hyperion Telecommunications, Inc. and the Representatives named
therein (Incorporated herein by reference is Exhibit 10.02 to
Hyperion Telecommunications, Inc.'s Current Report on Form 8-K
dated June 24, 1998.) (File No. 0-21605).
10.35 Warrant issued by Hyperion Telecommunications, Inc. to MCI dated
May 8, 1998 (Incorporated herein by reference is Exhibit 10.03 to
Hyperion Telecommunications, Inc.'s Current Report on Form 8-K
dated June 24, 1998.) (File No. 0-21605).
10.36 Warrant issued by Hyperion Telecommunications, Inc. to the
Registrant dated June 5, 1998 (Incorporated herein by reference is
Exhibit 10.04 to Hyperion Telecommunications, Inc.'s Current Report
on Form 8-K dated June 24, 1998.) (File No. 0-21605).
10.37 Purchase Agreement among Adelphia Communications Corporation and
Barclays Capital, Inc. dated June 29, 1998 (Incorporated herein by
reference is Exhibit 10.01 to the Registrant's Current Report on
Form 8-K dated July 23, 1998.).
10.38 U.S. Underwriting Agreement between the Registrant and the
Representatives of the U.S. Underwriters named therein, dated
August 12, 1998 (Incorporated herein by reference is Exhibit 10.01
to the Form 8-K of the Registrant for the event dated August 18,
1998.) (File No. 0-16014).
10.39 International Underwriting Agreement between the Registrant and
the Lead Managers of the Managers named therein, dated August 12,
1998 (Incorporated herein by reference is Exhibit 10.02 to the Form
8-K of the Registrant for the event dated August 18, 1998.) (File
No. 0-16014).
10.40 Direct Purchase Agreement between the Registrant and Highland
Communications, L.L.C., dated August 12, 1998 (Incorporated herein
by reference is Exhibit 10.03 to the Form 8-K of the Registrant for
the event dated August 18, 1998.) (File No. 0-16014).
10.41* Adelphia Communications Corporation 1998 Long-Term Incentive
Compensation Plan (Incorporated herein by reference is Exhibit A to
the Registrant's Proxy Statement for the Annual Meeting of
Stockholders on October 6, 1998.) (File No. 0-16014).
10.42 Distribution Agreement dated as of August 31, 1998 among Syracuse
Hilton Head Holdings, L.P., Adelphia Communications Corporation and
SHHH Acquisition Corp. (Incorporated herein by reference is Exhibit
10.05 to the Form 10-Q of the Registrant for the quarter ended
September 30, 1998.) (File No. 0-16014).
10.43 Second Amendment to Credit Agreement, dated as of April 12, 1996,
among Chelsea Communications, Inc., Kittanning Cablevision Inc.,
Robinson/Plum Cablevision L. P., the several banks and financial
institutions parties thereto, and Toronto Dominion (Texas), Inc. as
Administrative Agent (Incorporated herein by reference is Exhibit
10.06 to the Form 10-Q of the Registrant for the quarter ended
September 30, 1998.) (File No. 0-16014).
10.44 Purchase Agreement among Adelphia Communications Corporation and
Barclays Capital, Inc. (the "Initial Purchaser") dated November 6,
1998 (Incorporated by reference herein is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K, filed January 28, 1999.)
(File No. 0-16014).
10.45 Purchase Agreement among Adelphia Communications Corporation and
Salomon Smith Barney, Inc., Credit Suisse First Boston Corporation,
Goldman Sachs & Co., Lehman Brothers, Inc. and NationsBank
Montgomery Securities LLC (the "Initial Purchasers") dated January
6, 1999 (Incorporated by reference herein is Exhibit 10.02 to the
Registrant's Current Report on Form 8-K, filed January 28, 1999.)
(File No. 0-16014).
10.46 Credit Agreement, dated as of December 30, 1998, among Parnassos,
L.P. as the Borrower, various financial institutions as the
Lenders, the Bank of Nova Scotia as the Administrative Agent,
Nationsbank, N.A. as the Documentation Agent, and TD Securities
(USA) Inc. as the Syndication Agent (Incorporated by reference
herein is Exhibit 10.03 to the Registrant's Current Report on Form
8-K, filed January 28, 1999.) (File No. 0-16014).
10.47 Registration Rights Agreement among Adelphia Communications
Corporation, Doris Holdings, L.P. and Highland Holdings II dated
January 14, 1999 (Incorporated by reference herein is Exhibit 10.04
to the Registrant's Current Report on Form 8-K, filed January 28,
1999.) (File No. 0-16014).
10.48 Underwriting Agreement dated January 11, 1999 between the
Registrant and Goldman, Sachs & Co. (Incorporated by reference
herein is Exhibit 1.01 to the Registrant's Current Report on Form
8-K, filed January 13, 1999.) (File No. 0-16014).
10.49 Purchase Agreement between the Registrant and Highland Holdings II
dated January 11, 1999 (Incorporated by reference herein is Exhibit
10.01 to the Registrant's Current Report on Form 8-K, filed January
13, 1999.) (File No. 0-16014).
10.50 Stock Purchase Agreement dated January 28, 1999 (Incorporated
herein by reference is Exhibit 13 to Amendment No. 3 to Schedule
13D filed February 8, 1999 on behalf of FPL Group, Inc.).
10.51 Class B Voting Agreement, dated as of March 5, 1999, among Adelphia
Communications Corporation, Leonard Tow, The Claire Tow Trust, and
the Trust Created by Claire Tow under date of December 10, 1979
(Incorporated herein by reference is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K for the event dated
February 22, 1999.) (File No. 0-16014).
10.52 Rigas Class B Voting Agreement , dated as of March 5, 1999, among
Century Communications Corp., John Rigas, Michael Rigas, Timothy
Rigas and James Rigas (Incorporated herein by reference is Exhibit
10.02 to the Registrant's Current Report on Form 8-K for the event
dated February 22, 1999.) (File No. 0-16014).
10.53 Purchase Agreement between Hyperion Telecommunications, Inc. and
the Initial Purchasers named therein, dated as of February 25,
1999, regarding Hyperion's 12% Senior Subordinated Notes due 2007
(Incorporated herein by reference is Exhibit 10.03 to the
Registrant's Current Report on Form 8-K for the event dated
February 22, 1999.) (File No. 0-16014).
10.54 Purchase Agreement between Hyperion Telecommunications, Inc. and
Highland Holdings, dated as of February 25, 1999, regarding
Hyperion's 12% Senior Subordinated Notes due 2007 (Incorporated
herein by reference is Exhibit 10.05 to the Registrant's Current
Report on Form 8-K for the event dated February 22, 1999.) (File
No. 0-16014).
10.55 Class B Common Stock Purchase Letter Agreement dated April 9, 1999
between Adelphia Communications Corporation and Highland Holdings
(Incorporated herein by reference is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K for the event dated April
9, 1999.) (File No. 0-16014).
10.56 Class A Common Stock Underwriting Agreement among Adelphia
Communications Corporation, Salomon Smith Barney Inc. and the other
underwriters named therein, as representatives of the Underwriters,
dated April 23, 1999 (Incorporated by reference herein is Exhibit
1.01 to the Current Report on Form 8-K of the Registrant for the
event dated April 28, 1999.) (File No. 0-16014).
10.57 7-7/8% Senior Notes Underwriting Agreement among Adelphia
Communications Corporation and Chase Securities Inc., as
representative of the Underwriters, dated April 23, 1999
(Incorporated by reference herein is Exhibit 1.02 to the Current
Report on Form 8-K of the Registrant for the event dated April 28,
1999.) (File No. 0-16014).
10.58 5-1/2% Series D Convertible Preferred Stock Underwriting Agreement
among Adelphia Communications Corporation and Salomon Smith Barney
Inc., as representative of the Underwriters, dated April 26, 1999
(Incorporated by reference herein is Exhibit 1.03 to the Current
Report on Form 8-K of the Registrant for the event dated April 28,
1999.) (File No. 0-16014).
10.59 Indenture, dated as of February 26, 1997, between the Registrant
and Bank of Montreal Trust Company with respect to the Registrant's
9-7/8% Senior Notes Due 2007 (Incorporated herein by reference is
Exhibit 4.01 to the Registrant's Current Report on Form 8-K dated
May 1, 1997.) (File No. 0-16014).
10.60 Indenture, dated as of April 15, 1996, between Hyperion
Telecommunications, Inc. and Bank of Montreal Trust Company
(Incorporated by reference is Exhibit 4.1 to Registration Statement
No. 333-06957 on Form S-4 filed for Hyperion Telecommunications,
Inc.).
10.61 First Supplemental Indenture, dated as of September 11, 1996,
between Hyperion Telecommunications, Inc. and Bank of Montreal
Trust Company (Incorporated herein be reference is Exhibit 4.2 to
Hyperion Telecommunications, Inc.'s Registration Statement No.
333-12619 on Form S-3, formerly on Form S-1.).
10.62 Indenture, dated as of November 12, 1996, between Olympus
Communications, L.P., Olympus Capital Corporation and Bank of
Montreal Trust Company (Incorporated herein by reference is Exhibit
10.02 to the Registrant's Current Report on Form 8-K dated December
16, 1996.) (File No. 0-16014).
10.63 Indenture, dated as of August 27, 1997, with respect to Hyperion
Telecommunications, Inc. ("Hyperion") 12-1/4% Senior Secured Notes
due 2004, between Hyperion and the Bank of Montreal Trust Company
(Incorporated herein by reference to Exhibit 4.01 to Hyperion's
Current Report on Form 8-K dated August 27, 1997.) (File No.
0-21605).
10.64 Second Supplemental Indenture, dated as of August 27, 1997, between
Hyperion and the Bank of Montreal Trust Company, regarding
Hyperion's 13% Senior Discount Notes due 2003 (Incorporated by
reference herein to Exhibit 4.06 to Hyperion's Current Report on
Form 8-K dated August 27, 1997.) (File No. 0-21605).
10.65 Indenture, dated as of September 25, 1997, with respect to the
Registrant's 9-1/4% Senior Notes due 2002, between the Registrant
and the Bank of Montreal Trust Company (Incorporated herein by
reference is Exhibit 4.01 to the Registrant's Current Report on
Form 8-K dated September 25, 1997.) (File No. 0-16014).
10.66 Indenture, dated as of January 21, 1998, with respect to the
Registrant's 8-3/8% Senior Notes due 2008, between the Registrant
and the Bank of Montreal Trust Company (Incorporated by reference
herein is Exhibit 4.01 to the Registrant's Current Report on Form
8-K dated January 21, 1998.) (File No. 0-16014).
10.67 First Supplemental Indenture, dated as of November 12, 1998, to
January 1998 Indenture with respect to the Registrant's 8-3/8%
Senior Notes due 2008, between the Registrant and the Bank of
Montreal Trust Company (Incorporated by reference herein is Exhibit
4.01 to the Registrant's Current Report on Form 8-K filed on
January 28, 1999.) (File No. 0-16014).
10.68 Registration Rights Agreement between Adelphia Communications
Corporation and the Initial Purchaser, dated November 12, 1998,
regarding the Registrant's 8-3/8% Senior Notes due 2008
(Incorporated by reference herein is Exhibit 4.02 to the
Registrant's Current Report on Form 8-K filed on January 28, 1999.)
(File No. 0-16014).
10.69 Registration Rights Agreement dated as of July 12, 1999, among
Adelphia, the Century Class B Holders and Ms. Claire Tow
(Incorporated herein by reference is Exhibit 10.01 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
10.70 Tag-Along Rights Agreement dated as of July 12, 1999, among
Adelphia, the Century Class B Holders, Ms. Claire Tow and the
holders of Adelphia Class B Common Stock named therein
(Incorporated herein by reference is Exhibit 10.02 to the
Registrant's Current Report on Form 8-K for the event dated July
12, 1999.) (File No. 0-16014).
10.71 Purchase Agreement dated as of July 12, 1999, between Adelphia and
Citizens Cable Company (Incorporated herein by reference is Exhibit
10.03 to the Registrant's Current Report on Form 8-K for the event
dated July 12, 1999.) (File No. 0-16014).
10.72 Underwriting Agreement dated October 1, 1999 regarding the sale of
6,000,000 shares of Class A common stock of Adelphia (Incorporated
herein by reference is Exhibit 1.01 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999.)
(File No. 0-16014).
10.73 Stock Purchase Agreement dated October 1, 1999 between Adelphia
Communications Corporation and Highland Holdings (Incorporated
herein by reference is Exhibit 10.01 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999.)
(File No. 0-16014).
10.74 Bank Credit Facility dated May 6, 1999 among the Registrant, other
borrowers and the lenders named therein (Incorporated herein by
reference to Exhibit 10.01 to Current Report on Form 8-K for the
event dated September 16, 1999 filed by Adelphia Communications
Corporation.) (File No. 0-16014).
10.75 Third Amendment to the Olympus Communications, L.P. Second Amended
and Restated Limited Partnership Agreement, dated October 1, 1999
(Incorporated herein by reference is Exhibit 3.8 to Form 10-K of
Olympus for fiscal year ended December 31, 1999.) (File No.
333-19327).
10.76 Amended Credit Agreement, dated as of March 29, 1996, among
Highland Video Associates L.P., Telesat Acquisition Limited
Partnership, Global Acquisition Partners, L.P., the various
financial institutions as parties thereto, Bank of Montreal as
syndication agent, Chemical Bank as documentation agent, and the
Bank of Nova Scotia as administrative agent (Incorporated herein by
reference is Exhibit 10.37 to Adelphia Communications Corporation's
Current Report on Form 8-K dated June 19, 1996.) (File No.0-16014).
10.77 First Amendment, dated as of July 31, 1998 for the Amended and
Restated Credit Agreement dated of as March 29, 1996 (Incorporated
here in by reference is Exhibit 10.2 to Olympus' Form 8-K dated
April 2,
1999.) (File No. 333-19327).
10.78 Redemption Agreement between Olympus Communications, LP and
Cable GP, Inc., dated as of October 1, 1999 (Incorporated by
reference herein is Exhibit 10.6 to Form 10-K of Olympus for fiscal
year ended December 31, 1999.) (File No. 333-19327).
10.79 Underwriting Agreement dated as of November 23, 1999 among Adelphia
Business Solutions, Inc., Salomon Smith Barney Inc. and the several
other Underwriters named therein (Incorporated herein by reference
is Exhibit 1.01 to Adelphia Business Solutions' Form 8-K for the
event dated November 23, 1999.) (File No. 0-21605).
10.80 Stock Purchase Agreement dated November 23, 1999 between Adelphia
Business Solutions, Inc. and Adelphia Communications Corporation
(Incorporated herein by reference is Exhibit 10.01 to Adelphia
Business Solutions' Form 8-K for the event dated November 23,
1999.) (File No. 0-21605).
10.81 Amended Bank Credit Facility (Incorporated by reference herein is
Exhibit 10.1 to FrontierVision Operating Partners, L.P.'s and
FrontierVision Capital Corporation's Registration Statement on Form
S-1, Registration No. 333-9535.).
10.82 Amendment No. 1 to Amended Bank Credit Facility (Incorporated by
reference herein is Exhibit 10.14 to FrontierVision Operating
Partners, L.P.'s and FrontierVision Capital Corporation's
Registration Statement on Form S-1, Registration No. 333-9535.).
10.83 Consent and Amendment No. 2 to Amended Bank Credit Facility
(Incorporated by reference herein is Exhibit 10.15 to
FrontierVision Operating Partners, L.P.'s and FrontierVision
Capital Corporation's Quarterly Report on Form 10-Q, File No.
333-9535 for the quarter ended September 30, 1996.).
10.84 Amended Credit Facility (Incorporated by reference herein is
Exhibit 10.18 to FrontierVision Holdings, L.P.'s and FrontierVision
Holdings Capital Corporation's Annual Report on Form 10-K, File
No. 333-36519 for the year ended December 31, 1997.).
10.85 Indenture dated as of October 7, 1996, among FrontierVision
Operating Partners, L.P., FrontierVision Capital Corporation and
Colorado National Bank, as Trustee (Incorporated by reference
herein is Exhibit 4.1 to FrontierVision Operating Partners, L.P.'s
and FrontierVision Capital Corporation's Quarterly Report on Form
10-Q, File No. 333-9535 for the quarter ended September 30, 1996.).
10.86 Indenture dated as of September 19, 1997, among FrontierVision
Holdings, L.P., FrontierVision Holdings Capital Corporation and
U.S. Bank National Association d/b/a Colorado National Bank, as
Trustee (Incorporated by reference herein is Exhibit 4.2 to
FrontierVision Holdings, L.P.'s and FrontierVision Holdings Capital
Corporation's Registration Statement on Form S-4, Registration No.
333-36519.).
10.87 Indenture dated as of December 9, 1998, among FrontierVision
Holdings, L.P., FrontierVision Holdings Capital II Corporation and
U.S. Bank National Association, as Trustee (Incorporated by
reference herein is Exhibit 4.5 to FrontierVision Holdings, L.P.'s
and FrontierVision Holdings Capital II Corporation's Registration
Statement on Form S-4, Registration No. 333-75567.).
10.88 Purchase Agreement dated as of December 2, 1998, by and among
FrontierVision Holdings, L.P., FrontierVision Holdings Capital II
Corporation and J.P. Morgan Securities, Inc. and Chase Securities
Inc., as Initial Purchasers (Incorporated by reference herein is
Exhibit 4.6 to FrontierVision Holdings, L.P.'s and FrontierVision
Holdings Capital II Corporation's Registration Statement on Form
S-4, Registration No. 333-75567.).
10.89 Registration Rights Agreement dated as of December 9, 1998, by and
among Frontier Vision Holdings, L.P., FrontierVision Holdings
Capital II Corporation and J.P. Morgan Securities Inc., and Chase
Securities, Inc., as Initial Purchasers (Incorporated by reference
herein is Exhibit 4.7 to FrontierVision Holdings, L.P.'s and
FrontierVision Holdings Capital II Corporation's Registration
Statement on Form S-4, Registration No. 333-75567.).
10.90 Indenture, dated as of November 15, 1988, by and between Century
Communications Corp. ("Century," now known as Arahova
Communications, Inc.) and the Bank of Montreal Trust Company, as
Trustee (Filed as Exhibit 4(l) to Amendment No. 7 to Century's
Registration Statement on Form S-1 (File No. 33-21394), which is
incorporated herein by reference.).
10.91 Indenture, dated as of October 15, 1991, by and between Century and
the Bank of Montreal Trust Company, as Trustee (Filed as Exhibit
4.2 to Amendment No. 2 to Century's Registration Statement on Form
S-3 (File No. 33-33787), which is incorporated herein by
reference.).
10.92 First Supplemental Indenture, dated as of October 15, 1991, by and
between Century and the Bank of Montreal Trust Company, as Trustee
(Filed as Exhibit 7(2) to Century's current report on Form 8-K,
dated October 17, 1991 and incorporated herein by reference.) (File
No. 0-16899).
10.93 Indenture, dated as of February 15, 1992, by and between Century
and the Bank of America National Trust and Savings Association, as
Trustee (Filed as Exhibit 4.3 to Amendment No. 2 to Century's
Registration Statement on Form S-3 (File No. 33-33787), which is
incorporated herein by reference.).
10.94 First Supplemental Indenture, dated as of February 15, 1992, by and
between Century and the Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(t) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1992 and
incorporated herein by reference.) (File No. 0-16899).
10.95 Second Supplemental Indenture, dated as of August 15, 1992, by and
between Century and Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(u) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1992 and
incorporated herein by reference.) (File No. 0-16899).
10.96 Third Supplemental Indenture, dated as of April 1, 1993, by and
between Century and Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(v) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1993 and
incorporated herein by reference.) (File No. 0-16899).
10.97 Fourth Supplemental Indenture, dated as of March 6, 1995, by and
between Century and Bank of America National Trust and Savings
Association, as Trustee (Filed as Exhibit 4(w) to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1995, and
incorporated herein by reference.) (File No. 0-16899).
10.98 Fifth Supplemental Indenture, dated as of January 23, 1997, by and
between Century and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee (Filed as Exhibit 4.10 to
Century's Annual Report on Form 10-K for the fiscal year ended May
31, 1997, and incorporated herein by reference.) (File No.
0-16899).
10.99 Sixth Supplemental Indenture, dated as of September 29, 1997,
between Century and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee (Filed as Exhibit 10.2 to
Century's Quarterly Report on Form 10-Q for the quarterly period
ended August 31, 1997, and incorporated herein by reference.) (File
No. 0-16899).
10.100 Seventh Supplemental Indenture dated as of November 13, 1997
between Century and First Trust of California, National
Association, successor trustee to Bank of America National Trust
and Savings Association, as Trustee (Filed as Exhibit 4.1 to
Century's Quarterly Report on Form 10-Q for the quarterly period
ended November 30, 1997, and incorporated herein by reference.)
(File No. 0-16899).
10.101 Eighth Supplemental Indenture dated as of December 10, 1997 between
Century and First Trust of California, National Association, as
Trustee (Incorporated by reference herein is Exhibit 4.13 to Form
10-K of Century for fiscal year ended May 31, 1999.) (File No.
0-16899).
10.102 Indenture, dated as of January 15, 1998 between Century and First
Trust of California, National Association, as Trustee (Filed as
Exhibit 4 to Century's Registration Statement on Form S-4 (File No.
333-47161), which is incorporated herein by reference.)
(File No. 0-16899).
10.103* Employment Agreement, dated as of January 1, 1997, between Century
and Scott N. Schneider (Filed as Exhibit 10.4 to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1997, and
incorporated herein by reference.) (File No. 0-16899).
10.104* 1994 Stock Option Plan of Century (Filed as Exhibit 10(v)(3) to
Century's Annual Report on Form 10-K for the fiscal year ended May
31, 1995, and incorporated herein by reference.) (File No.
0-16899).
10.105 Amendment No. 1 to Management Agreement and Joint Venture Agreement
(Century ML Venture), dated September 21, 1987, between Century
Texas and ML Media Partners, L.P., a Delaware limited partnership
(Filed as Exhibit 10(w) to Century's Annual Report on Form 10-K for
the fiscal year ended May 31, 1989 and incorporated herein by
reference.) (File No. 0-16899).
10.106 Management Agreement and Joint Venture Agreement (Century-ML Radio
Venture), dated as of February 15, 1989, between Century Texas and
ML Media Partners, L.P., a Delaware limited partnership (Filed as
Exhibit 10(x) to Century's Annual Report on Form 10-K for the
fiscal year ended May 31, 1989 and incorporated herein by
reference.) (File No. 0-16899).
10.107 Credit Agreement dated as of April 15, 1997 among Citizens Century
Cable Television Venture, Bank of America, National Trust and
Savings Association, as Syndication Agent, and Societe General, as
Agent, Corestates Bank, N.A., The First National Bank of Boston,
LTCB Trust Company, and PNC Bank, National Association, as
Co-Agents, and each of the bank parties thereto (Filed as Exhibit
10.41 to Century's Annual Report on Form 10-K for the fiscal year
ended May 31, 1997, and incorporated herein by reference.) (File
No. 0-16899).
10.108* Employment Agreement, dated as of January 1, 1997, between Century
and Bernard P. Gallagher (Filed as Exhibit 10.1 to Century's
Quarterly Report on Form 10-Q for the quarterly period ended August
31, 1997, and incorporated herein by reference.) (File No.
0-16899).
10.109* Modification Agreement, dated as of June 1, 1998, between Century
and Scott N. Schneider (Filed as Exhibit 10.44 to Century's Annual
Report on Form 10-K for the fiscal year ended May 31, 1998 and
incorporated by reference.) (File No. 0-16899).
10.110* Modification Agreement, dated as of June 1, 1998, between Century
and Bernard P. Gallagher (Filed as Exhibit 10.45 to Century's
Annual Report on Form 10-K for the fiscal year ended May 31, 1998
and incorporated by reference.) (File No. 0-16899).
10.111* Employment Agreement, dated as of July 1, 1997, between Century and
Leonard Tow (Filed as Exhibit 10.48 to Century's Annual Report on
Form 10-K for the fiscal year ended May 31, 1998 and incorporated
by reference.) (File No. 0-16899).
10.112 Agreement and Plan of Merger, dated as of July 2, 1998, between
Centennial Cellular Corp. and CCW Acquisition Corp (Filed as
Exhibit 10.49 to Century's Annual Report on Form 10-K for the
fiscal year ended May 31, 1998 and incorporated by reference.)
(File No. 0-16899).
10.113 Ninth Supplemental Indenture, dated as of October 1, 1999 between
Arahova Communications, Inc. ("Arahova") and U.S. Bank Trust
National Association (the "Trustee"), successor trustee to Bank of
America National Trust and Savings Association, to the Indenture,
dated as of February 15, 1992 between Century Communications Corp.
and the Trustee (Incorporated herein by reference is Exhibit 4.01
to Form 10-Q for Arahova for the quarter ended November 30, 1999.)
(File No. 0-16899).
10.114 First Supplemental Indenture, dated as of October 1, 1999 between
Arahova Communications, Inc. and U.S. Bank Trust National
Association (the "Trustee"), to the Indenture, dated as of January
15, 1998 between Century Communications Corp. and the Trustee
(Incorporated herein by reference is Exhibit 4.02 to Form 10-Q for
Arahova for the quarter ended November 30, 1999.) (File No.
0-16899).
10.115 Agreement of Limited Partnership of Century-TCI California
Communications, L.P., dated as of December 7, 1999 (Filed
herewith.).
10.116 Credit Agreement dated as of December 3, 1999 among Century-TCI
Califiornia, L.P., Certain Lenders, Societe Generale and Deutsche
Bank Securities Inc., as Co-Syndication Agents, Salomon Smith
Barney Inc. as Lead Arranger and Sole Book Manager, Mellon Bank,
N.A. as Documentation Agent and Citibank, N.A. as Administrative
Agent (Filed herewith.).
10.117 Agreement and Plan of Reorganization dated as of December 8, 1999,
by and among Cablevision of the Midwest, Inc., Cablevision of the
Midwest Holding Co., Inc. Adelphia General Holdings II, Inc. and
the Registrant. (Filed herewith.).
10.118 Asset Purchase Agreement dated as of December 8, 1999, by and among
Telerama, Inc., Cablevision of Cleveland, L.P. and the Registrant
(Filed herewith)
10.119 Revolving Credit and Term Loan Agreement dated as of October 5,
1999, among Harron Communications Corp, the Subsidiary Guarantors
named therein, and the Agents and Lenders named therein (Filed
herewith.).
10.120 Underwriting Agreement dated as of November 10, 1999, among the
Underwriters and Representatives named therein and the Registrant,
regarding the 9-3/8% Senior Notes due 2009 of the Registrant (Filed
herewith.).
10.121 Amendment No. 2 to Amended Credit Facility of FrontierVision
Operating Partners, L.P., dated as of July 15, 1999 (Incorporated
herein by reference is Exhibit 10.21 to Form 10-K of FrontierVision
Holdings, L.P. for the year ended December 31, 1999) (File No.
333-36519).
21.01 Subsidiaries of the Registrant (Filed herewith.).
23.01 Consent of Deloitte & Touche LLP (Filed herewith.).
27.01 Financial Data Schedule (Filed herewith.).
99.01 Material incorporated by reference into this Annual Report on Form
10-K of the Olympus Communications, L.P. and Olympus Capital
Corporation Form 10-K for the year ended December 31, 1998.
<FN>
* Denotes management contracts and compensatory plans and arrangements
required to be identified by Item 14(a)(3).
</FN>
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 4.16
ADELPHIA COMMUNICATIONS CORPORATION
AND
HARRIS TRUST COMPANY OF NEW YORK,
Trustee
$500,000,000 9-3/8% Senior Notes due November 15, 2009
SECOND SUPPLEMENTAL INDENTURE
Dated as of November 16, 1999
TO
INDENTURE
Dated as of April 28, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
i
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS
<S> <C>
ss.1.1. Definitions.............................................................................................1
ARTICLE 2 FORM AND TERMS OF THE NOTES
ss.2.1. Form and Dating.........................................................................................9
ss.2.2. Execution and Authentication...........................................................................10
ss.2.3. Depository and Paying Agent for Notes..................................................................11
ss.2.4. Transfer and Exchange of Notes.........................................................................11
ss.2.5. Change of Control Offer................................................................................13
ss.2.6. Events of Default......................................................................................15
ss.2.7. Acceleration...........................................................................................16
ss.2.8. Mergers and Consolidations.............................................................................17
ss.2.9. Supplemental Indentures................................................................................18
ss.2.10. Covenants.............................................................................................18
ss.2.11. Defeasance and Covenant Defeasance....................................................................23
ARTICLE 3 MISCELLANEOUS
ss.3.1. Effect of Headings.....................................................................................24
ss.3.2. Succesors and Assigns..................................................................................24
ss.3.3. Separability Clause....................................................................................24
ss.3.4. Governing Law..........................................................................................24
EXHIBITS
Exhibit A FORM OF NOTES
</TABLE>
<PAGE>
-4-
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of November 16,
1999 ("Supplemental Indenture"), is by and between ADELPHIA COMMUNICATIONS
CORPORATION, a Delaware corporation (the "Company"), having its principal office
at One North Main Street, Coudersport, PA 16195, and HARRIS TRUST COMPANY OF NEW
YORK, formerly known as Bank of Montreal Trust Company, a trust company
organized under the laws of the State of New York, as trustee (the "Trustee"),
having its principal office at Wall Street Plaza, 88 Pine Street, 19th Floor,
New York, NY 10005.
WITNESSETH:
WHEREAS, the Company and the Trustee executed and delivered an
Indenture, dated as of April 28, 1999 (the "Indenture"), to provide for the
issuance by the Company from time to time of Securities to be issued in one or
more series as provided in the Indenture;
WHEREAS, the issuance and sale of up to $500,000,000 aggregate
principal amount of a series of the Company's Securities (the "Notes") have been
authorized by resolutions adopted by the Board of Directors of the Company on
November 9, 1999 and by the 1999 Public Offering Commitee of the Board of
Directors of the Company on November 10, 1999, with such terms as have been
established by resolutions adopted by the 1999 Public Offering Committee of the
Board of Directors of the Company dated November 10, 1999;
WHEREAS, the Company desires to issue and sell $500,000,000
aggregate principal amount of the Notes on the date hereof;
WHEREAS, the Company desires to enter into a supplemental
indenture pursuant to Section 9.1 of the Indenture to supplement the Indenture
to establish the form and terms of the Notes; and
NOW, THEREFORE, for and in consideration of the premises
stated herein and the purchase of the Notes by the Holders thereof, the parties
hereto hereby enter into this Indenture, for the equal and proportionate benefit
of all Holders of Notes, as follows:
ARTICLE 1
DEFINITIONS
ss.1.1. Definitions.
-----------
(a) All of the terms used in this Supplemental Indenture which
are defined in the Indenture shall have the meanings specified in the Indenture,
unless otherwise provided herein or unless the context otherwise requires, and
for the purposes of this Supplemental Indenture, the following terms have the
meanings set forth in this Section:
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by, or is under
common control with, the Company, (ii) which beneficially owns or holds 10% or
more of any class of the voting Capital Stock of the Company, or (iii) of which
10% or more of the voting Capital Stock is beneficially owned or held by the
Company, a Restricted Subsidiary or an Unrestricted Subsidiary of the Company.
Without a limitation, an Affiliate also includes any director or executive
officer of the Company. As used herein, "Affiliate" shall not include a
Restricted Subsidiary.
"Agent" means any Security Registrar, Paying Agent,
co-registrar or agent for service of notices and demands. See Section 2.3
hereof.
"Agent Members" means members of, or participants in, the
Depository.
"Aggregate Excess Restricted Investments" means for any fiscal
quarter the aggregate of Excess Restricted Investments with respect to the
Restricted Investments in all of the Unrestricted Subsidiaries and Affiliates of
the Company.
"Allowable Securities" means (i) cash equivalents, (ii) common
or preferred Capital Stock in a Person which (x) has Investment Grade Senior
Debt or (y) whose ratio of Indebtedness plus Preferred Stock to Annualized Pro
Forma EBITDA is less than 7.75:1, or (iii) debt securities issued by a Person
which (x) has Investment Grade Senior Debt or (y) whose Leverage Ratio is less
than 7.75:1, provided that the securities in (ii)(y) and (iii)(y) above shall
only be deemed to be Allowable Securities if the principal business of the
Person is owning and operating cable television systems.
"Annualized Pro Forma EBITDA" means, with respect to any
Person, (i) such Person's Pro Forma EBITDA for the latest fiscal quarter
multiplied by four, minus (ii) in the case of the Company only, the Company's
Aggregate Excess Restricted Investments for such fiscal quarter.
"Asset Sale" means the sale, transfer or other disposition
(other than to the Company or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions of (a) any Capital Stock of or
other equity interest in any Restricted Subsidiary, (b) all or substantially all
of the assets of the Company or of any Restricted Subsidiary or (c) all or
substantially all of the assets of a Company System or part thereof serving at
least 5,000 basic subscribers, a division, line of business or comparable
business segment of the Company or any Restricted Subsidiary.
"Applicable Procedures" means the procedures of the
Depository.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of corporate stock, partnership
interests or any other participation, right or other interest in the nature of
any equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capital Stock Sale Proceeds" means the aggregate net sale
proceeds (including the fair market value of property, other than cash, as
determined by an independent appraisal firm) received by the Company from the
issue or sale (other than to a Subsidiary) by the Company of any class of its
Capital Stock on or after January 1, 1993 (including Capital Stock of the
Company issued after January 1, 1993 upon conversion of or in exchange for other
securities of the Company).
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Change of Control" means such time as (i) (a) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
other than the Rigas Family and its Affiliates, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of more than 35% of the total
voting power required to elect or designate for election a majority of the
Company's Board of Directors and attaching to the then outstanding voting
Capital Stock of the Company and (b) the Rigas Family, together with its
Affiliates, is not at such time the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 35% of the total voting power required to
elect or designate for election a majority of the Company's Board of Directors
and attaching to the then outstanding voting Capital Stock of the Company, or
(ii) during any period of two consecutive calendar years, individuals who at the
beginning of such period constituted the Company's Board of Directors (together
with any new directors whose election by the Company's Board of Directors or
whose nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved or approved by the Rigas Family and its
Affiliates at a time when they had the right or ability by voting right,
contract or otherwise to elect or designate for election a majority of the
Company's Board of Directors) cease for any reason to constitute a majority of
the directors then in office.
"Change of Control Triggering Event" means the occurrence of
both a Change of Control and a Rating Decline.
"Consolidated Fixed Charge Ratio" means, for any Person, for
any period, the ratio of (i) Annualized Pro Forma EBITDA to (ii) Consolidated
Interest Expense for such period multiplied by four.
"Consolidated Interest Expense" means, for any Person, for any
period, the amount of interest in respect of Indebtedness (including
amortization of original issue discount, amortization of debt issuance costs,
and non-cash interest payments on any Indebtedness and the interest portion of
any deferred payment obligation and after taking into account the effect of
elections made under any Interest Rate Agreement, however denominated, with
respect to such Indebtedness), the amount of Redeemable Dividends and the
interest component of rentals in respect of any Capitalized Lease Obligation
paid, accrued or scheduled to be paid or accrued by such Person during such
period, determined on a consolidated basis in accordance with GAAP. For purposes
of this definition, interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by such Person to be the
rate of interest implicit in such Capitalized Lease Obligation in accordance
with GAAP consistently applied.
"Cumulative Credit" means the sum of (i) Capital Stock Sale
Proceeds plus (ii) cumulative EBITDA of the Company from and after January 1,
1993 to the end of the fiscal quarter immediately preceding the date of a
proposed Restricted Payment, or, if such cumulative EBITDA for such period is
negative, minus the amount by which such cumulative EBITDA is less than zero.
"Cumulative Interest Expense" means the aggregate amount of
Consolidated Interest Expense paid, accrued or scheduled to be paid or accrued
by the Company from January 1, 1993 to the end of the fiscal quarter immediately
preceding a proposed Restricted Payment, determined on a consolidated basis in
accordance with GAAP.
"Definitive Notes" means Notes that are in the form of the
Notes attached hereto as Exhibit A, that do not include the information called
for by footnotes 1 and 2 thereof.
"Depository" means The Depository Trust Company and its
successors.
"EBITDA" means, for any Person, for any period, an amount
equal to (A) the sum of (i) consolidated net income for such period (exclusive
of any gain or loss realized in such period upon an Asset Sale), plus (ii) the
provision for taxes for such period based on income or profits to the extent
such income or profits were included in computing consolidated net income and
any provision for taxes utilized in computing net loss under clause (i) hereof,
plus (iii) Consolidated Interest Expense for such period, plus (iv) depreciation
for such period on a consolidated basis, plus (v) amortization of intangibles
for such period on a consolidated basis, plus (vi) any other non-cash items
reducing consolidated net income for such period, minus (B) all non-cash items
increasing consolidated net income for such period, all for such Person and its
Subsidiaries determined in accordance with GAAP consistently applied, except
that with respect to the Company, each of the foregoing items shall be
determined on a consolidated basis with respect to the Company and its
Restricted Subsidiaries only.
"Excess Restricted Investment" means, with respect to any
particular Unrestricted Subsidiary or Affiliate of the Company for a fiscal
quarter, the lesser of the amounts described in the following clauses (i) and
(ii), or if such amounts are equal, such amount:
(i) the aggregate amount of any Restricted
Investments (other than the Initial
Investment) made by the Company or any
Restricted Subsidiary with respect to such
Unrestricted Subsidiary or Affiliate and
during the twelve-month period ending on the
last day of such fiscal quarter;
(ii) cash income received during such quarter by
the Company with respect to its Restricted
Investments in such Unrestricted Subsidiary
or Affiliate multiplied by four;
and provided that cash income from a particular Restricted
Investment shall be included only (x) if cash income has been received by the
Company with respect to such Restricted Investment during each of the previous
two fiscal quarters, or (y) if the cash income derived from such Restricted
Investment is attributable to Allowable Securities.
"Global Note" means a permanent global note that contains the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 2 to the form of the Note attached hereto as Exhibit A, and that is
deposited with and registered in the name of the Depository.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Security Registrar's books.
"Indebtedness" is defined to mean (without duplication), with
respect to any Person, any indebtedness, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute subscriber
advance payments and deposits, accounts payable or trade payables, and other
accrued liabilities arising in the ordinary course of business) if and to the
extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and shall also
include, to the extent not otherwise included, (i) any Capitalized Lease
Obligations, (ii) obligations secured by a lien to which the property or assets
owned or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed, (iii) guaranties of items
of other Persons which would be included within this definition for such other
Persons (whether or not such items would appear upon the balance sheet of the
guarantor), (iv) in the case of the Company, Preferred Stock of its Restricted
Subsidiaries and (v) obligations of any such Person under any Interest Rate
Agreement applicable to any of the foregoing. Notwithstanding the foregoing,
Indebtedness shall not include any interest or accrued interest until due and
payable.
"Initial Investment" means the Restricted Investment in a
Person made by the Company or a Restricted Subsidiary that first results in such
Person becoming an Unrestricted Subsidiary or Affiliate of the Company, except
that in the case of Olympus, "Initial Investment" shall mean any Restricted
Investment made in Olympus since February 22, 1994, but only to the extent that
such Restricted Investment when aggregated with the other Restricted Investments
made in Olympus since such date does not exceed $25,000,000.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement designed to protect the party indicated therein
against fluctuations in interest rates.
"Investment Grade Senior Debt" means, with respect to any
Person, Indebtedness of such Person which has been rated with an investment
grade rating by Moody's or Standard & Poor's Corporation.
"Leverage Ratio" is defined as the ratio of (i) the
outstanding Indebtedness of a Person and its Subsidiaries (or in the case of the
Company, its Restricted Subsidiaries) divided by (ii) the Annualized Pro Forma
EBITDA of such Person.
"Lien" means with respect to any property or assets of the
Company (it being understood that for the purposes of this definition property
or assets of the Company do not include property or assets of any Subsidiary of
the Company) any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority, or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation, conditional
sale, or other title retention agreement having substantially the same economic
effect as any of the foregoing) except for (i) liens for taxes, assessments or
governmental charges or levies on property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested in
good faith and by appropriate proceedings; (ii) liens imposed by law such as
carriers', warehousemen's and mechanics' liens and other similar liens arising
in the ordinary course of business which secure payment of obligations not more
than sixty (60) days past due or are being contested in good faith and by
appropriate proceedings; (iii) other liens incidental to the conduct of its
business or the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit
and which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of its
business; (iv) utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character; or (v) liens arising
upon entry of a confession of judgment in Pennsylvania courts in connection with
borrowings not in excess of $1,000,000 in the aggregate.
"Notes" means the 9-3/8% Senior Notes due November 15, 2009
that are issued under this Supplemental Indenture, as amended or supplemented
from time to time pursuant to the Indenture.
"Olympus" means Olympus Communications, L.P., a Delaware
limited partnership.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Investments" means, for any Person, Restricted
Investments made on or after February 22, 1994 consisting of (i) advances for
less than one year issued in the ordinary course of business for working capital
purposes or for the purchase of property, plant and equipment in an amount not
to exceed $5,000,000 in the aggregate outstanding, (ii) with respect to a
Restricted Investment in Olympus, $25,000,000 plus the aggregate amount of cash
income received by the Company from Olympus, minus the aggregate amount of all
Restricted Investments made since February 22, 1994 with respect to Olympus,
(iii) $20,000,000 plus the cash proceeds from the sale or redemption of, or
income from, any Restricted Investments made on or after January 1, 1993, minus
the aggregate amount of all Restricted Investments (excluding Restricted
Investments made with respect to Olympus) since January 1, 1993, (iv) non-cash
Restricted Investments made with the non-cash proceeds from the sale or
redemption of, or income from, any Restricted Investments, or (v) an amount
which, at the time of such Restricted Investment, does not exceed the amount of
Restricted Payments that could then be made by the Company and its Restricted
Subsidiaries under Section 10.6; provided further that no Restricted Investments
may be made under (ii), (iii), (iv) or (v) unless pro forma for such Restricted
Investment the Company could incur $1 of debt under the first paragraph of
Section 10.5.
"Permitted Refinancing Indebtedness" means any renewals,
extensions, substitutions, refinancings or replacements of any Indebtedness,
including any successive extensions, renewals, substitutions, refinancings or
replacements so long as (i) the aggregate amount of Indebtedness represented
thereby is not increased by such renewal, extension, substitution, refinancing
or replacement, (ii) in the case of Indebtedness of the Company, the average
life and the date such Indebtedness is scheduled to mature is not shortened and
(iii) in the case of Indebtedness of the Company, the new Indebtedness shall not
be senior in right of payment to the Indebtedness that is being extended,
renewed, substituted, refinanced or replaced.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Pro Forma EBITDA" means for any Person, for any period, the
EBITDA of such Person, as determined on a consolidated basis in accordance with
GAAP consistently applied after giving effect to the following: (i) if, during
or after such period, such Person or any of its Subsidiaries shall have made any
Asset Sale, Pro Forma EBITDA of such Person and its Subsidiaries for such period
shall be reduced by an amount equal to the Pro Forma EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset Sale for
the period or increased by an amount equal to the Pro Forma EBITDA (if negative)
directly attributable thereto for such period and (ii) if, during or after such
period, such Person or any of its Subsidiaries completes an acquisition of any
Person or business which immediately after such acquisition is a Subsidiary of
such Person or whose assets are held directly by such Person or a Subsidiary of
such Person, Pro Forma EBITDA shall be computed so as to give pro forma effect
to the acquisition of such Person or business; and provided further that with
respect to the Company, all of the foregoing references to "Subsidiary" or
"Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary" or
"Restricted Subsidiaries" of the Company.
"Rating Date" means the date which is 90 days prior to the
earlier of (i) a Change of Control and (ii) public notice of the occurrence of a
Change of Control or of the intention of the Company to effect a Change of
Control.
"Rating Decline" means the occurrence of the following on, or
within 90 days after, the date of public notice of the occurrence of a Change of
Control or of the intention by the Company to effect a Change of Control (which
period shall be extended so long as the rating of the Notes is under publicly
announced consideration for possible downgrade by Moody's or Standard & Poor's
Corporation): (a) in the event the Notes are rated by either Moody's or Standard
& Poor's on the Rating Date as Investment Grade Senior Debt, the rating of the
Notes by both Moody's and Standard & Poor's shall be below Investment Grade
Senior Debt; or (b) in the event the Notes are rated below Investment Grade
Senior Debt by both Moody's and Standard & Poor's on the Rating Date, the rating
of the Notes by either Moody's or Standard & Poor's shall be decreased by one or
more gradations (including gradations within rating categories as well as
between rating categories).
"Redeemable Dividend" means, for any dividend with regard to
Redeemable Stock, the quotient of the dividend divided by the difference between
one and the maximum statutory federal income tax rate (expressed as a decimal
number between 1 and 0) then applicable to the issuer of such Redeemable Stock.
"Redeemable Stock" means with respect to any Person, any
Capital Stock that by its terms or otherwise is required to be redeemed or is
redeemable at the option of the holder at any time prior to the maturity of the
Notes.
"Restricted Investment" means any advance, loan, account
receivable (other than an account receivable arising in the ordinary course of
business), or other extension of credit (excluding, however, accrued and unpaid
interest in respect of any advance, loan or other extension of credit) or any
capital contribution to (by means of transfers of property to others, payments
for property or services for the account or use of others, or otherwise), any
purchase or ownership of any stocks, bonds, notes, debentures or other
securities (including, without limitation, any interests in any partnership or
joint venture) of, or any bank accounts with or guarantee of any Indebtedness or
other obligations of, any Unrestricted Subsidiary or Affiliate of the Company.
"Restricted Payment" means (i) any dividend or distribution
(whether made in cash, property or securities), on or with respect to any shares
of Capital Stock of the Company or Capital Stock of any Subsidiary which is
consolidated with the Company in accordance with GAAP consistently applied,
except for any dividend or distribution which is made solely to the Company or
another Subsidiary or dividends or distributions payable solely in shares of
Common Stock of the Company, or (ii) any redemption, repurchase, retirement or
other direct or indirect acquisition of (a) Indebtedness of the Company which is
subordinate in right of payment to the Notes, except by exchange for or out of
the proceeds of the substantially concurrent issuance of Permitted Refinancing
Indebtedness or from proceeds of a sale of Capital Stock by the Company, or (b)
shares of Capital Stock of the Company or any warrants, rights or options to
directly or indirectly purchase or acquire any such Capital Stock of the Company
or any securities exchangeable for or convertible into any such shares, other
than options issued or shares purchased or granted under the Company's Stock
Option Plan of 1986 or the Company's Restricted Stock Bonus Plan, from any
employee of the Company or any of its Subsidiaries who, together with any Person
that, directly or indirectly, controls (other than by virtue of being directly
or indirectly the employer of such employee), is controlled by or is under
common control with such employee, owns less than 1% of the outstanding Capital
Stock of the Company, except for the purchase, redemption, retirement or other
acquisition of any shares of the Company's Capital Stock by exchange for, or out
of the proceeds of the substantially concurrent sale of, other shares of its
Capital Stock other than any capital stock which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or redeemable at the option
of the holder thereof, in whole or in part, on or prior to November 15, 2009.
"Restricted Subsidiary" means (a) any Subsidiary of the
Company, whether existing on or after the date of this Indenture, unless such
Subsidiary is an Unrestricted Subsidiary or shall have been classified as an
Unrestricted Subsidiary by a resolution adopted by the Board of Directors of the
Company and (b) an Unrestricted Subsidiary which is reclassified as a Restricted
Subsidiary by a resolution adopted by the Board of Directors of the Company,
provided that on and after the date of such reclassification such Unrestricted
Subsidiary shall not incur Indebtedness other than that permitted to be incurred
by a Restricted Subsidiary under the provisions of this Indenture.
"Rigas Family" means collectively John J. Rigas and members of
his immediate family, any of their respective spouses, estates, lineal
descendants, heirs, executors, personal representatives, administrators, trusts
for any of their benefit and charitable foundations to which shares of the
Company's Capital Stock beneficially owned by any of the foregoing have been
transferred.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, officers or trustees thereof is held by such first-named Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise if in accordance
with GAAP such entity is consolidated with the first-named Person for financial
statement purposes.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary, (b) any Subsidiary of the Company which is classified
after the date of this Indenture as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors of the Company and (c) any subsidiary which as
of the date of the Indenture has been declared an Unrestricted Subsidiary by a
resolution adopted by the Board of Directors of the Company (such Unrestricted
Subsidiaries being Hyperion Telecommunications, Inc., Global Cablevision, Inc.,
Orchard Park Cablevision, Inc. and Global Acquisition Partners, L.P. on the date
hereof); provided that a Subsidiary organized or acquired after the date of this
Indenture may be so classified as an Unrestricted Subsidiary only if immediately
after the date of such classification, any investment by the Company and its
Restricted Subsidiaries in any such Subsidiary made at the time of the
organization or acquisition of such Subsidiary would be a Restricted Investment
permissible under this Indenture. The Trustee shall be given prompt notice by
the Company of each resolution adopted by its Board of Directors under this
provision, together with a copy of each such resolution adopted.
(b) Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
<S> <C>
"Change of Control Offer".............................................2.5
"Change of Control Purchase Price"....................................2.5
"DTC".................................................................2.3
"Event of Default"....................................................2.7
"Proposed Change of Control Response Date"............................2.5
"Reclassification"....................................................2.11
</TABLE>
ARTICLE 2
FORM AND TERMS OF THE NOTES
ss.2.1. Form and Dating.
---------------
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A attached hereto. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Notes. Notes shall be issued initially in the form
of the Global Notes, which shall be deposited on behalf of the purchasers of the
Notes represented thereby with the Depository at its New York office, and
registered in the name of the Depository or a nominee of the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Notes may from time to
time be increased or decreased by adjustments made on the records of the Trustee
and the Depository or its nominee as hereinafter provided.
The Global Notes shall represent such of the outstanding Notes
as shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of the Global Notes to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian (as hereinafter defined), at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.4 hereof.
Except as set forth in Section 2.4 hereof, the Global Notes
may be transferred, in whole and not in part, only to another nominee of the
Depository or to a successor of the Depository or its nominee.
(b) Book-Entry Provisions. This Section 2.1(b) shall
apply only to the Global Notes deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver the Global Notes that (i)
shall be registered in the name of the Depository or the nominee of the
Depository and (ii) shall be delivered by the Trustee to the Depository or
pursuant to the Depository's instructions or held by the Note Custodian.
Agent Members shall have no rights either under this Indenture
with respect to any Global Notes held on their behalf by the Depository or by
the Note Custodian or under such Global Notes, and the Depository may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Notes for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Company, the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices of such Depository governing the exercise of the rights of
an owner of a beneficial interest in the Global Notes.
(c) Definitive Notes. Notes issued in certificated form shall
be substantially in the form of Exhibit A attached hereto (but without including
the text referred to in footnotes 1 and 2 thereto). Except as provided in
Section 2.4, owners of beneficial interests in the Global Notes will not be
entitled to receive physical delivery of certificated Securities.
ss.2.2. Execution and Authentication.
----------------------------
An Officer shall sign the Notes for the Company by manual or
facsimile signature. If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid. A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by an Officer, authenticate up to $500,000,000 aggregate principal amount of
Notes for original issue. The aggregate principal amount of Notes outstanding at
any time may not exceed such amounts except as provided in Section 3.6 of the
Indenture.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
ss.2.3. Depository and Paying Agent for Notes.
-------------------------------------
The Company initially appoints The Depository Trust Company
("DTC") to act as Depository with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Security Registrar and Paying Agent respect to the Global Notes.
ss.2.4. Transfer and Exchange of Notes.
------------------------------
(a) Transfer and Exchange of Global Notes. The transfer and
exchange of beneficial interests in the Global Notes shall be effected through
the Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. Beneficial
interests in the Global Notes may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in the Global Notes.
(b) Transfer and Exchange of Definitive Notes. When
Definitive Notes are presented by a Holder to the Security Registrar with a
request:
(x) to register the transfer of the Definitive
Notes; or
(y) to exchange such Definitive Notes for an
equal principal amount of Definitive Notes
of other authorized denominations, the
Security Registrar shall register the
transfer or make the exchange as requested
if its requirements for such transactions
are met; provided, however, that the
Definitive Notes presented or surrendered
for register of transfer or exchange shall
be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory
to the Security Registrar duly executed by
such Holder or by his attorney, duly
authorized in writing.
(c) Intentionally omitted.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.4), the Global Notes may not be
transferred as a whole except by the Depository to a nominee of the Depository
or by a nominee of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor Depository or
a nominee of such successor Depository.
(e) Intentionally omitted.
(f) Authentication of Definitive Notes in Absence of
Depository. If at any time:
(i) the Depository for the Notes notifies the
Company that the Depository is unwilling or
unable to continue as Depository for the
Global Notes and a successor Depository for
the Global Notes is not appointed by the
Company within 90 days after delivery of
such notice; or
(ii) the Company at its sole discretion, notifies
the Trustee in writing that it elects to
cause the issuance of Definitive Notes under
this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Intentionally omitted.
(h) Cancellation and/or Adjustment of the Global Notes. At
such time as all beneficial interests in the Global Notes have been exchanged
for Definitive Notes, redeemed, repurchased or canceled, the Global Notes shall
be returned to or retained and canceled by the Trustee in accordance with
Section 3.9 of the Indenture. At any time prior to such cancellation, if any
beneficial interest in the Global Notes is exchanged for Definitive Notes,
redeemed, repurchased or canceled, the principal amount of Notes represented by
the Global Notes shall be reduced accordingly and an endorsement shall be made
on the Global Notes, by the Trustee or the Note Custodian, at the direction of
the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the
Trustee shall authenticate Definitive Notes
and the Global Notes at the Security
Registrar's request.
(ii) No service charge shall be made to a Holder
for any registration of transfer or
exchange, but the Company may require
payment of a sum sufficient to cover any
transfer tax or similar governmental charge
payable in connection therewith (other than
any such transfer taxes or similar
governmental charge payable upon exchange or
transfer pursuant to Section 2.4 hereto).
(iii) All Definitive Notes and the Global Notes
issued upon any registration of transfer or
exchange of Definitive Notes or the Global
Notes shall be the valid obligations of the
Company, evidencing the same debt, and
entitled to the same benefits under this
Indenture, as the Definitive Notes or the
Global Notes surrendered upon such
registration of transfer or exchange.
(iv) Prior to due presentment for the
registration of a transfer of any Note, the
Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note
is registered as the absolute owner of such
Note for the purpose of receiving payment of
principal of and interest on such Notes, and
neither the Trustee, any Agent nor the
Company shall be affected by notice to the
contrary.
(v) The Trustee shall authenticate Definitive
Notes and the Global Notes in accordance
with the provisions of Section 2.2 hereof.
ss.2.5. Change of Control Offer.
-----------------------
Within 50 days of (i) the proposed occurrence of a Change of
Control or (ii) the occurrence of a Change of Control Triggering Event, the
Company shall notify the Trustee in writing of such proposed occurrence or
occurrence, as the case may be, and shall make an offer to purchase (the "Change
of Control Offer") the Notes at a purchase price equal to 100% of the principal
amount thereof plus any accrued and unpaid interest thereon to the Change of
Control Payment Date (as hereinafter defined) (the "Change of Control Purchase
Price") in accordance with the procedures set forth in this covenant.
Within 50 days of (i) the proposed occurrence of a Change of
Control or (ii) the occurrence of a Change of Control Triggering Event, the
Company also shall (a) cause a notice of the Change of Control Offer to be sent
at least once to the Dow Jones News Service or similar business news service in
the United States and (b) send by first-class mail, postage prepaid, to the
Trustee and to each holder of the Notes, at his address appearing in the
register of the Notes maintained by the Security Registrar, a notice stating:
(1) that the Change of Control Offer is being made
pursuant to this covenant and that all Notes tendered will be
accepted for payment, provided that a Change of Control
Triggering Event has occurred and otherwise subject to the
terms and conditions set forth herein;
(2) the Change of Control Purchase Price and the
purchase date (which shall be a Business Day no earlier than
50 days from the date such notice is mailed and no later than
15 days after the date of the corresponding Change of Control
Triggering Event) (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to
accrue interest;
(4) that, unless the Company defaults in the payment
of the Change of Control Purchase Price, any Notes accepted
for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment
Date;
(5) that holders accepting the offer to have their
Notes purchased pursuant to a Change of Control Offer will be
required to surrender the Notes to the Paying Agent at the
address specified in the notice prior to the close of business
on the Business Day preceding the Change of Control Payment
Date;
(6) that holders will be entitled to withdraw their
acceptance if the Paying Agent receives, not later than the
close of business on the third Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the holder,
the principal amount of the Notes delivered for purchase, and
a statement that such holder is withdrawing his election to
have such Notes purchased;
(7) that holders whose Notes are being purchased only
in part will be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered, provided
that each Note purchased and each such new Note issued shall
be in an original principal amount in denominations of $1,000
and integral multiples thereof; and
(8) any other procedures that a holder must follow
to accept a Change of Control Offer or effect withdrawal of
such acceptance.
Notwithstanding any other provision of this Section 2.5
, in the case of a notice of a Change of
Control Offer that is being furnished by the Company with respect to a proposed
Change of Control that has not yet actually occurred, the Company may specify in
such notice that holders of the Notes shall be required to notify the Company,
by a date not earlier than the date (the "Proposed Change of Control Response
Date") which is 30 days from the date of such notice, as to whether such holders
will tender their Notes for payment pursuant to the Change of Control Offer and
to notify the Company of the principal amount of such Notes to be so tendered
(with the failure of any holder to so notify the Company within such 30-day
period to be deemed an election of such holder not to accept such Change of
Control Offer). In such event, the Company shall have the option, to be
exercised by a subsequent written notice to be sent, no later than 15 days after
the Proposed Change of Control Response Date, to the same Persons to whom the
original notice of the Change of Control Offer was sent, to cancel or otherwise
effect the termination of the proposed Change of Control and to rescind the
related Change of Control Offer, in which case the then outstanding Change of
Control Offer shall be deemed to be null and void and of no further effect.
On the Change of Control Payment Date, the Company shall (a)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (b) deposit with the Paying Agent money sufficient to pay the
purchase price of all Notes or portions thereof so tendered and (c) deliver or
cause to be delivered to the Trustee Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof tendered to the
Company. The Paying Agent shall promptly mail to each holder of Notes so
accepted payment in an amount equal to the purchase price for such Notes, and
the Trustee shall promptly authenticate and mail to such holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered;
provided that each such new Note shall be issued in an original principal amount
in denominations of $1,000 and integral multiples thereof.
There shall be no purchase of any Notes pursuant to this
covenant if there has occurred (prior to, on or after, as the case may be, the
tender of such Notes pursuant to the Change of Control Offer, by the holders of
such Notes) and is continuing an Event of Default. The Paying Agent will
promptly return to the respective holders thereof any Notes (a) the tender of
which has been withdrawn in compliance with this Indenture or (b) held by it
during the continuance of an Event of Default (other than a default in the
payment of the Change of Control Purchase Price with respect to such Notes).
In the event that the Company is required to make a Change of
Control Offer, the Company will comply with all applicable tender offer rules
including Rule 14e-1 under the Exchange Act, to the extent applicable.
ss.2.6. Events of Default.
-----------------
With respect to the Notes issued under this Supplemental
Indenture, Section 5.1 of the Indenture is hereby replaced in its entirety as
follows:
An "Event of Default" occurs with respect to the Notes if:
(1) the Company defaults in the payment of any
principal of such series of Notes when the same becomes due
and payable at maturity, upon acceleration or otherwise;
(2) the Company defaults in the payment of any
interest on such series of Notes when the same becomes due and
payable and the default continues for a period of 30 days;
(3) the Company defaults in the observance or
performance of any other covenant in such series of Notes or
this Indenture for 60 days after written notice from the
Trustee or the Holders of not less than 25% in aggregate
principal amount of such series of Notes then outstanding;
(4) the Company fails to pay when due principal,
interest or premium aggregating $10,000,000 or more with
respect to any Indebtedness of the Company or any Restricted
Subsidiary, or the acceleration of any such Indebtedness which
default shall not be cured or waived, or such acceleration
shall not be rescinded or annulled, within ten days after
written notice as provided in this Indenture;
(5) a court of competent jurisdiction enters a final
judgment or judgments for the payment of money in excess of
$10,000,000 against the Company or any Restricted Subsidiary
and such judgment remains undischarged for a period of 60
consecutive days during which a stay of enforcement of such
judgment shall not be in effect;
(6) the Company, or any Restricted Subsidiary with
liabilities of greater than $10,000,000 under GAAP as of the
date of the event described in this clause (6), pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of
an order for relief against
it in an involuntary case,
(C) consents to the appointment
of a Custodian of it or
for all or substantially
all of its property, or
(D) makes a general assignment
for the benefit of its
creditors;
(7) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
(A) is for relief against the
Company, or any Restricted
Subsidiary with liabilities
of greater than $10,000,000
under GAAP as of the
effective date of such
order or decree, in an
involuntary case,
(B) appoints a Custodian of the
Company, or any Restricted
Subsidiary with liabilities
of greater than $10,000,000
under GAAP as of the
effective date of such
order or decree, or for all
or substantially all of its
property, or
(C) orders the liquidation of
the Company, or any
Restricted Subsidiary with
liabilities of greater than
$10,000,000 under GAAP as
of the effective date of
such order or decree, and
the order or decree remains
unstayed and in effect for
60 days.
A Default under clauses (3) and (4) is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of a series of Notes notifies the Company and the
Trustee, of the Default and the Company does not cure the Default within (a) 60
days after receipt of such notice in the case of a Default under clause (3) and
(b) 10 days after receipt of such notice in the case of a Default under clause
(4). The notice must specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default." If the Holders of at least 25% in
principal amount of a series of outstanding Notes request the Trustee to give
such notice on their behalf, the Trustee shall do so.
ss.2.7. Acceleration.
------------
With respect to the Notes issued under this Supplemental
Indenture, Section 5.2 of the Indenture is hereby replaced in its entirety as
follows:
If an Event of Default with respect to the Notes (other than
an Event of Default resulting from certain events of bankruptcy, insolvency or
reorganization) occurs and is continuing, the Trustee by notice to the Company,
or the Holders of not less than 25% in aggregate principal amount of the Notes
affected thereby then outstanding may declare to be immediately due and payable
the principal amount of the Notes then outstanding plus accrued but unpaid
interest to the date of acceleration; provided, however, that after such
acceleration but before a judgment or decree based on such acceleration is
obtained by the Trustee, the Holders of a majority in aggregate principal amount
of the outstanding Notes by written notice to the Trustee and the Company may
rescind and annul such acceleration and its consequences if all existing Events
of Default, other than the nonpayment of accelerated principal or interest, have
been cured or waived. In case an Event of Default specified in Section 2.6(6) or
(7) of the Supplemental Indenture occurs, such amount with respect to all of the
Notes shall be due and payable immediately without any declaration or other act
on the part of the Trustee or the Holders of the Notes.
ss.2.8. Mergers and Consolidations.
--------------------------
With respect to the Notes issued under this Supplemental
Indenture, Section 8.1 of the Indenture is replaced in its entirety as follows:
The Company may not consolidate with, merge with or into, or
transfer all or substantially all of its assets (as an entirety or substantially
as an entirety in one transaction or a series of related transactions), to any
Person unless: (i) the Company shall be the continuing Person, or the Person (if
other than the Company) formed by such consolidation or into which the Company
is merged or to which the properties and assets of the Company are transferred
shall be a corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia and shall expressly
assume, by a supplemental indenture, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all of the obligations of the Company under
the Notes and this Indenture, and the obligations under this Indenture shall
remain in full force and effect; (ii) immediately before and immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; and (iii) immediately after giving effect to such
transaction on a pro forma basis for the most recent quarter, the pro forma
Consolidated Fixed Charge Ratio of the surviving entity shall be at least 1:1;
provided that, if the Consolidated Fixed Charge Ratio of the Company for the
most recent quarter preceding such transaction is within the range set forth in
Column A below, then the pro forma Consolidated Fixed Charge Ratio of the
surviving entity after giving effect to such transaction shall be at least equal
to the greater of the percentage of the Consolidated Fixed Charge Ratio of the
Company for the most recent quarter preceding such transaction set forth in
Column B below or the ratio set forth in Column C below:
<TABLE>
<CAPTION>
A B C
- - -
<S> <C> <C>
1.1111:1 to 1.4999:1 90% 1.00:1
1.5 and higher 80% 1.35:1
</TABLE>
and provided, further, that if the pro forma Consolidated Fixed Charge Ratio of
the surviving entity is 2:1 or more, the calculation in the preceding proviso
shall be inapplicable and such transaction shall be deemed to have complied with
the requirements of such proviso.
In connection with any consolidation, merger or transfer
contemplated by this Section 8.1, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this Section 8.1 and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
ss.2.9. Supplemental Indentures.
-----------------------
With respect to the Notes issued under this Supplemental
Indenture, the following Section supplements Article 9 of the Indenture:
ss.9.7 Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may revoke
the consent as to his Note or portion of a Note, if the Trustee receives the
notice of revocation before the date the amendment, supplement, waiver or other
action becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date unless the consent of the requisite number
of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described in
any of clauses (1) through (4) of Section 9.2 of the Indenture. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
ss.2.10. Covenants.
---------
With respect to the Notes issued under this Supplemental
Indenture,
(1) references in the Indenture to the following sections are
modified as follows:
<TABLE>
<CAPTION>
Reference in the Indenture to: Refers to:
----------------------------- ---------
<S> <C>
Section 10.1 of the Indenture Section 10.1 of the Supplemental Indenture
Section 10.2 of the Indenture Not applicable
Section 10.5 of the Indenture Section 10.10 of the Supplemental Indenture
Section 10.7 of the Indenture Section 10.3 of the Supplemental Indenture
Section 10.8 of the Indenture Section 10.8 of the Supplemental Indenture
</TABLE>
and (2) Article 10 of the Indenture is hereby replaced in its
entirety as follows:
ARTICLE 10
COVENANTS
ss.10.1 Payment of Notes.
The Company shall pay the principal of and all interest on the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent holds on that date money designated for
and sufficient to pay such installment.
The Company will pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law) and on overdue
interest, to the extent lawful, at the rate borne by the Notes.
ss.10.2 SEC Reports.
-----------
The Company shall file with the Trustee, within 15 days after
it files with the SEC, copies of the annual reports and of the other
information, documents and reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe), if any, which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended. The Company shall also comply with
the other provisions of TIA ss. 314(a).
ss.10.3 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead (as a defense or
otherwise) or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law which would prohibit
or forgive the Company from paying all or any portion of the principal of and/or
interest on the Notes as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance of
this Indenture; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
ss.10.4 Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any transaction with any Affiliate upon terms which
would be any less favorable than those obtainable by the Company or a Restricted
Subsidiary in a comparable arm's-length transaction with a Person which is not
an Affiliate. The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any transaction (or series of related transactions)
involving in the aggregate $1,000,000 or more with any Affiliate except for (i)
the making of any Restricted Payment, (ii) any transaction or series of
transactions between the Company and one or more of its Restricted Subsidiaries
or between two or more of its Restricted Subsidiaries (provided that no more
than 5% of the equity interest in any of its Restricted Subsidiaries is owned by
an Affiliate), and (iii) the payment of compensation (including, without
limitation, amounts paid pursuant to employee benefit plans) for the personal
services of officers, directors and employees of the Company or any of its
Restricted Subsidiaries, so long as the Board of Directors of the Company in
good faith shall have approved the terms thereof and deemed the services
theretofore or thereafter to be performed for such compensation or fees to be
fair consideration therefor; and provided further that for any Asset Sale, or a
sale, transfer or other disposition (other than to the Company or any of its
Restricted Subsidiaries) of an interest in a Restricted Investment, involving an
amount greater than $25,000,000, such Asset Sale or transfer of interest in a
Restricted Investment is for fair value as determined by an opinion of a
nationally recognized investment banking firm filed with the Trustee.
Notwithstanding the foregoing, this provision shall not prohibit any such
transaction which is determined by the independent members of the Board of
Directors of the Company, in their reasonable, good faith judgment (as evidenced
by a Board Resolution filed with the Trustee) to be (a) in the best interests of
the Company or such Restricted Subsidiary, and (b) upon terms which would be
obtainable by the Company or a Restricted Subsidiary in a comparable
arm's-length transaction with a Person which is not an Affiliate.
ss.10.5 Limitation on Indebtedness.
--------------------------
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, issue, assume or become
liable for, contingently or otherwise (collectively an "incurrence"), any
Indebtedness unless, after giving effect to such incurrence on a pro forma
basis, Indebtedness of the Company and its Restricted Subsidiaries, on a
consolidated basis, shall not be more than the product of the Annualized Pro
Forma EBITDA for the latest fiscal quarter preceding such incurrence for which
financial statements are available, multiplied by 8.75.
Notwithstanding the above, this provision will not limit the
incurrence of Indebtedness which is incurred by the Company or its Restricted
Subsidiaries for working capital purposes or capital expenditures with respect
to plant, property and equipment of the Company and its Restricted Subsidiaries
in an aggregate amount not to exceed $50,000,000. Further, this provision will
not limit Permitted Refinancing Indebtedness, subject to the provisions of
Section 10.6.
ss.10.6 Limitation on Restricted Payments.
---------------------------------
So long as any of the Notes remain outstanding, the Company
shall not make, and shall not permit any Restricted Subsidiary to make, any
Restricted Payment if (a) at the time of such proposed Restricted Payment, a
Default or Event of Default shall have occurred and be continuing or shall occur
as a consequence of such Restricted Payment, or (b) immediately after giving
effect to any such Restricted Payment, the aggregate of all Restricted Payments
which shall have been made on or after January 1, 1993 (the amount of any
Restricted Payment, if other than cash, to be based upon fair market value as
determined in good faith by the Company's Board of Directors whose determination
shall be conclusive) would exceed an amount equal to the greater of (i) the sum
of $5,000,000 or (ii) the difference between (a) the Cumulative Credit and (b)
the sum of the aggregate amount of all Restricted Payments, and all Permitted
Investments made pursuant to clause (v) of the definition of "Permitted
Investments," made on or after January 1, 1993 plus 1.2 times Cumulative
Interest Expense.
ss.10.7 Reports to Holders.
------------------
The Company will send to the Trustee and to Noteholders,
within 15 days after the filing thereof with the SEC, copies of its annual
reports on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports
on Form 8-K; provided, however, that notwithstanding any event which results in
the Company being relieved of its obligation to file information, documents and
reports with the SEC pursuant to Sections 13 or 15(d) of the Exchange Act, the
Company shall nevertheless continue, so long as any Note remains outstanding and
unpaid, (i) to file with the SEC (at such time as it would be required to file
such reports under the Exchange Act), and to send to the Trustee and Noteholders
(within 15 days thereafter), quarterly and annual reports and information,
documents and other reports substantially equivalent to those it would have been
obligated to file if it had remained subject to such sections of the Exchange
Act, and (ii) so long as the Notes have not been registered pursuant to the
Registration Rights Agreement, upon the request of a Noteholder, to provide
information required to be delivered under Rule 144A(d)(4) under the Securities
Act to such Noteholder and its prospective purchasers designated by such
Noteholder.
ss.10.8 Money for Securities Payments to Be Held in Trust.
-------------------------------------------------
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any of the Securities of
that series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it will, prior to each due date of the principal of
(and premium, if any) or interest on any Securities of that series, deposit with
a Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure to so act.
The Company will cause each Paying Agent for any series of
Securities (other than the Trustee) to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities
of that series in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons
or otherwise disposed of as herein provided;
(ii) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities of that
series) in the making of any payment of principal (and
premium, if any) or interest on the Securities of that series;
and
(iii) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (and
premium, if any) or interest on any security of any series and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, unless an abandoned property law
designates another Person, and all liability of the Trustee or such Paying Agent
with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; provided, however, that the Trustee of such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
ss.10.9 Notice of Defaults Or Events of Default.
---------------------------------------
In the event that any Default or Event of Default shall occur
and be continuing, the Company will, within 10 days of the occurrence thereof,
give written notice of such Default or Event of Default to the Trustee.
ss.10.10 Compliance Certificates.
-----------------------
The Company shall deliver to the Trustee on or before 105 days
after the end of its fiscal year and on or before 50 days after the end of its
second fiscal quarter in each year an Officers' Certificate stating whether or
not the signers know of any Default or Event of Default. If they do know of such
a Default or Event of Default, the certificate shall describe such Default or
Event of Default and the efforts to remedy or obtain a waiver of the same.
ss.10.11 Covenant to Secure Notes Equally.
--------------------------------
Except for Liens created or assumed by the Company in
connection with the acquisition of real property or equipment to be used by the
Company in the operation of its business which do not secure Indebtedness in
excess of the purchase price of such real property or equipment, the Company
covenants that, if it shall create or assume any Lien upon any of its property
or assets, whether now owned or hereafter acquired, it will make or cause to be
made effective provisions whereby the Notes will be secured by such Lien equally
and ratably with all other Indebtedness of the Company secured by such Lien, as
long as any such other Indebtedness of the Company shall be so secured. The
restriction imposed by this Section 10.11 shall not apply with respect to a
Lien, including a pledge of Capital Stock of a Subsidiary or an Affiliate, to
secure Indebtedness which is an obligation of such Subsidiary or Affiliate and
not an obligation of the Company.
ss.10.11 Limitation on Investment in Affiliates and Unrestricted Subsidiaries.
--------------------------------------------------------------------
After the date of this Indenture, the Company may not, nor
will the Company allow any Restricted Subsidiary to, make a Restricted
Investment other than by way of Permitted Investments unless pro forma for such
Restricted Investment the Leverage Ratio of the Company does not exceed 7.75:1.
ss.10.12 Limitation on Sale of Assets.
----------------------------
Neither the Company nor any Restricted Subsidiary of the
Company shall sell an asset (including Capital Stock of Restricted Subsidiaries)
or reclassify a Restricted Subsidiary existing on the date of this Indenture as
an Unrestricted Subsidiary (a "Reclassification") unless (a) in the case of an
asset sale, (i) at least 75% of the net proceeds received by the Company or such
Restricted Subsidiary is in cash, cash equivalents or common or preferred
Capital Stock or debt securities issued by a Person which has Investment Grade
Senior Debt and (ii) cash proceeds from the asset sale are used to reduce debt
and such debt reduction results in the Company's Leverage Ratio being lower pro
forma after such asset sale than prior to such asset sale, or (b) in the case of
an asset sale or Reclassification, pro forma for such asset sale or
Reclassification the Indebtedness of the Company and its Restricted
Subsidiaries, on a consolidated basis, shall not be more than 7.75 multiplied by
Annualized Pro Forma EBITDA, provided that in no case under either clause (a) or
(b) shall the Company undertake an asset sale or Reclassification, if pro forma
for such an asset sale or Reclassification the Company and its Restricted
Subsidiaries would be the owners of fewer than 75% of the cable systems
(measured on the basis of basis subscribers as of February 22, 1994) owned by
the Company and its Restricted Subsidiaries as of February 22, 1994, provided
however, that the Company and its Restricted Subsidiaries may sell additional
assets of up to 10% of assets held as of February 22, 1994 if the consideration
received from such sale is (i) cash which is used within 12 months to purchase
additional systems of equivalent value or (ii) other cable systems of equivalent
value.
ss.2.11. Defeasance and Covenant Defeasance.
----------------------------------
With respect to the Notes issued under this Supplemental
Indenture, the following Section supplements Article 13 of the Indenture:
ss. 13.6. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 13.1 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to this
Article 13 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with Section 13.1;
provided, however, that if the Company has made any payment of principal of or
accrued interest on any Notes because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 3
MISCELLANEOUS
ss.3.1. Effect of Headings.
------------------
The Article and Section headings herein are for convenience
only and shall not affect the constructino hereof.
ss.3.2. Succesors and Assigns.
---------------------
All covenants and agreements in this Supplemental Indenture by
the Company shall bind its successors and assigns, whether so expressed or not.
ss.3.3. Separability Clause.
-------------------
In case any provision in this Supplemental Indenture or in the
Securities shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
ss.3.4. Governing Law.
-------------
This Supplemental Indenture and the Notes created hereby shall
be governed by and construed in accordance with the laws (other than the choice
of law provisions) of the State of New York.
[The rest of this page has been intentionally left
blank.]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Supplemental
Indenture to be duly executed, and attested, all as of the date and year first
written above.
ADELPHIA COMMUNICATIONS
CORPORATION
By: /s/ James R.. Brown___
-------------------
Name: James R. Brown
Title: Vice President
HARRIS TRUST COMPANY OF NEW YORK, as Trustee
By: /s/ Peter Morse______
---------------
Name: Peter Morse
Title: Vice President
<PAGE>
Exhibit A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[Face of Note]
9-3/8% Senior Notes due 2009
CUSIP No. 006848BE4 $500,000,000
ADELPHIA COMMUNICATIONS CORPORATION
promises to pay to Cede & Co. or registered assigns, the principal sum of
Five Hundred Million Dollars on November 15, 2009.
Interest Payment Dates: May 15 and November 15
Record Dates: April 30 and October 30
Dated: November 16, 1999
ADELPHIA COMMUNICATIONS CORPORATION
By
Name: Michael J. Rigas
Title: Executive Vice President
(SEAL)
This is one of the Notes referred to in the within- mentioned Indenture:
HARRIS TRUST COMPANY OF NEW YORK,
as Trustee
By:
Authorized Signature
<PAGE>
[Back of Note]
9-3/8% Senior Notes due 2009
Unless and until it is exchanged in whole or in part for Notes
in definitive form, this Note may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the issuer or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as may be requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or such other entity as may be requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.1
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Adelphia Communications Corporation, a Delaware
corporation (the "Company") promises to pay interest on the principal amount of
this Note at 9-3/8% per annum from November 16, 1999 until November 15, 2009.
The Company shall pay interest, semi-annually in arrears on May 15 and November
15 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance; provided that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be
May 15, 2000. The Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue principal from time to
time on demand at a rate equal to the per annum rate on the Notes then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall make payments in
respect of the Notes represented by the Global Notes (including principal and
interest) by wire transfer of immediately available funds to the accounts
specified by the Note Custodian. With respect to Notes issued in definitive
form, the Company shall make all payments of principal and interest by mailing a
check to each such Holder's registered address, provided that all payments with
respect to Notes having an aggregate principal amount of $100,000 or more, the
Holders of which have given wire transfer instructions to the Company at least
ten business days prior to the applicable payment date, will be required to be
made by wire transfer of immediately available funds to the accounts specified
by the Holders thereof. The Notes represented by the Global Notes are expected
to be eligible to trade in DTC's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such notes will, therefore, be
required by DTC to be settled in immediately available funds. The Company
expects that secondary trading in the Definitive Notes also will be settled in
immediately available funds.
3. PAYING AGENT AND SECURITY REGISTRAR. Initially,
Harris Trust Company of New York, the Trustee under the Indenture, will act as
Paying Agent and Security Registrar. The Notes may be presented for registration
of transfer and exchange at the offices of the Security Registrar. The Company
may change any Paying Agent or Security Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of April 28, 1999 (the "Base Indenture") as supplemented by a Second
Supplemental Indenture dated as of November 16, 1999 (the "Supplemental
Indenture" and, together with the Base Indenture, the "Indenture" ) between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. The Notes issued under the Indenture are
senior unsecured obligations of the Company limited to $500 million in aggregate
principal amount.
5. MANDATORY REDEMPTION. Except as set forth in
paragraph 6 below, the Company shall not be required to make mandatory
redemption payments with respect to the Notes.
6. REPURCHASE AT OPTION OF HOLDER. Within 50 days of (i) the
proposed occurrence of a Change of Control or (ii) the occurrence of Change of
Control Triggering Event, the Company shall be required to make an offer (a
"Change of Control Offer") to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of each Holder's Notes at a purchase price equal to
100% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase, which date shall be
no later than 50 days from the date such notice is mailed (the "Change of
Control Payment Date"). Within 50 days of (i) the proposed occurrence of a
Change of Control or (ii) the occurrence of Change of Control Triggering Event,
the Company shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture. Such right
to require the repurchase of Notes shall not continue after discharge of the
Company from its obligations with respect to the Notes. The board of directors
of the Company may not waive this provision.
7. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are
in registered form without coupons in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof. The transfer of Notes may be
registered and Notes may be exchanged as provided in the Indenture.
8. PERSONS DEEMED OWNERS. The registered Holder of
a Note may be treated as its owner for all purposes.
9. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture with respect to the Notes or the Notes may be amended
or supplemented with the written consent of the Holders of a majority in
principal amount of the Notes, and any existing default or compliance with any
provision of the Indenture with respect to the Notes or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the Notes.
Without the consent of any Holder of the Notes, the Indenture with respect to
the Notes or the Notes may be amended or supplemented to, in addition to other
events more fully described in the Indenture, cure any ambiguity, defect or
inconsistency, to establish the form or terms of the Notes as permitted by
Sections 2.1 and 3.1 of the Indenture, to evidence the succession of another
corporation to the Company and the assumption by any such successor of the the
covenants of the Company contained in the Indenture, to secure the Notes, to
make any change that does not materially adversely affect the interests of any
Holder under the Indenture, or to qualify, or maintain the qualification of the
Indenture under the Trust Indenture Act.
10. DEFAULTS AND REMEDIES. An Event of Default with respect to
the Notes occurs if: (i) the Company defaults in the payment when due of any
interest on, or Liquidated Damages with respect to, any such series of Notes and
such default continues for a period of 30 days; (ii) the Company defaults in the
payment of the principal of any such series of Notes at its maturity; (iii) the
Company fails to observe or perform any other covenant, representation, warranty
or other agreement in the Indenture or the Notes for 60 days after written
notice to the Company by the Trustee or the Holders of at least 25% in principal
amount of such series of Notes then outstanding; (iv) the Company fails to pay
when due principal, interest or premium aggregating $10,000,000 or more with
respect to any Indebtedness of the Company or any Restricted Subsidiary, or the
acceleration of any such Indebtedness which default shall not be cured or
waived, or such acceleration shall not be rescinded or annulled, within 10 days
after written notice; (v) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction against the
Company or any of its Restricted Subsidiaries and such judgment or judgments
remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
judgments exceeds $10,000,000; or (vi) the Company or any Restricted Subsidiary
with liabilities of greater than $10,000,000 under GAAP as of the date of the
event described in this clause, pursuant to or within the meaning of Bankruptcy
Law: (a) commences a voluntary case, (b) consents to the entry of an order for
relief against it in an involuntary case, (c) consents to the appointment of a
Custodian of it or for all or substantially all of its property, or (d) makes a
general assignment for the benefit of its creditors, (vii) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for
relief against the Company, or any Restricted Subsidiary with liabilities of
greater than $10,000,000 under GAAP as of the effective date of such order or
decree in an involuntary case, (b) appoints a custodian of the Company, or any
Restricted Subsidiary of Restricted Subsidiary with liabilities of greater than
$10,000,000 under GAAP as of the effective date of such order or decree or for
all or substantially all of its property or (c) orders the liquidation of the
Company, or any Restricted Subsidiary with liabilities greater than $10,000,000
under GAAP as of the effective date of such order or decree; and the order or
decree remains unstayed and in effect for 60 consecutive days. If any Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding series of Notes may declare all of such
Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case an Event of Default specified in clauses (6) or (7) of Section 5.1 of the
Indenture occurs with respect to the Company, or a Restricted Subsidiary with
liabilities of greater than $10,000,000 under GAAP as of the effective date of
such order or decree, all outstanding series of Notes will become due and
payable without further action or notice. Holders of such series of Notes may
not enforce the Indenture with respect to such series of Notes or such series of
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding series of
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of such series of Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of not less than a majority in aggregate
principal amount of the such series of Notes then outstanding by notice to the
Trustee may on behalf of the Holders of all of the Notes waive any existing
Default or Event of Default and its consequences under the Indenture, except a
continuing Default or Event of Default in the payment of the principal of and
Liquidated Damages, if any, or interest on, such series of Notes (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding series of Notes may rescind an acceleration and its
consequence, including any related payment default) or a default with respect to
any covenant or provision which cannot be modified or amended without the
consent of the Holder of each outstanding Note affected.
The Company is required to deliver to the Trustee annually a
statement regarding compliance with the Indenture, and the Company is required,
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a statement specifying such Default or Event of Default and what action
the Company is taking or proposes to take thereto.
11. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
12. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability including any rights against any general partner of the Company in its
capacity as general partner. The waiver and release are part of the
consideration for the issuance of the Notes.
13. AUTHENTICATION. This Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
14. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
15. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
Adelphia Communications Corporation
One North Main Street
Coudersport, Pennsylvania 16915
Attention: Colin H. Higgin, Esq.
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: __________
Your Signature:
(Sign exactly as your name appears on the face of this Note)
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 2.5 of the Supplemental Indenture, check the box
below:
Section 2.5
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 2.5 of the Supplemental Indenture, state the
amount you elect to have purchased: $________
Date: __________ Your Signature:
(Sign exactly as your name appears on the Note)
Tax Identification No.:
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF EXCHANGES OF NOTES2
The following exchanges of a part of this Global Note for
other Notes have been made:
Principal Amount of Signature of
Amount of decrease Amount of increase in this Global Note authorized office
in Principal Amount Principal Amount of following such of Trustee or Note
Date of Exchange of this Global Note this Global Note decrease (or increase) Custodian
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- --------
1 This paragraph should be included only if the Note is issued in global form.
2 This should be included only if the Note is issued in global form.
</TABLE>
EXHIBIT 10.115
AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P., DATED AS
OF DECEMBER 7, 1999
<PAGE>
-iv-
AGREEMENT OF LIMITED PARTNERSHIP OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P., DATED AS
OF DECEMBER 7, 1999
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1 DEFINITIONS.............................................................................................1
1.1 Terms Defined in This Section...................................................................1
1.2 Terms Defined Elsewhere in This Agreement......................................................11
1.3 Terms Generally................................................................................13
ARTICLE 2 FORMATION AND PURPOSE..................................................................................13
2.1 Formation......................................................................................13
2.2 Name...........................................................................................13
2.3 Principal and Registered Office................................................................14
2.4 Term...........................................................................................14
2.5 Purposes of Partnership........................................................................14
2.6 Authority of Partnership.......................................................................15
2.7 Certificate....................................................................................16
2.8 Addresses of the Partners......................................................................16
2.9 Foreign Qualification..........................................................................16
2.10 Tax Classification.............................................................................16
ARTICLE 3 PARTNERSHIP CAPITAL....................................................................................16
3.1 Contributions..................................................................................16
3.2 Additional Capital Contributions...............................................................18
3.3 Other Contributions............................................................................21
3.4 Return of Contributions........................................................................22
3.5 Financing......................................................................................22
ARTICLE 4 DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS..........................................................22
4.1 Distributions..................................................................................22
4.2 Allocations of Net Profit and Net Loss.........................................................24
4.3 Special Provisions Regarding Allocations of Profit and Loss....................................24
4.4 Tax Allocations: Code Section 704(c)..........................................................27
4.5 Allocation in Event of Transfer................................................................27
4.6 Alternative Allocations........................................................................28
ARTICLE 5 MANAGEMENT.............................................................................................28
5.1 Authority of Managing Partner..................................................................28
5.2 Advisory Committee.............................................................................34
5.3 No Management by Limited Partner...............................................................35
5.4 Operating and Capital Expenditure Budgets......................................................35
5.5 No Personal Liability..........................................................................36
5.6 Management Agreement...........................................................................36
5.7 Tax Matters Partner............................................................................36
5.8 Consolidation..................................................................................38
5.9 Management of Subsidiaries.....................................................................38
ARTICLE 6 STATUS OF LIMITED PARTNERS.............................................................................38
6.1 Limited Liability..............................................................................38
6.2 Return of Distributions of Capital.............................................................39
6.3 Specific Limitations...........................................................................39
6.4 Issuance of Partnership Interests..............................................................39
ARTICLE 7 WITHDRAWAL OF GENERAL PARTNER..........................................................................40
7.1 Withdrawal.....................................................................................40
7.2 Removal of Century as Managing Partner.........................................................41
7.3 Effect of Withdrawal or Removal of Managing Partner............................................42
7.4 No Dissolution.................................................................................42
ARTICLE 8 ASSIGNMENT OF PARTNERSHIP INTERESTS....................................................................42
8.1 Assignments by Century.........................................................................42
8.2 Assignments by Other Partners..................................................................42
8.3 Exceptions.....................................................................................43
8.4 Assignee.......................................................................................43
8.5 Other Consents and Requirements................................................................44
8.6 Assignment Not in Compliance...................................................................44
8.7 Division of Partnership Interests..............................................................44
8.8 Substitute Partners............................................................................44
8.9 Consent........................................................................................45
8.10 Covenants of Parents...........................................................................45
8.11 Impact of Code Section 708.....................................................................46
ARTICLE 9 RIGHT OF FIRST OFFER...................................................................................48
9.1 Proposed Sale and Negotiations With TCI........................................................48
9.2 Sale to Third Party; Re-Offer to TCI...........................................................48
9.3 Seller's Election Not to Sell..................................................................49
ARTICLE 10 OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES.........................................................50
10.1 Prohibited Cross-Interests.....................................................................50
10.2 Wireline All Distance Communications Services..................................................52
10.3 No Other Restrictions..........................................................................53
ARTICLE 11 DISSOLUTION AND LIQUIDATION OF PARTNERSHIP............................................................54
11.1 Events of Dissolution..........................................................................54
11.2 Liquidation....................................................................................54
11.3 Distribution in Kind...........................................................................56
11.4 No Action for Dissolution......................................................................56
11.5 No Further Claim...............................................................................56
ARTICLE 12 INDEMNIFICATION.......................................................................................56
12.1 General........................................................................................56
12.2 Exculpation....................................................................................57
12.3 Persons Entitled to Indemnity..................................................................57
ARTICLE 13 BOOKS, RECORDS, ACCOUNTING, AND REPORTS...............................................................58
13.1 Books and Records..............................................................................58
13.2 Delivery to Partner and Inspection.............................................................58
13.3 Annual Statements..............................................................................59
13.4 Quarterly Financial Statements.................................................................60
13.5 Monthly Statements.............................................................................60
13.6 Other Information..............................................................................61
13.7 Tax Matters....................................................................................61
13.8 Other Filings..................................................................................61
13.9 Non-Disclosure.................................................................................61
ARTICLE 14 REPRESENTATIONS BY TCI................................................................................62
14.1 Investment Intent..............................................................................62
14.2 Securities Regulation..........................................................................63
14.3 Knowledge and Experience.......................................................................63
14.4 Economic Risk..................................................................................63
14.5 Binding Agreement..............................................................................63
14.6 Tax Position...................................................................................63
14.7 Information....................................................................................64
ARTICLE 15 AMENDMENTS AND WAIVERS................................................................................64
15.1 Amendments to Partnership Agreement............................................................64
15.2 Waivers........................................................................................64
ARTICLE 16 MISCELLANEOUS.........................................................................................65
16.1 Additional Documents...........................................................................65
16.2 Inspection.....................................................................................65
16.3 General........................................................................................65
16.4 Notices, Etc...................................................................................65
16.5 Execution of Papers............................................................................65
16.6 Disputed Matters...............................................................................66
16.7 No Third-Party Beneficiaries...................................................................66
16.8 @Home Matters..................................................................................66
16.9 Programming Matters............................................................................68
</TABLE>
TABLE OF SCHEDULES AND EXHIBIT
Schedule Description
Schedule I Addresses of the Partners
Schedule II Advisory Committee Members
Schedule III Five-year Operating Plan
Schedule IV Programming Services
Schedule V Certain Agreements
Exhibit Description
Exhibit A Form of Management Agreement
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P.
THIS AGREEMENT OF LIMITED PARTNERSHIP is made and entered into as of
December 7, 1999, by and among Century Exchange LLC, a Delaware limited
liability company, as a general partner, and TCI California Holdings, LLC, a
Colorado limited liability company, as a limited partner.
PRELIMINARY STATEMENT
TCI and Century own interests in the Century-TCI California, L.P., a
Delaware limited partnership ("Century-TCI California").
Concurrently with the execution and delivery of this Agreement, the
Partners agreed to contribute 99% of their interests in Century-TCI California
to the Partnership. Immediately thereafter, the Partnership will contribute a 1%
limited partner interest in Century-TCI California to Century-TCI Holdings, LLC.
Upon completion of this contribution, the Partners will contribute their
remaining 1% interest in Century-TCI California to the Partnership. Ultimately,
the Partnership will hold a 99% general partner interest in Century-TCI
California on the date hereof.
The parties to this Agreement desire to enter into this Agreement to
provide for the formation of the Partnership, the allocation of profits and
losses, cash flow, and other proceeds of the Partnership between the Partners,
the respective rights, obligations, and interests of the Partners to each other
and to the Partnership, and certain other matters.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1.........
DEFINITIONS
1.1 Terms Defined in This Section.
-----------------------------
For purposes of this Agreement, the following terms shall have the
following meanings (all terms used in this Agreement that are not defined in
this Section 1.1 shall have the meanings set forth elsewhere in this Agreement
as indicated in Section 1.2, except as otherwise provided in this Agreement):
"Act" means the Delaware Revised Uniform Limited Partnership Act.
"Adelphia" means Adelphia Communications Corporation, a Delaware
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Adjusted Capital Account Deficit" means, with respect to either
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after:
(a)......crediting to such Capital Account any amounts that
such Partner is obligated to restore to the Partnership pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1)and 1.704-2(i)(5); and
(b)......debiting from such Capital Account the items
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Advisory Committee" means the Advisory Committee established by
Section 5.2.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by, or under common control with such Person. For
purposes of this definition, the term "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of equity interests, by
contract, or otherwise, and the terms "controlled by" and "under common control
with" have meanings corresponding to the meaning of "control." Notwithstanding
the foregoing, neither the Partnership nor any Person controlled by the
Partnership shall be deemed to be an Affiliate of either Partner or of any
Affiliate of either Partner, or vice versa, solely as a result of such Partner's
Partnership Interest.
"Agreement" means this Agreement of Limited Partnership, as it may be
amended from time to time.
"Assignee" means a Person that has acquired a direct beneficial
interest in a Partnership Interest in accordance with the provisions of Article
8 but has not become a substitute Partner in accordance with the provisions of
Section 8.8.
"Business Day" means any day (other than a Saturday or a Sunday) on
which banks are permitted to be open for business in the State of New York.
"Capital Account" means a separate account to be maintained for each
Partner in accordance with the Code, which, subject to any contrary requirements
of the Code, shall equal such Partner's initial Capital Account balance as
provided in Section 3.1(b), increased by: (a) the amount of money contributed by
such Partner to the Partnership, if any; (b) the fair-market value without
regard to Code Section 7701(g) of property, if any, contributed by such Partner
to the Partnership (net of liabilities that are secured by such contributed
property or that the Partnership or any other Partner is considered to assume or
take subject to under Code Section 752); (c) allocations to the Partner of Net
Profit and items of income and gain pursuant to Article 4; and (d) other
additions made in accordance with the Code; and decreased by: (a) the amount of
cash distributed to such Partner by the Partnership; (b) allocations to the
Partner of Net Loss and items of loss and deduction pursuant to Article 4; (c)
the fair-market value without regard to Code Section 7701(g) of property
distributed to such Partner by the Partnership (net of liabilities that are
secured by such distributed property or that such Partner is considered to
assume or take subject to under Code Section 752); and (d) other deductions made
in accordance with the Code. The foregoing provisions and the other provisions
of this Agreement relating to the maintenance of Capital Accounts are intended
to comply with Treasury Regulations under Code Section 704(b) and, to the extent
not inconsistent with the provisions of this Agreement, shall be interpreted and
applied in a manner consistent with such Treasury Regulations.
"Capital Contributions" means, with respect to either Partner, the
amount of money and the net fair-market value of property contributed by such
Partner to the Partnership pursuant to this Agreement.
"Capital Lease" means a lease which shall have been, or should be, in
accordance with generally accepted accounting principles, recorded as a capital
lease.
"Century" means Century Exchange LLC, a Delaware limited liability
company, or any other Person that succeeds to its Partnership Interest and is
admitted as a Partner in accordance with the provisions of this Agreement.
"Century Appraiser" means an appraiser designated by Century pursuant
to Section 3.2(f)(2).
"Century/Texas" means Century Communications Corp., a Texas
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its cable television
business and assets.
"Certificate" means the certificate of limited partnership to be filed
with respect to the Partnership pursuant to the Act.
"Closing" means the consummation of the contribution of assets to
Century-TCI California in accordance with Section 9 of the Contribution
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any subsequent federal law of similar import, and, to the extent
applicable, the Treasury Regulations.
"Consolidated" refers to the consolidation of accounts of the
Partnership with the accounts of its Subsidiaries, all in accordance with
generally accepted accounting principles, including principles of consolidation.
"Contribution Agreement" means the Contribution Agreement, dated as of
November 18, 1998, among Century-TCI California, Century, TCI, and the other
parties named therein, as it may be amended from time to time in accordance with
its terms.
"Commercial Paper" means one or more unsecured instruments of
indebtedness issued from time to time having a maturity of 270 days or less and
denominated in U.S. Dollars (including, without limitation, euronotes,
eurobonds, domestic notes, domestic bonds, and other types of commercial paper).
"Controlled Affiliate" means, with respect to any Person, such Person's
Parent and any other Person that, at such time, is either (a) controlled
directly or indirectly by such Person's Parent and of which such Person's Parent
owns, directly or indirectly, at least fifty percent of the outstanding equity
interests or (b) controlled directly or indirectly by such Person.
Notwithstanding the foregoing, neither Centennial Cellular Corp., Citizens
Utilities Company, nor any Person controlled, directly or indirectly, by
Centennial Cellular Corp. or Citizens Utilities Company shall be deemed to be a
Controlled Affiliate of Century.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such Fiscal Year, Depreciation shall be determined in the
manner described in Treasury Regulations Section 1.704-1(b)(2)(iv)(g)(3) or
Treasury Regulations Section 1.704-3(d)(2), as applicable.
"EBIDT" means, for any period, the sum of the Consolidated net income
or loss for such period, excluding gains or losses from extraordinary items, of
the Partnership and its Subsidiaries plus the sum of interest expense,
depreciation and amortization expense and provision for income taxes to the
extent deducted in computing such net income or loss (but excluding from the
calculation of such Consolidated net income or loss, (i) that percentage of the
accounts of each Minority Entity equal to the percentage ownership interest of
such Minority Entity which is not owned by the Partnership or any Subsidiary and
(ii) interest income and interest expense in respect of any advance made by the
Partnership to any Subsidiary, by any Subsidiary to the Partnership, or by any
Subsidiary to any other Subsidiary).
..................(i)......If the Partnership or any Subsidiary has made an
acquisition during any Fiscal Period for which EBIDT is to be computed, then
EBIDT shall be computed as if such system had been owned by the Partnership or
such Subsidiary throughout such Fiscal Period. Each computation of EBIDT for
such system shall be based on the following financial statements to the extent
available on the date on which the computation is made:
(a) The most recent Qualified annual statements of operations and cash
flows for such system, or
(b) If such annual statements are not available, the statements described
in (I) or (II) below, whichever is applicable, annualized for such Fiscal
Period,
..................(I) the most recent Qualified statements of
operations and cash flows for such system, if such statements cover at least
three consecutive months out of the twelve months preceding the date as of which
EBIDT is to be computed, or
..................(II) if none of the foregoing statements is
available, pro forma statements of the operations and cash flows of such system
for the then most recent Fiscal Period prepared by the Partnership so as to be
Qualified,
.........where the term "Qualified" means financial statements which
reflect the expenses and income of such system in a manner consistent with that
used in financial reports of the Partnership for systems it has then been
operating for at least one Fiscal Period.
..................(ii).....if the Partnership or any subsidiary has sold or
otherwise disposed of any cable television system during any Fiscal Quarter or
Fiscal Period for which EBIDT is to be computed, EBIDT shall be computed as if
such system had not been owned by the Partnership or such Subsidiary during any
part of such Fiscal Quarter or Fiscal Period, as the case may be.
"Equity Value" means, with respect to any Partnership Interest, for
purposes of any provision of this Agreement that refers to the Equity Value of
such Partnership Interest, the amount that would be distributed to the holder of
such Partnership Interest in liquidation of the Partnership, with respect to
such Partnership Interest, if the Partnership Value (determined in the manner
specified in such provision) were distributed to the Partners in liquidation in
accordance with Section 11.2(d), without reduction for liabilities pursuant to
Section 11.2(d)(1) or reserves pursuant to Section 11.2(d)(2) except as
specifically provided in this definition of "Partnership Value."
"FCC" means the Federal Communications Commission.
"Fiscal Period" means the period of four consecutive Fiscal Quarters
ended on the last day of March, June, September or December, as the case may be.
"Fiscal Quarter" means the period of three calendar months ending on
the last day of March, June, September or December, as the case may be.
"Fiscal Year" means the fiscal year of the Partnership as required
under Code Section 706.
"General Partner" means Century and any other Person admitted as a
general partner in accordance with the provisions of this Agreement.
"Gross Asset Value" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except as follows:
(a)......The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair-market value
of such asset, as determined in accordance with Section 3.1(c)(1) or Section
3.1(d), as applicable;
(b)......The Gross Asset Values of all assets of the
Partnership shall be adjusted to equal their respective gross fair-market
values, as agreed to by the Partners as of the following times: (1) the
acquisition of an additional interest in the Partnership by any new or existing
Partner in exchange for more than a de minimis Capital Contribution; (2) the
distribution by the Partnership to a Partner of more than a de minimis amount of
property of the Partnership as consideration for an interest in the Partnership;
and (3) the liquidation of the Partnership within the meaning of Treasury
Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that the
adjustments pursuant to clauses (1) and (2) above shall be made only if the
Partners agree that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership;
(c)......The Gross Asset Value of any asset of the Partnership
distributed to either Partner shall be the gross fair-market value of such asset
on the date of distribution; and
(d)......The Gross Asset Value of the assets of the
Partnership shall be increased (or decreased) to reflect any adjustments to the
adjusted basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m) and Section 4.3(g); provided, however, that Gross Asset
Value shall not be adjusted pursuant to this paragraph (d) to the extent that
the Partners agree that an adjustment pursuant to paragraph (c) of this
definition is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this paragraph (d).
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to paragraph (a), (b), or (d) of this definition, the Gross Asset Value
of such asset shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Net Profit and Net
Loss.
"Indebtedness" has the meaning specified below:
(a)......if the Partnership is not subject to any loan
agreement that limits the ratio of the Partnership's indebtedness to its cash
flow, then "Indebtedness" means (i) indebtedness for borrowed money or for the
deferred purchase price of property or services in respect of which such Person
is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which such Person otherwise assures a creditor against loss, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
including, but not limited to, Commercial Paper, (iii) obligations, contingent
or otherwise, under acceptance, letter of credit or similar facilities, (iv)
obligations as lessee under Capital Leases, and (v) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv) above; provided that Indebtedness shall not include
trade accounts payable unless payment thereof has been deferred by agreement
beyond the customary period in the industry, and
(b)......if the Partnership is subject to a loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Indebtedness" means any indebtedness that is required to be taken into account
under that loan agreement to which the Partnership is subject that includes the
most restrictive covenant regarding the ratio of the Partnership's indebtedness
to its cash flow.
"Limited Partner" means TCI and any other Person admitted as a limited
partner in accordance with the provisions of this Agreement.
"Managing Partner" means Century and any General Partner selected as
successor Managing Partner pursuant to Section 7.1(b) or Section 7.2(b).
"Minority Entity" means any corporation less than 50% of the Voting
Rights of which corporation are at the time directly or indirectly owned by the
Partnership, by the Partnership and one or more of its Subsidiaries, or by one
or more other Subsidiaries.
"Net Profit and Net Loss" means, for each Fiscal Year or other period,
an amount equal to the Partnership's taxable income or loss for such Fiscal Year
or other period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss, or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a)......Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in computing Net Profit
or Net Loss shall be added to such taxable income or loss;
(b)......Code Section 705(a)(2)(B) expenditures of the
Partnership that are not otherwise taken into account in computing Net Profit or
Net Loss shall be subtracted from such taxable income or loss;
(c)......If the Gross Asset Value of any asset of the
Partnership is adjusted pursuant to paragraph (b) or (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Profit or Net Loss;
(d)......Gain or loss resulting from any disposition of
property of the Partnership with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of the property disposed of, notwithstanding that the adjusted tax basis
of such property differs from its Gross Asset Value;
(e)......In lieu of the depreciation, amortization, and other
cost recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year or
other period;
(f)......Notwithstanding anything to the contrary in the
definition of the terms "Net Profit" and "Net Loss," any items that are
specially allocated pursuant to Section 4.3 of this Agreement shall not be taken
into account in computing Net Profit or Net Loss; and
(g)......For purposes of this Agreement, any deduction for a
loss on a sale or exchange of property of the Partnership that is disallowed to
the Partnership under Code Section 267(a)(1) or Code Section 707(b) shall be
treated as a Code Section 705(a)(2)(B) expenditure.
"Nonrecourse Deductions" means losses, deductions, or Code Section
705(a)(2)(B) expenditures attributable to Partnership Nonrecourse Liabilities.
The amount of Nonrecourse Deductions shall be determined pursuant to Treasury
Regulations Section 1.704-2(c), which provides generally that the amount of
Nonrecourse Deductions for a Fiscal Year shall equal the net increase, if any,
in Partnership Minimum Gain during that Fiscal Year, reduced (but not below
zero) by the aggregate distributions made during that Fiscal Year of proceeds of
a Nonrecourse Liability that are allocable to an increase in Partnership Minimum
Gain.
"Nonrecourse Liability" has the meaning set forth in Treasury
Regulations Section 1.752-1(a)(2).
"Operating Cash Flow Ratio" has the meaning specified below:
(a)......if the Partnership is not subject to any loan
agreement that limits the ratio of the Partnership's indebtedness to its cash
flow, then "Operating Cash Flow Ratio" means the ratio of (i) the Total Debt as
of such date to (ii) EBIDT for the most recent Fiscal Period which ends on or
before such date, and
(b)......if the Partnership is subject to a loan agreement
that limits the ratio of the Partnership's indebtedness to its cash flow, then
"Operating Cash Flow Ratio" means the ratio of the Partnership's indebtedness to
its cash flow as calculated for purposes of that loan agreement to which the
Partnership is subject that includes the most restrictive covenant regarding the
ratio of the Partnership's indebtedness to its cash flow.
"Ownership Restriction" means any provision of the Communications Act
of 1934, as amended, or any other law subsequently enacted, or any rule,
regulation, or policy of the FCC promulgated thereunder restricting the
ownership and control of communications properties (including cable television
systems, television broadcast stations, radio broadcast stations, telephone
companies, and newspapers), including those relating to cross-ownership and
cross-interest, as those terms are commonly understood in the communications
industry.
"Parent" has the meaning specified below:
(a)......so long as Tele-Communications owns a controlling
interest, directly or indirectly, in TCI, "Parent" means, with respect to TCI,
Tele-Communications;
(b)......so long as either Century/Texas or Adelphia owns a
controlling interest, directly or indirectly, in Century, "Parent" means, with
respect to Century, Century/Texas; and
(c)......with respect to any other Person (including TCI, if
paragraph (a) of this definition does not apply, and Century, if paragraph (b)
of this definition does not apply), "Parent" means the ultimate parent entity
(as determined in accordance with the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder) of such Person
(or such Person if it is its own ultimate parent entity).
"Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4), which generally defines "Partner Nonrecourse
Debt" as any Partnership liability to the extent such liability is nonrecourse
and a Partner (or related Person) bears the economic risk of loss pursuant to
Treasury Regulations Section 1.752-2.
"Partner Nonrecourse Debt Minimum Gain" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), which generally defines "Partner
Nonrecourse Debt Minimum Gain" as the Partnership Minimum Gain attributable to
Partner Nonrecourse Debt. The amount of Partner Nonrecourse Debt Minimum Gain
shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(3).
"Partner Nonrecourse Deductions" means losses, deductions, or Code
Section 705(a)(2)(B) expenditures attributable to Partner Nonrecourse Debt. The
amount of Partner Nonrecourse Deductions shall be determined pursuant to
Treasury Regulations Section 1.704-2(i)(2), which provides generally that the
amount of Partner Nonrecourse Deductions for a Fiscal Year shall equal the net
increase, if any, in Partner Nonrecourse Debt Minimum Gain during that Fiscal
Year, reduced (but not below zero) by the proceeds of Partner Nonrecourse Debt
distributed during the Fiscal Year to the partner bearing the economic risk of
loss for such Partner Nonrecourse Debt that are both attributable to such
Partner Nonrecourse Debt and allocable to an increase in Partner Nonrecourse
Debt Minimum Gain.
"Partners" means each General Partner and each Limited Partner.
"Partnership" means the partnership created by this Agreement.
"Partnership Interest" means the entire ownership interest of a Partner
in the Partnership at any particular time, including all of its rights and
obligations hereunder and under the Act.
"Partnership Minimum Gain" means the excess of the Partnership
Nonrecourse Liabilities over the adjusted tax basis of property securing such
Partnership Nonrecourse Liabilities. The amount of Partnership Minimum Gain
shall be determined in accordance with Treasury Regulations Section 1.704-2(d),
which provides generally that the amount of Partnership Minimum Gain shall be
determined by first computing for each Nonrecourse Liability any gain the
Partnership would realize if it disposed of the property subject to that
Nonrecourse Liability for no consideration other than full satisfaction of such
Nonrecourse Liability, and then aggregating the separately computed gains.
"Partnership Value" means the amount that would be available to be
distributed to the Partners in liquidation of the Partnership, if the
Partnership were liquidated in the following manner:
(a)......with respect to each Subsidiary, either the assets of
such Subsidiary would be sold for the fair-market value of such assets, and the
Subsidiary would be liquidated in a manner comparable to that described in
paragraphs (b) and (c) below and the definition of "Equity Value," or all equity
interests in such Subsidiary owned, directly or indirectly, by the Partnership
would be sold for the fair-market value of such equity interests, whichever
would produce the greater net proceeds to the Partnership;
(b)......the assets of the Partnership (other than any equity
interest in any Subsidiary that would have been liquidated under paragraph (a)
above) would be sold for the fair-market value of such assets; and
(c)......the Partnership would pay any liabilities that would
be required by generally accepted accounting principles to be reflected on a
balance sheet of the Partnership (other than any such liabilities relating to
the operations of the Partnership's business that would be assumed by a
purchaser of the Partnership's assets) and would establish reserves in the
amount of any reserves required by generally accepted accounting principles to
be reflected on a balance sheet of the Partnership.
"Percentage Interest" means (a) as of any date prior to the date
hereof, with respect to Century, seventy-five percent, and, with respect to TCI,
twenty-five percent, and (b) as of any date on or after the date hereof, with
respect to either Partner, a fraction the numerator of which is the net
fair-market value of all Capital Contributions made by such Partner and the
denominator of which is the net fair-market value of all Capital Contributions
made by both Partners, with all such net fair-market values being determined in
the manner specified in Section 3.1(b), subject to subsequent adjustment
pursuant to Section 3.2(e) and Section 4.1(d).
"Person" means an individual, partnership, joint venture, association,
corporation, trust, estate, limited liability company, limited liability
partnership, or any other legal entity.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, at any time, any Person that is controlled by the
Partnership at such time.
"TCI" means TCI California Holdings, LLC, or any other Person that
succeeds to its Partnership Interest and is admitted as a Partner in accordance
with the provisions of this Agreement.
"TCI Appraiser" means an appraiser designated by TCI pursuant to
Section 3.2(f)(2).
"TCI Members" means the members of TCI.
"Tele-Communications" means Tele-Communications, Inc., a Delaware
corporation, and any successor (by merger, consolidation, sale of assets, or
other similar transaction) to all or substantially all of its business and
assets.
"Territory" means the following counties in California: Los Angeles,
Orange, San Bernardino, Ventura, San Diego, Riverside, Santa Barbara, and Kern.
"Third Appraiser" means an appraiser designated by the TCI Appraiser
and the Century Appraiser pursuant to Section 3.2(f)(4).
"Total Debt" means, as of any date, the Consolidated Debt of the
Partnership and its Subsidiaries, including, without limitation, Capital Leases,
guaranties, obligations with respect to letters of credit and trade accounts
payable for which payment has been deferred by agreement beyond the customary
period in the industry.
"Treasury Regulations" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Voting Rights" means, as to any corporation, ordinary voting power
(whether associated with outstanding common stock or outstanding preferred
stock, or both) to elect members of the Board of Directors of such corporation
(irrespective of whether or not at the time capital stock of any class or
classes of such corporation shall or might have voting power or additional
voting power upon the occurrence of any contingency).
"Wholly Owned Subsidiary" means, at any time, any Subsidiary all of the
outstanding equity interests of which are owned at such time, directly or
indirectly, by the Partnership.
1.2 Terms Defined Elsewhere in This Agreement.
-----------------------------------------
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
@Home Distribution Agreement Section 16.8(c)(2)
Additional Income Tax Amount Section 8.11(a)(2)
Adjusted Prior Value Section 3.2(f)(2)
Adjustment Value Section 3.2(f)(6)
All Distance Services Section 10.2(a)
AT&T Section 10.2(a)
Average Adjustment Value Section 3.2(f)(6)
Capital Call Section 3.2(a)
Century Distribution Agreement Section 16.8(c)(1)
Deemed Distribution Section 4.1(c)(2)
Deferred Assignment Section 8.11(c)
First Assigning Partner Section 8.11(d)
First Offer Notice Section 9.1(a)
Formal Determination Section 10.1(b)
Indemnified Persons Section 12.1
Liquidator Section 11.2(b)
Negotiation Period Section 10.2(b)
Non-Exclusive Service Section 16.8(a)
Notice Section 10.2(a)
Offered Interest Section 9.1(a)
Other Financial Terms Section 9.1(a)
Other Terms Section 9.1(a)
Partnership Territory Section 10.2(a)
Programming Supply Agreement Section 16.9(c)
Purchase Price Section 9.1(a)
Regulatory Allocations Section 4.3(i)
Re-Offer Notice Section 9.2(c)
Second Assigning Partner Section 8.11(d)
Secretary Section 5.7(b)
Seller Section 9.1(a)
SSI Section 16.9(c)
SSI Administrative Fee Section 16.9(c)
Termination Section 8.11(a)(1)
TCI Systems Section 16.8(a)
</TABLE>
1.3 Terms Generally.
---------------
The definitions in Section 1.1 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context requires, any pronoun includes the corresponding masculine,
feminine, and neuter forms. The words "include," "includes," and "including" are
not limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day.
ARTICLE 2.........
FORMATION AND PURPOSE
2.1 Formation.
---------
The Partners hereby form the Partnership as a limited partnership
pursuant to the Act. The rights and liabilities of the Partners shall be
determined pursuant to the Act and this Agreement. To the extent that the rights
or obligations of either Partner are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Act, control.
2.2 Name.
----
(a) The name of the Partnership is Century-TCI California Communications, L.P.
Except as provided in Section 2.2(b), the business of the Partnership may be
conducted under that name or, upon compliance with applicable laws, any other
name that the Managing Partner deems appropriate or advisable, including any
name that includes the name "Century," except that the Partnership shall not
conduct business under any name that includes the name "Century" without the
approval of Century. The Partnership shall file any assumed name certificates
and similar filings, and any amendments thereto, that the Managing Partner
considers appropriate or advisable.
(b) Neither the Partnership nor any Subsidiary shall conduct business under the
name "Tele-Communications, Inc., "TCI," or any variation thereof without the
approval of TCI, except that any asset contributed to the Partnership by TCI may
continue to bear any name borne by such asset at the time of its contribution to
the Partnership for a period of ninety days after its contribution. The parties
agree that "Communications" is not a variation of "Tele-Communications, Inc."
for purposes of this Section 2.2(b).
2.3 Principal and Registered Office.
-------------------------------
The office required to be maintained by the Partnership in the State of
Delaware pursuant to Section 17-104 of the Act shall initially be located at
1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The resident
agent of the Partnership pursuant to Section 17-104 of the Act shall initially
be The Corporation Trust Company. The Partnership may, upon compliance with the
applicable provisions of the Act, change its resident agent from time to time in
the discretion of the Managing Partner. The principal office of the Partnership
shall be located at One North Main Street, Coudersport, Pennsylvania 16915, or
at such other place as the Managing Partner shall from time to time designate by
written notice to the Partners. The Partnership may conduct business at such
additional places as the Managing Partner shall deem advisable.
2.4 Term
The term of the Partnership shall commence on the date of the filing of
the Certificate with the Secretary of State of Delaware and shall continue until
December 31, 2023, unless sooner terminated as provided in this Agreement.
2.5 Purposes of Partnership.
-----------------------
The purposes of the Partnership are:
(a) to engage in the business, directly or indirectly through interests in one
or more Subsidiaries, of acquiring, developing, owning, operating, managing, and
selling the cable television systems and other assets currently owned by
Century-TCI California;
(b) to acquire, develop, own, operate, manage, and sell additional cable
television systems in the Territory and businesses providing high-speed data
service and telephony services in the Territory;
(c) to acquire, develop, own, operate, manage, and sell, or invest in,
businesses in the Territory related to and ancillary to those referred to above;
and
(d) to engage in other businesses in the Territory as agreed to between
Century and TCI.
2.6 Authority of Partnership.
------------------------
The Partnership shall be empowered and authorized, for itself or on
behalf of any Subsidiary, to the extent necessary, appropriate, proper,
advisable, incidental to, or convenient for the furtherance and accomplishment
of the purposes described in Section 2.5:
(a) to possess, transfer, mortgage, pledge, or otherwise deal in, and to
exercise all rights, powers, privileges, and other incidents of ownership or
possession with respect to securities or other assets held or owned by the
Partnership, and to hold securities or assets in the name of a nominee or
nominees;
(b) to borrow or raise money, and from time to time to issue, accept, endorse,
and execute promissory notes, loan agreements, options, stock purchase
agreements, contracts, documents, checks, drafts, bills of exchange, warrants,
bonds, debentures, and other negotiable or nonnegotiable instruments and
evidences of indebtedness, and to secure the payment of any thereof and of the
interest thereon by mortgage upon or pledge, conveyance, or assignment in trust
of the whole or any part of the property of the Partnership whether at the time
owned or thereafter acquired and to guarantee the obligations of others and to
sell, pledge, or otherwise dispose of such bonds or other obligations of the
Partnership for its purposes;
(c) to guarantee the obligations of others in connection with the purchase
or acquisition by the Partnership of securities or assets;
(d) to maintain an office or offices in such place or places as the Managing
Partner shall determine and in connection therewith to rent or acquire office
space, engage personnel, and do such other acts and things as may be necessary
or advisable in connection with the maintenance of such office, and on behalf of
and in the name of the Partnership to pay and incur reasonable expenses and
obligations for legal, accounting, investment advisory, consultative and
custodial services, and other reasonable expenses including taxes, travel,
insurance, rent, supplies, interest, salaries and wages of employees, and all
other reasonable costs and expenses incident to the operation of the
Partnership;
(e) to form and own one or more corporations, trusts, or partnerships (but no
entity so formed or owned, while it is a Subsidiary, may do what the Partnership
is prohibited by this Agreement from doing); and
(f) to own, lease, or otherwise acquire any and all assets and services
related to the purposes described in Section 2.5.
2.7 Certificate.
-----------
The Managing Partner shall cause the Certificate to be filed with the
Secretary of State of Delaware and shall cause the Certificate to be filed or
recorded in any other public office where filing or recording is required or is
deemed by the Managing Partner to be advisable.
2.8 Addresses of the Partners.
-------------------------
The respective addresses of the Partners are set forth on Schedule I.
2.9 Foreign Qualification.
---------------------
The Managing Partner shall take all necessary actions to cause the
Partnership to be authorized to conduct business legally in all appropriate
jurisdictions, including registration or qualification of the Partnership as a
foreign limited partnership in those jurisdictions that provide for registration
or qualification and the filing of a certificate of limited partnership in the
appropriate public offices of those jurisdictions that do not provide for
registration or qualification.
2.10 Tax Classification.
------------------
Notwithstanding any other provision of this Agreement, no Partner or
employee of the Partnership may take any action (including the filing of a U.S.
Treasury Form 8832 Entity Classification Election) that would cause the
Partnership or any Subsidiary which is a partnership or limited liability
company to be characterized as an entity other than a partnership for federal
income tax purposes without the affirmative unanimous consent of the Partners. A
determination of whether any action would cause the Partnership to be
characterized as an entity other than a partnership for federal income tax
purposes will be based upon a declaratory judgment or similar relief obtained
from a court of competent jurisdiction, a favorable ruling from the Internal
Revenue Service, or the receipt of an opinion of counsel reasonably satisfactory
to the Partners.
ARTICLE 3.........
PARTNERSHIP CAPITAL
3.1 Contributions.
-------------
(a) Initial Contributions. Simultaneously with the execution of this Agreement,
the Partners shall each contribute to the Partnership their interests in
Century-TCI California pursuant to the Contribution and Assignment (99%
Interest) and the Contribution and Assignment (1% Interest).
(b) Capital Account Balances. The Capital Accounts of the Partners
immediately after the initial contributions shall be the net
fair-market value of the initial contributions, determined as follows:
(1) In the case of Century, (A) the Aggregate Gross Fair-Market Value of the
Century Assets (as defined in the Contribution Agreement) minus (B) the amount
of Century Permitted Debt (as defined in the Contribution Agreement) assumed by
Century-TCI California at the Closing pursuant to Section 3.1 of the
Contribution Agreement.
(2) In the case of TCI, (A) the Aggregate Gross Fair-Market Value of the TCI
Assets (as defined in the Contribution Agreement) minus (B) the amount of TCI
Permitted Debt (as defined in the Contribution Agreement) assumed by Century-TCI
California at the Closing pursuant to Section 3.1 of the Contribution Agreement.
(c) Allocation of Gross Fair-Market Value; Subsequent Contributions.
- ------------------------------------------------------------------------
(1) TCI and Century will negotiate in good faith to reach agreement within
thirty days after the Closing on the allocation of the Aggregate Gross
Fair-Market Value of the Century Assets and the Aggregate Gross Fair-Market
Value of the TCI Assets to the assets contributed or to be contributed to
Century-TCI California by TCI and Century pursuant to the Contribution Agreement
. If TCI and Century do not agree on such allocation within ninety days after
the Closing, then such allocation shall be determined by an appraisal to be
conducted by an independent appraisal firm agreed to by Century and TCI and
retained by the Partnership, at the Partnership's expense, with experience in
the valuation and appraisal of assets similar to such asset. Neither TCI nor
Century will take a position that is inconsistent with such allocation, either
as agreed to by them or as determined by such appraiser.
(2) The value of any payment or other transfer of assets required to be made by
either Partner to Century-TCI California under the Contribution Agreement after
the Closing, including any contribution of cash or property pursuant to Section
7.23 of the Contribution Agreement, is reflected in the Aggregate Gross
Fair-Market Value of the Century Assets or the Aggregate Gross Fair-Market Value
of the TCI Assets, as applicable, which is reflected in such Partner's Capital
Account immediately after the Closing as provided in Section 3.1(b), and any
such payment or other transfer of assets shall be deemed to have been made at
Closing and shall not increase such Partner's Capital Account above the amount
provided in Section 3.1(b).
(d) Determining Fair-Market Value of Other Contributed Assets. Except as
otherwise agreed to between the Partners, the fair-market value of any asset
contributed by a Partner to the Partnership, other than pursuant to Section
3.1(a), shall be determined for purposes of this Agreement as follows:
(1) The Partner contributing such asset shall determine the fair-market value of
such asset and send a written notice to the other Partner setting forth its
determination.
(2) Within ten Business Days after its receipt of the contributing Partner's
notice pursuant to Section 3.1(d)(1), the other Partner may send a written
notice to the contributing Partner accepting or rejecting the contributing
Partner's determination of the fair-market value of such asset. If the other
Partner accepts the contributing Partners determination, the fair-market value
of such asset for purposes of this Agreement shall be as determined by the
contributing Partner.
(3) If the other Partner does not send a written notice to the contributing
Partner accepting the contributing Partner's determination of the fair-market
value of any asset within ten Business Days after its receipt of the
contributing Partner's notice pursuant to Section 3.1(d)(1), the fair-market
value of such asset for purposes of this Agreement shall be determined by an
appraisal to be conducted by an independent appraisal firm agreed to by Century
and TCI and retained by the Partnership, at the Partnership's expense, with
experience in the valuation and appraisal of assets similar to such asset.
3.2 Additional Capital Contributions.
--------------------------------
(a) So long as Century is the Managing Partner, the Managing Partner may request
additional cash Capital Contributions by the Partners pursuant to this Section
3.2 by delivering a written notice (each such notice, a "Capital Call") to each
other Partner specifying (1) the amount of cash being requested, (2) the
purposes for which the Capital Contributions are required, (3) the date on which
the Capital Contributions are requested to be made (which shall not be less than
fifteen days after the date on which the Managing Partner delivers the Capital
Call to each other Partner), and (4) the bank account of the Partnership to
which the Capital Contributions are to be made.
(b) To the extent that the amount of additional Capital Contributions requested
in all Capital Calls pursuant to this Section 3.2 does not exceed $10,000,000,
each Partner shall make additional Capital Contributions in cash in accordance
with each Capital Call in an amount equal to the product of the Percentage
Interest of such Partner as of the date of the contribution multiplied by the
amount of Capital Contributions requested in such Capital Call.
(c) To the extent that the amount of additional Capital Contributions requested
in all Capital Calls pursuant to this Section 3.2 exceeds $10,000,000, then each
Partner may elect whether or not to make additional Capital Contributions in
response to a Capital Call by delivering written notice of its election to the
other Partner within ten days after its receipt of the Capital Call; provided,
however, that the Managing Partner must elect to make additional Capital
Contributions in response to any Capital Call. A Partner that does not deliver a
notice of its election to the other Partner within ten days after its receipt of
a Capital Call shall be deemed to have elected to make additional Capital
Contributions in response to the Capital Call. A Partner that elects to make
additional Capital Contributions in response to a Capital Call shall be
obligated to contribute to the Partnership in cash, in accordance with such
Capital Call, an amount equal to the product of the Percentage Interest of such
Partner as of the date of the contribution multiplied by the amount of Capital
Contributions requested in such Capital Call. (d) If one Partner elects to make
additional Capital Contributions in response to a Capital Call and the other
Partner elects not to make additional Capital Contributions in response to such
Capital Call, then the Partner that elected to make additional Capital
Contributions may also elect, by delivering written notice of its election to
the other Partner within ten days after the last day for the other Partner's
delivery of an election pursuant to Section 3.2(c), to make an additional
Capital Contribution to the Partnership, in accordance with such Capital Call,
up to an amount equal to the product of the Percentage Interest of the other
Partner as of the date of the contribution multiplied by the amount of Capital
Contributions requested in such Capital Call. A Partner that elects to make
additional Capital Contributions pursuant to this Section 3.2(d) shall be
obligated to contribute to the Partnership in cash the amount specified in its
election, in accordance with the Capital Call, in addition to the amount such
Partner is obligated to contribute pursuant to Section 3.2(c).
(e) If one Partner elects to make an additional Capital Contribution in response
to a Capital Call and the other Partner elects not to make an additional Capital
Contribution in response to such Capital Call (regardless of whether the
contributing Partner also elected to make an additional Capital Contribution
pursuant to Section 3.2(d)) or if a Partner makes a Capital Contribution
pursuant to any other agreement between the Partners (except as otherwise agreed
to between the Partners), then, effective as of the date on which the
contributing Partner makes such Capital Contribution, the Percentage Interests
of each Partner shall be adjusted to equal (1) the sum of (A) the Equity Value
of such Partner's Partnership Interest plus (B) the amount, if any, of Capital
Contributions then being made by such Partner in response to such Capital Call
pursuant to Section 3.2(c) and Section 3.2(d) or pursuant to such agreement
between the Partners (taking into account Section 3.1(d)), divided by (2) the
sum of (A) the Equity Value of such Partner's Partnership Interest plus (B) the
Equity Value of the other Partner's Partnership Interest, plus (C) the amount of
Capital Contributions then being made by the contributing Partner, where the
Partnership Value for purposes of calculating each such Equity Value shall be as
agreed to between TCI and Century pursuant to Section 3.2(f)(1) or, if TCI and
Century failed to agree on the Partnership Value, then the Partnership Value for
purposes of calculating each such Equity Value shall be the Average Adjustment
Value determined in accordance with Section 3.2(f)(6).
(f) The Partnership Value for purposes of calculating each Equity Value under
Section 3.2(e) and Section 4.1(d) shall be determined in accordance with the
following provisions:
(1) TCI and Century shall negotiate in good faith to reach an agreement on such
Partnership Value within thirty days after the election by one Partner to make
an additional Capital Contribution pursuant to Section 3.2(c) or the execution
of an agreement between the Partners regarding Capital Contributions to be made
by a Partner or noncash distributions to be made to a Partner, as applicable.
(2) If TCI and Century fail to agree on such Partnership Value within the period
specified in Section 3.2(f)(1), then either Partner may elect to commence the
valuation process described below by sending written notice to the other Partner
either (A) designating an appraiser to be retained by the electing Partner to
make a determination of the Partnership Value or (B) if the Partnership Value
was previously determined for purposes of calculating Equity Value of the
Partners' Partnership Interests under Section 3.2(e) (either by agreement
between TCI and Century or as the Average Adjustment Value) with respect to any
Capital Contribution made no more than one year prior to the date on which the
Capital Contribution with respect to which the Equity Value of the Partners'
Partnership Interests is then being determined is to be made, electing to use
the Adjusted Prior Value as such Partner's Adjustment Value. If a Partner elects
to commence the valuation process pursuant to this Section 3.2(f)(2), the other
Partner shall, within ten Business Days after its receipt of notice of the
electing Partner's election, send a written notice to the electing Partner
either (A) designating an appraiser to be retained by such other Partner to make
a determination of the Partnership Value or (B) if the condition in clause (B)
of the preceding sentence is satisfied, electing to use the Adjusted Prior Value
as such Partner's Adjustment Value. For purposes of this Section 3.2(f), the
"Adjusted Prior Value" means the Partnership Value as most recently determined
for purposes of calculating Equity Value of the Partners' Partnership Interests
under Section 3.2(e), increased by the amount of Capital Contributions made by
the Partners since the date of such determination and decreased by the amount of
distributions to the Partners since the date of such determination.
(3) Any appraiser designated pursuant to Section 3.2(f)(2) shall be instructed
to complete its appraisal within thirty days after its designation pursuant to
Section 3.2(f)(2).
(4) If the difference between TCI's Adjustment Value and Century's Adjustment
Value is greater than three percent of the lower of such values, then the TCI
Appraiser (or TCI, if TCI elected to use the Adjusted Prior Value as its
Adjustment Value) and the Century Appraiser (or Century, if Century elected to
use the Adjusted Prior Value as its Adjustment Value) shall jointly designate an
appraiser to be retained by the Partnership to make a determination of the
Partnership Value. The Third Appraiser shall be instructed to complete its
appraisal within thirty days after its designation.
(5) In making its determination of the Partnership Value, each appraiser shall:
(A) assume that the fair-market value of the assets of the Partnership, the
fair-market value of the assets of any Subsidiary, or the fair-market value of
any equity interests in any Subsidiary, as applicable, is the price at which
such assets, as a going concern, or such equity interests would change hands in
a private market transaction between a single willing buyer and a single willing
seller, neither being under any compulsion to buy or sell and each having
reasonable knowledge of all relevant facts;
(B) assume the sale of all relevant assets occurred immediately prior to the
additional Capital Contribution with respect to which the Equity Value of the
Partners' Partnership Interests is then being determined;
(C) take into account liabilities of the Partnership and the Subsidiaries in
existence on such date;
(D) assume a sale of the assets of the Partnership and each Subsidiary for cash;
and
(E) use valuation techniques then prevailing in the cable television industry.
(6) The Partnership Value as determined by the appraiser designated by a
Partner, or, if the Partner so elected pursuant to Section 3.2(f)(2), the
Adjusted Prior Value, shall be such Partner's "Adjustment Value," the
Partnership Value determined by the Third Appraiser, shall be the Third
Appraiser's "Adjustment Value," and the "Average Adjustment Value" shall be:
(A) If the difference between TCI's Adjustment Value and Century's Adjustment
Value is less than or equal to three percent of the lower of such values, then
the Average Adjustment Value shall be the average of TCI's Adjustment Value and
Century's Adjustment Value;
(B) If Section 3.2(f)(6)(A) does not apply and the difference between the
highest of the three Adjustment Values (including the Adjustment Value of the
Third Appraiser) and the middle of the three Adjustment Values is equal to the
difference between the lowest of the three Adjustment Values and the middle of
the three Adjustment Values, then the Average Adjustment Value shall be the
middle Adjustment Value; and
(C) In all other cases, the Average Adjustment Value shall be the average of the
two closest of TCI's Adjustment Value, Century's Adjustment Value, and the Third
Appraiser's Adjustment Value.
(7) Each appraiser designated pursuant to this Section 3.2(f) shall be a
nationally recognized investment banking firm that is qualified and experienced
in the appraisal of cable television systems and shall not be an Affiliate of
either Partner. The fees and expenses of the TCI Appraiser shall be borne by
TCI, the fees and expenses of the Century Appraiser shall be borne by Century,
and the fees and expenses of the Third Appraiser shall be borne by the
Partnership, except that, if one Partner elects to use the Adjusted Prior Value
as its Adjustment Value, then the fees and expenses of the Third Appraiser shall
be borne by the other Partner.
3.3 Other Contributions.
-------------------
Except for Capital Contributions made pursuant to Section 3.1 or
Section 3.2 or as otherwise agreed to by the Partners, no additional Capital
Contributions shall be made by either Partner.
3.4 Return of Contributions.
-----------------------
Neither Partner shall have the right to demand a return of all or any
part of its Capital Contribution during the term of the Partnership, and any
return of the Capital Contribution of either Partner shall be made solely from
the assets of the Partnership and only in accordance with the terms of this
Agreement. No interest shall be paid to either Partner with respect to its
Capital Contribution to the Partnership.
3.5 Financing.
---------
To finance the business of the Partnership, subject to Section
5.1(b)(1) and Section 5.1(c)(10), the Managing Partner may arrange for the
obtaining of loans by the Partnership, including loans made by one or more
Affiliates of the Managing Partner. Any payment by the Partnership to any
Affiliate of the Managing Partner with respect to any such loans made by such
Affiliate shall not be treated as a distribution to the Managing Partner under
this Agreement.
ARTICLE 4.........
DISTRIBUTIONS; ALLOCATIONS OF PROFIT AND LOSS
4.1 Distributions.
-------------
(a) Amount and Timing of Cash Distributions. All cash of the Partnership
shall be distributed at such times and in such amounts
as the Managing Partner may determine in its sole discretion.
(b) Allocation of Cash Distributions. All distributions of cash pursuant
to Section 4.1(a) and Section 11.2(d)(3) shall be allocated between the Partners
in proportion to their Percentage Interests as of the date of the distribution.
(c) Tax Withholding.
(1) The Partnership shall, and shall cause each Subsidiary to, seek to qualify
for and obtain exemptions from any provision of the Code or any provision of
state, local, or foreign tax law that would otherwise require the Partnership or
a Subsidiary to withhold amounts from payments or distributions to the Partners
or the partners of such Subsidiary. If the Partnership or a Subsidiary does not
obtain any such exemption, the Partnership or such Subsidiary is authorized to
withhold from any payment or distribution to either Partner or the partners of
such Subsidiary any amounts that are required to be withheld pursuant to the
Code or any provision of any state, local, or foreign tax law that is binding on
the Partnership or such Subsidiary.
(2) If the Code or any provision of any state, local, or foreign tax law that is
binding on the Partnership requires that the Partnership remit to any taxing
authority any tax with respect to, or for the account of, either Partner in its
capacity as a Partner, as a result of any transaction by the Partnership or any
Subsidiary (other than a payment or distribution to a Partner), the Partnership
shall, to the extent that Partnership funds are available therefor, remit the
full required amount of such tax to the taxing authority and shall notify such
Partner in writing of the amount of such tax. The Partnership shall treat the
payment of such tax as a distribution pursuant to Section 4.1(a) (a "Deemed
Distribution"), and substantially simultaneously with the payment of such tax
the Partnership shall cause a distribution of cash to be made to the Partners so
as to cause the distributions pursuant to this Section 4.1(c) (including the
Deemed Distribution) to be in proportion to the Partners' Percentage Interests;
provided, however, that if the Partnership does not have sufficient funds to
make such cash distribution or if the Partnership is prohibited from making such
cash distribution, then each Partner agrees to contribute to the Partnership,
within fifteen Business Days after its receipt of written notice from the
Partnership, the amount of any such tax to the extent it exceeds such Partner's
proportionate share (based on Percentage Interests) of the distributions
pursuant to this Section 4.1(c) (including the Deemed Distribution), together
with interest from the date the Partnership remits such tax until it is paid by
such Partner, at an interest rate equal to that paid by the Partnership with
respect to its senior indebtedness. Interest paid by a Partner pursuant to this
Section 4.1(c) shall not be treated as Capital Contributions for any purposes
under this Agreement, including calculation of the Partners' Capital Accounts.
The Partnership is further authorized to withhold from any subsequent payment or
distribution to either Partner the amount of such Partner's obligation under the
preceding sentence.
(3) All amounts that are credited against payments or distributions to which a
Partner would otherwise be entitled pursuant to this Section 4.1(c) shall be
treated as amounts distributed to such Partner pursuant to Section 4.1(a) for
all purposes of this Agreement.
(d) Non-Cash Distributions.
- -------------------------------
(1) Except as specifically agreed to by the Partners, the Partnership shall not
distribute any noncash asset to either Partner.
(2) The fair-market value of any asset distributed in kind to either Partner
shall either be a value agreed to by the Partners or a value determined by a
methodology agreed to by the Partners.
(3) The Partnership shall determine the gain or loss used in determining Net
Profit or Net Loss that would have resulted if any distributed noncash asset had
been sold for its fair-market value, such gain or loss shall be allocated
pursuant to Article 4, and the Partners' Capital Accounts shall be adjusted to
reflect such gain or loss. The amount distributed and charged to the Capital
Account of each Partner receiving an interest in a distributed asset shall be
the fair-market value of such interest (net of any liability secured by such
asset that such Partner assumes or takes subject to).
(4) If the Partners agree that any non-cash asset shall be distributed to either
Partner and the distributions of cash and noncash assets being made in
connection with the distribution of such non-cash asset are not allocated
between the Partners in proportion to their Percentage Interests as of the date
of the distribution, then, except as otherwise agreed to by the Partners,
effective as of the date on which such distributions are made, the Percentage
Interests of each Partner shall be adjusted to equal (A) the sum of (i) the
Equity Value of such Partner's Partnership Interest minus (ii) the amount of
cash and the fair-market value of any noncash asset then being distributed to
such Partner, divided by (B) the sum of (i) the Equity Value of such Partner's
Partnership Interest plus (ii) the Equity Value of the other Partner's
Partnership Interest, minus (iii) the amount of cash and the fair-market value
of any non-cash asset then being distributed to the Partners, where the
Partnership Value for purposes of calculating each such Equity Value shall be as
agreed to between TCI and Century pursuant to Section 3.2(f)(1) or, if TCI and
Century failed to agree on the Partnership Value, then the Partnership Value for
purposes of calculating each such Equity Value shall be the Average Adjustment
Value determined in accordance with Section 3.2(f)(6).
4.2 Allocations of Net Profit and Net Loss.
--------------------------------------
(a) Allocations of Net Profit and Net Loss. Except as provided in Section
4.2(b), Net Profit and Net Loss for each Fiscal Year (or portion thereof) shall
be allocated between the Partners in proportion to their Percentage Interests.
(b) Allocations of Net Profit and Net Loss Following Dissolution.
Notwithstanding Section 4.2(a), following the dissolution of the Partnership
pursuant to Section 11.1, beginning in the Fiscal Year in which such dissolution
occurs or beginning in any Fiscal Year prior to the Fiscal Year in which such
dissolution occurs if the Partnership's federal income tax return for such prior
Fiscal Year has not yet been required to be filed (not including extensions),
items of income and gain, loss, and deduction shall be allocated between the
Partners so as to cause the credit balances in the Partners' Capital Accounts to
be in proportion to their Percentage Interests.
4.3 Special Provisions Regarding Allocations of Profit and Loss.
-----------------------------------------------------------
(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Article
4, if there is a net decrease in Partnership Minimum Gain for any Fiscal Year,
each Partner shall be specially allocated items of Partnership income and gain
for such Fiscal Year (and, if necessary, for succeeding Fiscal Years) in an
amount equal to such Partner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Treasury Regulations Section 1.704-2(g);
provided, however, that this Section 4.3(a) shall not apply to the extent the
circumstances described in Treasury Regulations Sections 1.704-2(f)(2),
1.704-2(f)(3), 1.704-2(f)(4), or 1.704-2(f)(5) exist. Allocations made pursuant
to the preceding sentence shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant thereto. The items of
Partnership income and gain to be allocated pursuant to this Section 4.3(a)
shall be determined in accordance with Treasury Regulations Section
1.704-2(f)(6). This Section 4.3(a) is intended to comply with the minimum gain
chargeback requirement in Treasury Regulations Section 1.704-2(f) and shall be
interpreted consistently therewith.
(b) Partner Minimum Gain Chargeback. Notwithstanding any other provision of this
Article 4 except Section 4.3(a), if during any Fiscal Year there is a net
decrease in Partner Nonrecourse Debt Minimum Gain, each Partner with a share of
that Partner Nonrecourse Debt Minimum Gain (determined in accordance with
Treasury Regulations Section 1.704-2(i)(5)) as of the beginning of such Fiscal
Year must be allocated items of Partnership income and gain for the Fiscal Year
(and, if necessary, for succeeding Fiscal Years) equal to that Partner's share
of the net decrease in the Partner Nonrecourse Debt Minimum Gain (determined in
accordance with Treasury Regulations Section 1.704-2(i)(4)); provided, however,
that this Section 4.3(b) shall not apply to the extent the circumstances
described in the third and fifth sentences of Treasury Regulations Section
1.704-2(i)(4) exist. Allocations pursuant to the preceding sentence shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto. The items of Partnership income and gain to be
allocated pursuant to this Section 4.3(b) shall be determined in accordance with
Treasury Regulations Section 1.704-2(i)(4). This Section 4.3(b) is intended to
comply with the minimum gain chargeback requirement in Treasury Regulations
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(c) Qualified Income Offset. If a Limited Partner unexpectedly receives any
adjustments, allocations, or distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to such Limited Partner in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit of such Limited Partner as quickly as possible;
provided, however, that an allocation pursuant to this Section 4.3(c) shall be
made if and only to the extent that such Limited Partner would have an Adjusted
Capital Account Deficit after all other allocations provided for in this Article
4 have been tentatively made as if this Section 4.3(c) were not in this
Agreement. Allocations made pursuant to the preceding sentence shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant thereto.
(d) Gross Income Allocation. If a Limited Partner has a deficit Capital Account
at the end of any Fiscal Year that is in excess of the sum of (l) the amount
such Limited Partner is obligated to restore to the Partnership pursuant to
Treasury Regulations Section 1.704-1(b)(2)(ii)(c), (2) the amount such Limited
Partner is deemed to be obligated to restore pursuant to the penultimate
sentence of Treasury Regulations Section 1.704-2(g)(1), and (3) the amount such
Limited Partner is deemed to be obligated to restore pursuant to the penultimate
sentence of Treasury Regulations Section 1.704-2(i)(5), such Limited Partner
shall be specially allocated items of Partnership income and gain in the amount
of such excess as quickly as possible; provided, however, that an allocation
pursuant to this Section 4.3(d) shall be made if and only to the extent that
such Limited Partner would have a deficit Capital Account in excess of such sum
after all other allocations provided for in this Article 4 have been tentatively
made as if Section 4.3(c) and this Section 4.3(d) were not in this Agreement.
Allocations made pursuant to the preceding sentence shall be made in proportion
to the respective amounts required to be allocated to each Partner pursuant
thereto.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or other
period shall be specially allocated between the Partners in proportion to their
Percentage Interests.
(f) Partner Nonrecourse Deductions. Any Partner Nonrecourse Deductions for any
Fiscal Year or other period shall be specially allocated to the Partner that
bears the economic risk of loss with respect to the Partner Nonrecourse Debt to
which such Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(i).
(g) Section 754 Adjustment. To the extent any adjustment to the adjusted tax
basis of any asset of the Partnership pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such section of the Treasury
Regulations.
(h) Excess Nonrecourse Liabilities. For purposes of determining a Partner's
proportionate share of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Treasury Regulations Section 1.752-3(a)(3), each Partner's
interest in Partnership profits shall be deemed to be equal to such Partner's
Percentage Interest.
(i) Curative Allocations. The allocations set forth in this Article 4 (other
than Section 4.3(g), Section 4.3(h), and this Section 4.3(i)) (the "Regulatory
Allocations") are intended to comply with certain requirements of the Treasury
Regulations. The Partners intend that, to the extent possible, all Regulatory
Allocations shall be offset either with other Regulatory Allocations or with
special allocations of other items of Partnership income, gain, loss, or
deduction pursuant to this Section 4.3(i). Therefore, notwithstanding any other
provision of this Article 4 (other than the Regulatory Allocations), offsetting
special allocations of Partnership income, gain, loss, or deduction shall be
made so that, after such offsetting allocations are made, each Partner's Capital
Account balance is, to the extent possible, equal to the Capital Account balance
such Partner would have had if the Regulatory Allocations were not part of this
Agreement and all Partnership items were allocated pursuant to Section 4.2. In
making such offsetting special allocations, future Regulatory Allocations under
Section 4.3(a) and Section 4.3(b) that, although not yet made, are likely to
offset Regulatory Allocations made under Section 4.3(e) and Section 4.3(f) shall
be taken into account.
4.4 Tax Allocations: Code Section 704(c).
-------------------------------------
(a) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the capital of the Partnership shall, solely for tax purposes, be
allocated between the Partners so as to take account of any variation between
the adjusted basis of such property to the Partnership for federal income tax
purposes and its initial Gross Asset Value using the traditional allocation
method described in Treasury Regulations Section 1.704-3(b). If, however, tax
allocations made under Code Section 704(c) with respect to any contributed
property are limited by "the ceiling rule" as described in Treasury Regulations
Section 1.704-3(b)(1), the remedial allocation method as described in Treasury
Regulations Section 1.704-3(d) shall be used with respect to such property.
(b) If the Gross Asset Value of any asset of the Partnership is adjusted
pursuant to paragraph (b) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss, and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(C) and the Treasury Regulations thereunder.
(c) Allocations pursuant to this Section 4.4 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any way be taken into account
in computing, either Partner's Capital Account or share of Net Profit, Net Loss,
other items, or distributions pursuant to any provision of this Agreement.
4.5 Allocation in Event of Transfer.
-------------------------------
If an interest in the Partnership is transferred, the Net Profit and
Net Loss of the Partnership and each item thereof, and all other items
attributable to the transferred interest for such Fiscal Year, shall be divided
and allocated between the transferor and the transferee pursuant to any method
agreed to between the Partners that is permitted by the Treasury Regulations;
provided, however, that (a) except in the case of a transfer from a Partner to
an Affiliate of such Partner, if the Partners are unable to agree on the method
of dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) in the case of a transfer from a Partner to an
Affiliate of such Partner, if the Partners are unable to agree on the method of
dividing and allocating such items, such items shall be divided and allocated
between the transferor and the transferee pursuant to any method agreed to
between the transferor and the transferee so long as such method (1) does not
change the allocation of Net Profit and Net Loss or any item thereof to the non
transferor Partner, and (2) does not require an interim closing of the
Partnership books. This Section shall apply for purposes of computing a
Partner's Capital Account and for federal income tax purposes.
4.6 Alternative Allocations.
-----------------------
The Advisory Committee is authorized and directed to allocate items of
income, gain, loss, or deduction arising in any Fiscal Year differently from the
manner that is otherwise provided for in this Agreement if, and to the extent
that, the Advisory Committee determines that the allocation of items of income,
gain, loss, or deduction in the manner otherwise provided for in this Agreement
would cause the credit balances in the Partners' Capital Accounts not to be in
proportion to their Percentage Interests immediately prior to any distributions
pursuant to Section 11.2(d)(3) if the Partnership was dissolved and terminated
on the last day of such Fiscal Year. Any allocation that is made pursuant to
this Section 4.6 shall be deemed to be a complete substitute for any allocation
that is otherwise provided for in this Agreement and no amendment to this
Agreement shall be required.
ARTICLE 5.........
MANAGEMENT
5.1 Authority of Managing Partner.
-----------------------------
(a) Generally. Except as expressly provided otherwise in this Agreement, the
Managing Partner shall have the exclusive authority to manage the business,
operations, and affairs of the Partnership (including internal matters) and the
exclusive right to exercise all rights incident to the ownership of all
partnership or corporate interests held by the Partnership, and shall have all
authority, rights, and powers conferred by law and those required or appropriate
for the management of the Partnership's business.
(b) Certain Limitations and Restrictions. Notwithstanding any provision in this
Agreement to the contrary, and in addition to any other consent or approval that
may be required by the express terms of this Agreement, but subject to Section
5.1(e), the Partnership shall not, and the Managing Partner shall have no
authority to cause the Partnership to, do any of the following without the
approval of TCI:
(1) incur or permit any Subsidiary to incur any Indebtedness if, immediately
after the incurring of such Indebtedness, the Operating Cash Flow Ratio of the
Partnership or such Subsidiary would exceed 6.5 to 1; or
(2) sell or otherwise dispose of, or cause or permit any Subsidiary to sell or
otherwise dispose of, in any one transaction (or series of mutually contingent
transactions), assets of the Partnership or any Subsidiary having an aggregate
value in excess of $50,000,000, except upon the liquidation and dissolution of
the Partnership in accordance with Article 11; provided, however, that the
limitations of this paragraph shall not apply to any pledging of assets by any
Person to secure any indebtedness of such Person permitted by this Agreement or
to any disposition of assets upon the exercise of any rights granted by such a
pledge; or
(3) merge with or consolidate into any Person, or cause or permit any Subsidiary
to merge with or consolidate into any Person (except that, without the approval
of TCI, (A) a Subsidiary may merge with another Subsidiary so long as the
survivor of such merger is a Subsidiary; (B) a Wholly Owned Subsidiary may merge
with the Partnership; and (C) a Subsidiary may merge with a Person other than a
Subsidiary as a means of effecting any acquisition or disposition of assets that
is otherwise permitted by this Agreement so long as the consummation of such
acquisition or disposition would not have adverse tax consequences to TCI or the
TCI Members); or
(4) purchase or otherwise acquire, or cause or permit any Subsidiary to purchase
or otherwise acquire, any assets, business, or equity interest in another
Person, if, after giving effect to such purchase or other acquisition, the
aggregate value of all property purchased or otherwise acquired by the
Partnership and all Subsidiaries in any period of twelve consecutive calendar
months would exceed $50,000,000; provided, however, that the limitations of this
paragraph shall not apply to any acquisition of assets by a Wholly Owned
Subsidiary from the Partnership or from another Wholly Owned Subsidiary; or
(5) enter into any transaction with either Partner or any Affiliate of either
Partner or permit any Subsidiary to enter into any transaction with either
Partner or any Affiliate of either Partner if the transaction contemplates
payments to or by the Partnership or any Subsidiary in any twelve month period
in excess of $1,000,000, in the aggregate; provided, however, that the
limitations of this paragraph shall not apply to any loan described in Section
5.1(c)(10), and TCI agrees not to withhold unreasonably its approval of any
transaction that requires its approval under this Section 5.1 (b)(5); or
(6) issue any Partnership Interest or other equity interest in the Partnership
or any option, warrant, or other instrument convertible into or evidencing the
right to acquire (whether or not for additional consideration) any Partnership
Interest or other equity interest in the Partnership; or
(7) permit any Subsidiary to issue any equity interest in such Subsidiary or any
option, warrant, or other instrument convertible into or evidencing the right to
acquire (whether or not for additional consideration) any equity interest in
such Subsidiary, other than an equity interest or option, warrant, or other
instrument issued to the Partnership or to a Wholly Owned Subsidiary; or
(8) commence, institute, or settle, or permit any Subsidiary to commence,
institute, or settle, any claim or lawsuit (or series of related claims or
lawsuits) on behalf of the Partnership or any Subsidiary (except as provided in
the Contribution Agreement with respect to claims arising thereunder), or
confess a judgment against the Partnership or any Subsidiary, not in the
ordinary course of business and for any amount in excess of $5,000,000 or
involving the potential granting of equitable relief that, if granted, would
have a material adverse effect on the business of the Partnership and the
Subsidiaries, taken as a whole; provided, however, that notwithstanding any
other provision in this Agreement to the contrary, (A) TCI may, without the
separate consent of Century or Century's representatives, cause Century-TCI
California to make a good faith claim against Century and its Affiliates
pursuant to the indemnification provisions of the Contribution Agreement or
against Century and its Affiliates pursuant to the Management Agreement
described in Section 5.6, and provided, further, that without the separate
consent of TCI, Century may not cause Century-TCI California to waive any such
claim against Century and its Affiliates pursuant to the indemnification
provisions of the Contribution Agreement or against Century and its Affiliates
pursuant to the Management Agreement described in Section 5.6, and (B) Century
may, without the separate consent of TCI or TCI's representatives, cause
Century-TCI California to make a good faith claim against TCI and its Affiliates
pursuant to the indemnification provisions of the Contribution Agreement or the
Exchange Agreement; or
(9) purchase, redeem, retire, or otherwise acquire any Partnership Interests or
other equity interest in the Partnership or Century-TCI California, except for
the purchase, redemption, retirement, or other acquisition of any equity
interest where the terms of such interest, as approved in accordance with
Section 5.1(b)(6) or (7), permit or require such purchase, redemption,
retirement, or other acquisition.
(c) Additional Limitations and Restrictions. Notwithstanding any provision in
this Agreement to the contrary, and in addition to any other consent or approval
that may be required by the express terms of this Agreement, the Partnership
shall not, and the Managing Partner shall have no authority to cause the
Partnership to, do any of the following without the approval of TCI:
(1) sell or otherwise dispose of, or cause or permit any Subsidiary to sell or
otherwise dispose of, any assets of the Partnership or any Subsidiary, if such
sale or other disposition would result in the allocation of income or gain to
TCI pursuant to Section 4.4 and Code Section 704(c), except upon the liquidation
and dissolution of the Partnership in accordance with Article 11; provided,
however, that the limitations of this paragraph shall not apply to any pledging
of assets by any Person to secure any indebtedness of such Person permitted by
this Agreement (but such limitations shall nevertheless apply to any disposition
of assets upon the exercise of any rights granted by such a pledge); or
(2) liquidate or dissolve the Partnership except in accordance with Article 11
or liquidate or dissolve Century-TCI California or Century-TCI Holdings, LLC; or
(3) issue any Partnership Interest or other equity interest in the Partnership
or any option, warrant, or other instrument convertible into or evidencing the
right to acquire (whether or not for additional consideration) any Partnership
Interest or other equity interest in the Partnership, except on terms that are
fair, from an economic standpoint, to the Partnership and the Partners; or
(4) permit any Subsidiary to issue any equity interest in such Subsidiary or any
option, warrant, or other instrument convertible into or evidencing the right to
acquire (whether or not for additional consideration) any equity interest in
such Subsidiary, except on terms that are fair, from an economic standpoint, to
the Partnership and its Partners, other than an equity interest or option,
warrant, or other instrument issued to the Partnership or to a Wholly Owned
Subsidiary; or
(5) admit any additional Partners to the Partnership or Century-TCI California
except in accordance with Section 6.4 or Section 8.8; or
(6) convert the Partnership or any Subsidiary that is a partnership or a limited
liability company to corporate form or to any other form of business
organization; or
(7) purchase, redeem, retire, or otherwise acquire any Partnership Interests or
other equity interest in the Partnership or Century-TCI California or
Century-TCI Holdings, LLC, except for the purchase, redemption, retirement, or
other acquisition of any equity interest where the terms of such interest, as
approved in accordance with Section 5.1(b)(6) or (7) or Section 5.1(c)(3),
permit or require such purchase, redemption, retirement, or other acquisition;
or
(8) merge with or consolidate into any Person, or cause or permit any Subsidiary
to merge with or consolidate into any Person, unless the terms under which any
equity interest in the Partnership or any Subsidiary is issued to any Person
(other than the Partnership or any Wholly Owned Subsidiary) are fair, from an
economic standpoint, to the Partnership and the Partners; or
(9) enter into any transaction with either Partner or any Affiliate of either
Partner or permit any Subsidiary to enter into any transaction with either
Partner or any Affiliate of either Partner if the transaction is not on terms
that are no less favorable to the Partnership or Subsidiary than could have been
obtained in a comparable arm's-length transaction with a Person that is not a
Partner or an Affiliate of a Partner; provided, however, that the limitations
shall not apply to any loan described in Section 5.1(c)(10); or
(10) incur or permit any Subsidiary to incur any Indebtedness to any Affiliate
of the Managing Partner unless (A) the financial terms of such Indebtedness are
the same as either (1) the financing obtained by such Affiliate of the Managing
Partner the proceeds of which are used to fund its loan to the Partnership by
which such Indebtedness is created, or (2) any similar financing obtained by the
Partnership from any Person that is not an Affiliate of the Managing Partner,
and (B) such Indebtedness would not result in any adverse tax consequences to
TCI or the TCI Members; or
(11) except as provided in Section 10.2, enter into any transaction with either
Partner or any Affiliate of either Partner or permit any Subsidiary to enter
into any transaction with either Partner or any Affiliate of either Partner
pursuant to which such Partner or its Affiliate would be authorized or permitted
to use the Partnership's or a Subsidiary's cable television system distribution
facilities to engage in any business that is ancillary to the ownership or
operation of cable television systems, including the ancillary businesses of
providing high-speed data service and telephony services described in Section
2.5; or
(12) commence any bankruptcy or insolvency proceeding, acquiesce in the
appointment of a referee, trustee, custodian, or liquidator, or admit to the
material allegations of a petition filed against the Partnership or any
Subsidiary in any bankruptcy proceeding; or
(13) amend the Management Agreement described in Section 5.6 or the partnership
agreement of Century-TCI California or the operating agreement of Century-TCI
Holdings, LLC (and TCI agrees not to withhold unreasonably its approval of any
amendment that requires its approval under this Section 5.1(c)(13)); or
(14) engage in or permit any Subsidiary to engage in any business not described
in Section 2.5 or engage in any business outside the Territory; or
(15) sell, assign or otherwise transfer any equity interest in Century-TCI
California or Century-TCI Holdings, LLC; or
(16) make any determination of "Gross Asset Value" with respect to Century-TCI
California or Century-TCI Holdings, LLC, any determination that an adjustment to
"Gross Asset Value" with respect to Century-TCI California or Century-TCI
Holdings, LLC should be made or any determination of the fair market value of
any asset contributed to such entity; or
(17) withdraw as the general partner or member of Century-TCI California or
Century-TCI Holdings, LLC; or
(18) prior to the second anniversary of the Closing, (1) take, or permit any
Subsidiary to take, any action that results in the principal amount of the
outstanding indebtedness for borrowed money of Century-TCI California being
reduced below an amount equal to the sum of the principal amount of the TCI
Permitted Debt and the Century Permitted Debt assumed by Century-TCI California
at Closing (the "Initial Debt"); (2) take, or permit any Subsidiary to take, any
action that would cause Century-TCI California not to have non-recourse debt
outstanding in an amount at least equal to the Initial Debt, it being agreed
that both non-recourse incurred indebtedness for borrowed money and committed
available non-recourse indebtedness for borrowed money that may be used to pay
down any Affiliate indebtedness for borrowed money on which Century-TCI
California is the obligor constitute non-recourse debt for this purpose; or (3)
refinance or otherwise change the terms of the indebtedness for borrowed money
of Century-TCI California that is in effect as of the Closing Date; provided,
that TCI may not withhold its consent unless the refinancing or other change in
terms would have adverse tax consequences to TCI or the TCI Members, as
reasonably determined by TCI.
It is the intent of this Section 5.1(c)(18) to define the relative rights of the
Partners among themselves, and not to affect the rights of the holders of any
indebtedness of Century-TCI California that are not affiliates of Century-TCI
California, or the obligations of Century-TCI California, under any instrument
pursuant to which any such indebtedness is issued. Without limiting the
generality of the foregoing, it is agreed that as to the holders of any such
indebtedness nothing in this Section 5.1(c)(18) shall affect:
..................(A) the obligations of Century-TCI California under
the Credit Agreement (including, without limitation, under Sections 2.04 or 2.05
thereof) dated as of December 3, 1999 (the "Credit Agreement") among Century-TCI
California, as borrower, the guarantors party thereto, the lenders party thereto
(the "Lenders"), and Citibank, N.A. as administrative agent (the "Administrative
Agent"), as such agreement may from time to time be amended, nor the rights of
the Lenders, or the effect of any action taken by Century-TCI California, under
the Credit Agreement (including without limitation, under Sections 2.03, 2.04,
or 2.05 thereof, or otherwise); or
..................(B) the validity or enforceability of any amendment
or modification to the Credit Agreement (or any of the Loan Documents referred
to therein) entered into by Century-TCI California with any of the Lenders or
the Administrative Agent, any of the Lenders and the Administrative Agent being
entitled to conclusively presume that any agreements or amendments executed by
the Partnership in its capacity as general partner of Century-TCI California is
valid, binding and enforceable and has been entered into after obtaining any
necessary consent from TCI required by this Section 5.1(c)(18).
(d) Consideration of Certain Transactions. The Managing Partner will consult
with the Advisory Committee before entering into any agreement or causing any
Subsidiary to enter into any agreement providing for any material transaction
outside the ordinary course of the Partnership's or such Subsidiary's business,
but the Managing Partner shall not be required under this Section 5.1(d) or
otherwise (except as specifically provided in Section 5.1(b) or Section 5.1(c))
to obtain the approval of the Advisory Committee in connection with any such
transaction.
(e) Expiration of Certain Approval Rights. The limitations in Section 5.1(b)
shall not apply at any time if:
(1) TCI's Percentage Interest is less than five percent at such time, and
(2) either:
(A) more than six months have elapsed since TCI's Percentage Interest fell below
five percent, unless at such time (1) TCI and Century have agreed on an
additional Capital Contribution to be made by TCI that would cause TCI's
Percentage Interest to be at least five percent, and the agreement between TCI
and Century with respect to such additional Capital Contribution is in full
force and effect, and (2) if the additional Capital Contribution contemplated by
such agreement would consist of any cable television system to be acquired by
TCI, TCI shall have entered into a letter of intent, memorandum of
understanding, or other similar document with respect to its acquisition of such
cable television system; or
(B) more than nine months have elapsed since TCI's Percentage Interest fell
below five percent, unless at such time (1) TCI and Century have agreed on an
additional Capital Contribution to be made by TCI that would cause TCI's
Percentage Interest to be at least five percent, and the agreement between TCI
and Century with respect to such additional Capital Contribution is in full
force and effect, and (2) if the additional Capital Contribution contemplated by
such agreement would consist of any cable television system to be acquired by
TCI, TCI shall have entered into a binding, definitive agreement with respect to
its acquisition of such cable television system, and such binding, definitive
agreement shall be in full force and effect.
5.2 Advisory Committee.
------------------
(a) Membership. The Partnership shall have an Advisory Committee consisting of
five individual representatives of the Partners. Three members of the Advisory
Committee shall be designated from time to time by Century in its sole
discretion. Two members of the Advisory Committee shall be designated from time
to time by TCI in its sole discretion. The members of the Advisory Committee, as
designated by Century and TCI, as of the date of this Agreement, are set forth
on Schedule II. The function of the Advisory Committee shall be to consult with
and advise the Managing Partner regarding significant decisions relating to the
Partnership, its Subsidiaries and their business and to make recommendations to
the Managing Partner with respect thereto; provided that ultimate decision
making power is vested in the Managing Partner, subject to the rights of TCI
specified elsewhere in this Agreement and provided further that the Advisory
Committee will not perform any functions or duties which, if performed by a
Limited Partner, would constitute participation in the control of the business
of the Partnership under the Act.
(b) Removal and Replacement of Members.
- -------------------------------------------
(1) Each Partner shall use its good-faith efforts to designate its
representatives as promptly as is reasonably practicable so that the Advisory
Committee shall at all times contain the number of members provided for in
Section 5.2(a).
(2) Any member of the Advisory Committee designated pursuant to Section 5.2(a)
may be removed and replaced at any time, and from time to time, by the Partner
that originally designated such member in accordance with Section 5.2(a). No
member shall be removed from office, with or without cause, without the consent
of the Partner that designated him.
(3) The Partnership shall reimburse each member of the Advisory Committee for
expenses, including travel and legal expenses, reasonably incurred in connection
with such member's performance of his duties as a member of the Advisory
Committee.
(c) Meetings of the Advisory Committee. The Advisory Committee shall hold one
regular meeting each quarter at such time and place as shall be determined by
the Advisory Committee. Special meetings of the Advisory Committee may be called
at any time by any member upon not less than three-Business-Days' prior notice.
Except as otherwise determined by the Advisory Committee, all special and
regular meetings of the Advisory Committee shall be held at the principal office
of the Partnership. Members of the Advisory Committee may participate in any
meeting of the Advisory Committee by means of conference telephone or similar
communications equipment through which all persons participating in the meeting
can hear each other, and such participation shall constitute presence in person
at the meeting.
(d) Procedural Matters.
(1) Unless waived in writing by all of the members (before or after a meeting)
at least three-Business-Days' prior notice of any meeting shall be given to each
member. Such notice shall state the purpose for which such meeting has been
called.
(2) At all meetings of the Advisory Committee, a majority of the members of the
Advisory Committee, including at least one member designated by TCI, shall
constitute a quorum for the transaction of business, except that, if notice was
given of two prior meetings called for the purpose of taking the same action (as
specified in the notices) and no member designated by TCI attended or was
represented by proxy at either of the meetings called by such notices, but a
quorum would have been present at each of such meetings had a member designated
by TCI attended or been represented by proxy, then at any subsequent meeting
called for the purpose of taking the same action, a majority of the members of
the Advisory Committee (without regard to whether any member designated by TCI
is present or represented by proxy) shall constitute a quorum for the
transaction of business. In determining the number of meetings called for the
purpose of taking any action under this Section 5.2(d)(2), any meeting adjourned
for lack of a quorum and each adjournment of such meeting shall be considered a
separate meeting, so long as a quorum would have been present had a member
designated by TCI attended or been represented by proxy.
(3) The Advisory Committee shall cause to be kept a book of minutes of all of
its meetings in which there shall be recorded the time and place of each such
meeting, whether regular or special, and if special, by whom called, the notice
thereof given, the names of those present, and the proceedings thereof.
5.3 No Management by Limited Partner.
--------------------------------
Except as expressly provided in this Agreement, no Limited Partner, in
its capacity as a limited partner of the Partnership, shall take part in or
interfere in any manner with the control, conduct, or operation of the
Partnership or have any right or authority to act for or bind the Partnership or
to vote on matters relating to the Partnership.
5.4 Operating and Capital Expenditure Budgets.
-----------------------------------------
A five-year operating plan for the Partnership is attached hereto as
Schedule III for informational purposes. After consultation with TCI, the
Managing Partner shall prepare and distribute to each Partner for informational
purposes only an operating budget and a capital expenditure budget for the
Partnership for each Fiscal Year.
5.5 No Personal Liability.
---------------------
No General Partner shall have any personal liability for the repayment
of the Capital Contributions of any other Partner, but each General Partner
shall return to the Partnership any distributions received by such General
Partner in excess of those to which such General Partner is entitled under this
Agreement.
5.6 Management Agreement.
--------------------
On the date hereof, Century-TCI California and Century (or an Affiliate
of Century designated by Century) shall enter into a Management Agreement
substantially in the form of Exhibit A. Century (or an Affiliate of Century
designated by Century) shall be entitled to the payments and reimbursements set
forth in such Management Agreement, as it may be amended from time to time in
accordance with its terms.
5.7 Tax Matters Partner.
-------------------
(a) Century is hereby designated as the Tax Matters Partner of the Partnership,
as provided in Treasury Regulations pursuant to Code Section 6231 and analogous
provisions of state and local law. Each Partner, by the execution of this
Agreement, consents to such designation of the Tax Matters Partner and agrees to
execute, certify, acknowledge, deliver, swear to, file, and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent.
(b) To the extent and in the manner provided by applicable law and Treasury
Regulations, the Tax Matters Partner shall furnish the name, address, profits
interest, and taxpayer identification number of each Partner and any Assignee to
the Secretary of the Treasury or his delegate (the "Secretary").
(c) The Tax Matters Partner shall notify each Partner of any audit that is
brought to the attention of the Tax Matters Partner by notice from the Internal
Revenue Service or any state or local taxing authority and shall forward to each
Partner copies of any written notices, correspondence, reports, or other
documents received by the Tax Matters Partner in connection with such audit
within ten Business Days following its receipt thereof from the Internal Revenue
Service or other state or local taxing authority. The Tax Matters Member shall
provide TCI with reasonable advance notice of administrative proceedings with
the Internal Revenue Service or any state or local taxing authority, including
any closing conference with the examiner and any appeals conference.
(d) The Tax Matters Partner shall give the Partners thirty-days' advance written
notice of its intent to initiate judicial review, file a request for
administrative adjustment on behalf of the Partnership, extend the period of
limitations for making assessments of any tax against a Partner with respect to
any Partnership item, or enter into any agreement with the Internal Revenue
Service or any state or local taxing authority that would result in the
settlement of any alleged tax deficiency or other tax matter, or to any
adjustment of taxable income or loss or any item included therein, affecting the
Partnership or either Partner.
(e) Subject to the foregoing provisions of this Section 5.7, the Tax Matters
Partner is hereby authorized, upon thirty-days' advance written notice to TCI,
to take any of the actions specified below:
(1) to enter into any settlement with the Internal Revenue Service or the
Secretary or any state or local taxing authority with respect to any tax audit
or judicial review, in which agreement the Tax Matters Partner may expressly
state that such agreement shall bind the other Partners, except that such
settlement agreement shall not bind either Partner that (within the time
prescribed pursuant to the Code and Treasury Regulations thereunder) files a
statement with the Secretary or such state or local taxing authority providing
that the Tax Matters Partner shall not have the authority to enter into a
settlement agreement on the behalf of such Partner;
(2) if a notice of a final administrative adjustment at the Partnership level of
any item required to be taken into account by a Partner for tax purposes (a
"final adjustment") is mailed to the Tax Matters Partner, to seek judicial
review of such final adjustment, including the filing of a petition for
readjustment with the Tax Court, the District Court of the United States for the
district in which the Partnership's principal place of business is located, or
elsewhere as allowed by law, or the United States Court of Federal Claims;
(3) to intervene in any action brought by any other Partner for judicial review
of a final adjustment;
(4) to file a request for an administrative adjustment with the Secretary at any
time and, if any part of such request is not allowed by the Secretary, to file a
petition for judicial review with respect to such request;
(5) to enter into an agreement with the Internal Revenue Service or any state or
local taxing authority to extend the period for assessing any tax that is
attributable to any item required to be taken into account by a Partner for tax
purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Partners (with respect to the
Partnership) or the Partnership in connection with any administrative or
judicial tax proceeding to the extent permitted by applicable law or Treasury
Regulations.
(f) The Tax Matters Partner shall consult in good faith with TCI before taking
any of the actions specified in Section 5.7(e).
(g) The Partnership shall indemnify and reimburse the Tax Matters Partner for
all reasonable expenses (including legal and accounting fees) incurred pursuant
to this Section 5.7 in connection with any administrative or judicial proceeding
with respect to the tax liability of the Partners. The payment of all such
reasonable expenses shall be made before any distributions are made to the
Partners. The taking of any action and the incurring of any expense by the Tax
Matters Partner in connection with any such proceeding, except to the extent
provided herein or required by law, is a matter in the sole discretion of the
Tax Matters Partner and the provisions on limitations of liability of a General
Partner and indemnification set forth in Article 12 shall be fully applicable to
Century in its capacity as the Tax Matters Partner.
(h) Any Partner that receives a notice of an administrative proceeding under
Code Section 6223 relating to the Partnership shall promptly notify the Tax
Matters Partner of the treatment of any Partnership item on such Partner's
federal income tax return that is or may be inconsistent with the treatment of
that item on the Partnership's return.
(i) Either Partner that enters into a settlement agreement with the Secretary
with respect to any Partnership item shall notify the Tax Matters Partner of
such agreement and its terms within sixty days after its date, and the Tax
Matters Partner shall notify the other Partners of the settlement agreement
within thirty days of such notification.
5.8 Consolidation.
-------------
It is the express intent and agreement of the Partners that Century
controls the Partnership for purposes of consolidating the operations of the
Partnership with Adelphia, under generally accepted accounting principles and
applicable Securities and Exchange Commission rules, regulations, and
guidelines, and that the limitations provided for in Section 5.1(b) and
elsewhere in this Agreement are designed to provide TCI with protection as a
minority partner, but are not intended to affect such control by Century. This
Section 5.8 shall not be construed as affecting in any way the rights of TCI
under this Agreement.
5.9 Management of Subsidiaries.
--------------------------
The Partnership shall not take any action as the sole or managing
member or sole or managing general partner of any Subsidiaries without the
approval of TCI if such action could not be taken by the Partnership without the
approval of TCI.
ARTICLE 6.........
STATUS OF LIMITED PARTNERS
6.1 Limited Liability.
-----------------
No Limited Partner, in its capacity as a limited partner of the
Partnership, shall be bound by or personally liable for the expenses,
liabilities, or obligations of the Partnership. In no event shall any Limited
Partner, in its capacity as a limited partner of the Partnership, be required to
make up a deficiency in its Capital Account upon the dissolution and termination
of the Partnership.
6.2 Return of Distributions of Capital.
----------------------------------
A Limited Partner may, under certain circumstances, be required by law
to return to the Partnership, for the benefit of the Partnership's creditors,
amounts previously distributed. No Limited Partner shall be obligated by this
Agreement to pay those distributions to or for the account of the Partnership or
any creditor of the Partnership. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any Limited
Partner must return or pay over any part of those distributions, the obligation
shall be that of such Limited Partner alone and not of any other Partner. Any
payment returned to the Partnership by a Partner or made directly by a Partner
to a creditor of the Partnership shall be deemed a Capital Contribution by such
Partner.
6.3 Specific Limitations.
--------------------
No Limited Partner shall have the right or power to: (a) withdraw or
reduce its Capital Contribution except as a result of the dissolution of the
Partnership or as otherwise provided by law or in this Agreement, (b) bring an
action for partition against the Partnership or any assets of the Partnership,
(c) cause the termination and dissolution of the Partnership, except as set
forth in this Agreement, or (d) demand or receive property other than cash in
return for its Capital Contribution. Except as otherwise set forth in this
Agreement or in any agreement permitted to be entered into under this Agreement
with respect to the purchase, redemption, retirement, or other acquisition of
Partnership Interests, no Limited Partner shall have priority over any other
Limited Partner either as to the return of its Capital Contribution or as to Net
Profit, Net Loss, or distributions. Other than upon the termination and
dissolution of the Partnership as provided by this Agreement, there has been no
time agreed upon when the Capital Contribution of any Limited Partner will be
returned.
6.4 Issuance of Partnership Interests.
---------------------------------
(1) Subject to obtaining the approval required under Section 5.1(b)(6) and
Section 5.1(c)(3) and in accordance with the terms thereof, the Managing Partner
may issue additional Partnership Interests to any Person and may admit to the
Partnership as additional Partners the Persons acquiring such Partnership
Interests, if such Persons were not previously admitted as Partners. The Persons
acquiring such Partnership Interests shall have the rights and be subject to the
obligations attributable to such Partnership Interests in the form issued to
them. A Person admitted as a new Partner shall only be entitled to distributions
and allocations of Net Profit and Net Loss attributable to the period beginning
on the effective date of its admission to the Partnership, and the Partnership
shall attribute Net Profit and Net Loss to the period before the effective date
of the admission of a new Partner and to the period beginning on the effective
date of the admission of a new Partner by any method agreed to between the
Partners that is permitted by the Treasury Regulations; provided, however, that
(a) upon the issuance of a Partnership Interest to a Person other than a Partner
or an Affiliate of a Partner, if the Partners are unable to agree on the method
of attributing Net Profit and Net Loss to such periods, the Partnership shall
attribute Net Profit and Net Loss to such periods by the interim closing of the
Partnership books method set forth in Treasury Regulation Section
1.706-1(c)(2)(ii), and (b) upon the issuance of a Partnership Interest to a
Partner or an Affiliate of a Partner, if the Partners are unable to agree on the
method of attributing Net Profit and Net Loss to such periods, the Partnership
shall attribute Net Profit and Net Loss to such periods pursuant to any method
agreed to between the Partnership and the new Partner so long as such method (1)
does not change the allocation of Net Profit and Net Loss or any item thereof to
any Partner other than the new Partner and its Affiliates and (2) does not
require an interim closing of the Partnership books.
ARTICLE 7.........
WITHDRAWAL OF GENERAL PARTNER
7.1 Withdrawal.
----------
(a) Century may retire or withdraw from the Partnership only with the prior
written consent of TCI.
(b) If Century withdraws from the Partnership while it is the Managing Partner,
the Partnership shall dissolve in accordance with the provisions of Article 11,
unless, within ninety days after the withdrawal of Century:
(1) TCI elects to continue the business of the Partnership and elects to convert
all or a portion of its limited partner interest to a general partner interest
and becomes the successor Managing Partner; or
(2) Either:
(A) if Century withdrew from the Partnership with the prior written consent of
TCI and at least one General Partner remains, TCI and Century elect to continue
the business of the Partnership and either (i) agree to appoint an existing
General Partner to be the successor Managing Partner or (ii) agree to admit a
new General Partner and to appoint such new General Partner to be the successor
Managing Partner; or
(B) if Century withdrew from the Partnership without the prior written consent
of TCI, TCI elects to continue the business of the Partnership and either (i) if
at least one General Partner remains elects to appoint an existing General
Partner to be the successor Managing Partner or (ii) elects to admit an Assignee
of part of its Partnership Interest as a new General Partner and to appoint such
new General Partner to be the successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to Section 7.1(b)
(including TCI) shall be entitled to exercise all rights and shall have all
duties and obligations of the Managing Partner under this Agreement. The
appointment of a successor Managing Partner pursuant to Section 7.1(b) shall be
effective as of the date of the withdrawal of Century, subject to the receipt of
all necessary governmental approvals and other material third-party consents.
(d) If Century withdrew from the Partnership without the prior written consent
of TCI, then, if TCI so elects, subject to the receipt of all necessary
governmental approvals and other material third-party consents, all of the
members of the Advisory Committee designated by Century shall be removed and
Century shall have no further right to designate any representatives.
(e) No successor to Century as Managing Partner may retire or withdraw from the
Partnership without the consent of the other Partners.
(f) For purposes of this Agreement, the term "withdrawal" means the happening of
any event described in Section 17-402(a) of the Act (other than subsections (4)
and (5) thereof).
(g) TCI may retire or withdraw from the Partnership only with the prior written
consent of Century.
7.2 Removal of Century as Managing Partner.
--------------------------------------
(a) The provisions of Section 7.2(b) shall apply if:
(1) a court of competent jurisdiction finds that Century has engaged in conduct
while acting as Managing Partner that constitutes either (A) a felony involving
moral turpitude that resulted in material harm to the Partnership or TCI or (B)
fraud against the Partnership or TCI, and
(2) the finding described in Section 7.2(a) has not been reversed, stayed,
enjoined, set aside, annulled, or suspended, and is not the subject of any
pending request for judicial review, reconsideration, appeal, or stay, and
(3) the time for filing any further request for judicial review,
reconsideration, appeal, or stay of the finding described in Section 7.2(a) has
expired.
(b) If each of the conditions specified in Section 7.2(a) is satisfied, then, if
TCI so elects by written notice to Century, upon the receipt of all necessary
governmental approvals and other material third-party consents:
(1) all of the members of the Advisory Committee designated by Century shall be
removed and Century shall have no further right to designate any
representatives; and
(2) Century shall be removed as Managing Partner and either (as specified by TCI
in its election pursuant to this Section 7.2(b)):
(A) TCI shall convert all or a portion of its limited partner interest to a
general partner interest and become the successor Managing Partner; or
(B) an existing General Partner appointed by TCI shall become the successor
Managing Partner; or
(C) an Assignee of part of TCI's Partnership Interest shall be admitted as a new
General Partner and shall become the successor Managing Partner.
(c) Any successor Managing Partner appointed pursuant to Section 7.2(b)
(including TCI) shall be entitled to exercise all rights and shall have all
duties and obligations of the Managing Partner under this Agreement. The
appointment of a successor Managing Partner pursuant to Section 7.2(b) shall be
effective as of the date of the removal of Century as Managing Partner.
7.3 Effect of Withdrawal or Removal of Managing Partner.
---------------------------------------------------
If the Partnership is continued pursuant to Section 7.1 following the
withdrawal of Century, or if Century is removed as Managing Partner pursuant to
Section 7.2, then the entire Partnership Interest of Century shall be converted
to that of a Limited Partner unless such conversion would have adverse tax
consequences to TCI or the TCI Members. The withdrawal or removal of any
Managing Partner shall not alter the allocations and distributions to be made to
the Partners pursuant to this Agreement.
7.4 No Dissolution.
--------------
The withdrawal of a General Partner other than the Managing Partner
shall not cause the dissolution of the Partnership or alter the allocations and
distributions to be made to the Partners pursuant to this Agreement.
ARTICLE 8.........
ASSIGNMENT OF PARTNERSHIP INTERESTS
8.1 Assignments by Century.
----------------------
Except as provided in Section 8.3, Century shall not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
interest in the Partnership without the prior written consent of TCI.
8.2 Assignments by Other Partners.
-----------------------------
Except as provided in Section 8.3, a Partner may not assign (whether by
sale, exchange, gift, contribution, distribution, or other transfer, including a
pledge or other assignment for security purposes) all or any part of its
Partnership Interest without the prior written consent of the Managing Partner.
Notwithstanding the consent of the Managing Partner to any assignment by a
Partner of all or any part of its Partnership Interest, the rights of any
Assignee shall be subject at all times to the limitations set forth in Section
8.4.
8.3 Exceptions.
----------
The provisions of Section 8.1 and Section 8.2 shall not apply and no
consent of the Managing Partner or TCI, as applicable, shall be required for:
(a) any assignment of Partnership Interests by Century that is permitted by
Article 9; or
(b) an assignment by a Partner or an Assignee of a Partner to a Controlled
Affiliate of such Partner; or
(c) in the case of an assignment by TCI or an Assignee of TCI, an assignment to
any Person controlled directly or indirectly by Tele-Communications and of which
Tele-Communications owns, directly or indirectly, at least fifty percent of the
outstanding equity interests; or
(d) in the case of an assignment by Century or an Assignee of Century, an
assignment to any Person controlled directly or indirectly by Adelphia and of
which Adelphia owns, directly or indirectly, at least fifty percent of the
outstanding equity interests; or
(e) an assignment by TCI pursuant to Section 7.1(b)(2)(B) or Section
7.2(b)(2)(C) to a Person who will become a successor Managing Partner.
8.4 Assignee.
--------
If the provisions of this Article 8 have been complied with, an
Assignee shall be entitled to receive distributions of cash or other property,
and allocations of Net Profit and Net Loss and of items of income, deduction,
gain, loss, or credit, from the Partnership attributable to the assigned
Partnership Interests from and after the effective date of the assignment, and
shall have the right to receive a copy of the quarterly and annual financial
statements required herein to be provided the Partners, but an Assignee shall
have no other rights of a Partner herein, such as rights to any other
information, an accounting, inspection of books or records, or voting as a
Partner on matters required by law, unless and until such Assignee is admitted
as a substitute Partner pursuant to the provisions of Section 8.8. The
Partnership and the Managing Partner shall be entitled to treat the assignor as
the absolute owner of the Partnership Interests in all respects, and shall incur
no liability for distributions, allocations of Net Profit or Net Loss, or
transmittal of reports and notices required to be given to Partners that are
made in good faith to the assignor until the effective date of the assignment,
or, in the case of the transmittal of reports (other than the financial
statements referred to above) or notices, until the Assignee is so admitted as a
substitute Partner. The effective date of an assignment shall be the first day
of the calendar month following the month in which the Managing Partner has
received an executed instrument of assignment in compliance with this Article 8
or such other date specified in the executed instrument of assignment. The
Assignee shall be deemed an Assignee on the effective date, and shall be only
entitled to distributions and allocations of Net Profit and Net Loss
attributable to the period beginning on the effective date of assignment. The
Partnership shall attribute Net Profit and Net Loss to the period before the
effective date of assignment and to the period beginning on the effective date
of assignment as provided in Section 4.5. Each Assignee will inherit the balance
of the Capital Account, as of the effective date of assignment, of the assignor
with respect to the Partnership Interests assigned.
8.5 Other Consents and Requirements.
-------------------------------
Any assignment of any Partnership Interests in the Partnership must be
in compliance with any requirements imposed by any state securities
administrator having jurisdiction over the assignment and the United States
Securities and Exchange Commission and must not cause the Partnership or any
Subsidiary to be in violation of any Ownership Restriction.
8.6 Assignment Not in Compliance.
----------------------------
Any assignment in contravention of any of the provisions of this
Article 8 shall be void and of no effect, and shall neither bind nor be
recognized by the Partnership.
8.7 Division of Partnership Interests.
---------------------------------
The several rights and obligations inherent in the Capital Account and
the Percentage Interest attributable to a Partner's Partnership Interest are
indivisible except in equal proportions, such that the assignment of a specified
percentage of a Partner's Partnership Interest may only represent an equal
percentage of the total Capital Account and the Percentage Interest that was
attributable to such Partner's Partnership Interest prior to the assignment.
8.8 Substitute Partners.
-------------------
An Assignee may not become a substitute Partner unless all of the
following conditions are first satisfied:
(a) A duly executed and acknowledged written instrument of assignment shall have
been filed with the Partnership, specifying the Partnership Interests being
assigned and setting forth the intention of the assignor that the Assignee
succeed to the assignor's interest as a substitute Partner;
(b) The Assignee shall be an Accredited Investor;
(c) The assignor and Assignee shall have executed and acknowledged any other
instruments that the Managing Partner deems necessary or desirable for
substitution, including the written acceptance and adoption by the Assignee of
the provisions of this Agreement, and shall have executed, acknowledged, and
delivered to the Managing Partner a special power of attorney as provided in
Section 16.5(b);
(d) Except in the case of an assignment permitted by Section 8.3, the non
assigning Partner shall have consented in writing to the admission of the
Assignee as a substitute Partner, the granting of which may be withheld by the
nonassigning Partner in its sole and absolute discretion;
(e) The Assignee shall have paid to the Partnership a transfer fee sufficient to
cover all reasonable expenses connected with the substitution; and
(f) The assignment to the Assignee shall have complied with the other provisions
of this Article 8.
8.9 Consent.
-------
Each Partner consents to the admission of substitute Partners by the
Managing Partner and to any Assignee of its Partnership Interests becoming a
substituted Partner in accordance with the terms and conditions of this
Agreement.
8.10 Covenants of Parents.
--------------------
(a) By executing this Agreement, Tele-Communications agrees that it will not
cause or permit to occur any transaction or series of transactions unless, after
giving effect to such transaction or series of transactions, at least fifty
percent of all the outstanding equity interests in TCI would be owned, directly
or indirectly, by one of the following Persons, and TCI would be controlled,
directly or indirectly, by one of the following Persons:
(1) Tele-Communications; or
(2) any other Person that directly or indirectly owns either:
(A) cable television systems serving at least one million subscribers (excluding
cable television systems owned directly or indirectly by the Partnership) that
were owned, directly or indirectly, by Tele-Communications prior to the
transaction or series of transactions; or
(B) substantially all the cable television systems that were owned, directly or
indirectly, by Tele-Communications prior to the transaction or series of
transactions.
(b) By executing this Agreement, Century/Texas agrees that, except for a
transaction permitted by Article 9, it will not cause or permit to occur any
transaction or series of' transactions unless, after giving effect to such
transaction or series of transactions, at least fifty percent of all the
outstanding equity interests in Century would be owned, directly or indirectly,
by one of the following Persons, and Century would be controlled, directly or
indirectly, by one of the following Persons:
(1) Century/Texas; or
(2) Adelphia; or
(3) any other Person that directly or indirectly owns either:
(A) cable television systems serving at least one million subscribers (excluding
cable television systems owned directly or indirectly by the Partnership) that
were owned, directly or indirectly, by Century/Texas prior to the transaction or
series of transactions; or
(B) substantially all the cable television systems that were owned, directly or
indirectly, by Century/Texas prior to the transaction or series of transactions.
8.11 Impact of Code Section 708.
--------------------------
(a) If the assignment by a Partner of all or part of its Partnership Interest
results in the Termination of the Partnership, the Partner causing such
Termination (as determined in accordance with this Section 8.11) will indemnify
the other Partner for its Additional Income Tax Amount and reimburse the
Partnership for any reasonable fees and expenses of accountants and attorneys
that are incurred by the Partnership as a result of such Termination. For
purposes of this Section 8.11:
(1) "Termination" means, with respect to the Partnership, a technical
termination of the Partnership under Code Section 708(b)(1)(B); and
(2) "Additional Income Tax Amount" means, with respect to any Partner, an amount
equal to the excess of (A) the net present value on the date of Termination of
the federal and state income tax benefit attributable to such Partner's shares
of the Partnership's future tax depreciation expense (taking into account all
allocations made with respect to depreciable property under Code Section
704(c)), computed without regard to Code Section 168(i)(7) over (B) the net
present value on the date of Termination of the federal and state income tax
benefit attributable to such Partner's shares of the Partnership's future tax
depreciation expense (taking into account all allocations made with respect to
depreciable property under Code Section 704(c)), computed with regard to Code
Section 168(i)(7). In determining a Partner's "Additional Income Tax Amount,"
net present value shall be calculated using a discount rate equal to the
interest rate paid by the Partnership on the date of Termination with respect to
its senior indebtedness and the highest federal and California corporate income
tax rates in effect on the date of Termination shall apply.
(b) Except as provided in Section 8.11(c) and Section 8.11(d), the Partner whose
assignment of all or part of its Partnership Interest resulted in the
Termination of the Partnership shall be treated as the Partner causing such
Termination for purposes of Section 8.11(a).
(c) If a Partner desires to assign all or part of its Partnership Interest in a
transaction that, if consummated at one time, would result in the Termination of
the Partnership, such Partner may elect (1) to assign immediately as much of its
Partnership Interest as may then be assigned without resulting in the
Termination of the Partnership and (2) to assign the remaining portion of its
Partnership Interest that it desires to assign as soon thereafter as such
subsequent assignment would not result in the Termination of the Partnership. If
a Partner notifies the other Partner that it has elected to assign all or part
of its Partnership Interest in accordance with this Section 8.11(c), specifying
in its notice the portion of its Partnership Interest to be assigned immediately
in accordance with clause (1) of the preceding sentence and the portion of its
Partnership Interest to be assigned subsequently in accordance with clause (2)
of the preceding sentence (the assignment of such portion, the "Deferred
Assignment"), then, if the other Partner assigns all or any part of its
Partnership Interest prior to the Deferred Assignment by the notifying Partner
and the Deferred Assignment therefore results in the Termination of the
Partnership, the other Partner and not the notifying Partner shall be treated as
the Partner causing such Termination for purposes of Section 8.11(a).
(d) If a Partner (the "First Assigning Partner") fails to notify another Partner
(the "Second Assigning Partner") in writing of an assignment of any part of its
Partnership Interest (including any assignment of a direct or indirect ownership
interest in the First Assigning Partner to which Section 8.11(e) applies), and
an assignment by the Second Assigning Partner of any part of its Partnership
Interest (including any assignment of a direct or indirect ownership interest in
the Second Assigning Partner to which Section 8.11(e) applies) after the
assignment by the First Assigning Partner and before the Second Assigning
Partner has notice of the prior assignment by the First Assigning Partner
results in a Termination of the Partnership that would not have occurred if the
assignment by the First Assigning Partner had not occurred, then the First
Assigning Partner and not the Second Assigning Partner shall be treated as the
Partner causing such Termination for purposes of Section 8.11(a).
(e) Each Partner agrees that, solely for purposes of this Section 8.11, any
assignment of a direct or indirect ownership interest in a Partner that has the
same effect as an assignment of such Partner's Partnership Interest for purposes
of determining whether a Termination of the Partnership has occurred shall be
treated as an assignment of such Partner's Partnership Interest. Each Partner
shall notify the Partnership and the other Partner in writing not less than five
days prior to any assignment of its Partnership Interest (including any
assignment of a direct or indirect ownership interest in such Partner to which
this Section 8.11(e) applies).
ARTICLE 9.........
RIGHT OF FIRST OFFER
9.1 Proposed Sale and Negotiations With TCI.
---------------------------------------
(a) If, at any time after the fifth anniversary of the date hereof, Century or
any Affiliate of Century (such Person, the "Seller") proposes to assign (whether
by sale, exchange, gift, contribution, distribution, or other transfer) all of
Century's Partnership Interest or all of the outstanding equity interests in one
or more Persons (including Century) that collectively own, directly or
indirectly, all of Century's Partnership Interest (other than an assignment
permitted by Section 8.3(b), Section 8.3(d), or Section 8.10(b)), then Century
shall send a written notice (the "First Offer Notice") to TCI specifying the
Partnership Interest or other equity interests proposed to be sold (the "Offered
Interest") and the following terms of the sale: (1) purchase price and any
adjustments thereto, including any adjustments based on the number of customers
or operating cash flow (the "Purchase Price"), (2) other financial terms, such
as the type and structure of consideration to be paid (which shall not include
consideration other than cash or promissory notes) and the timing of payments
(the "Other Financial Terms"), and (3) any other material terms, such as any
nonstandard representations, covenants, or closing conditions, any material
limitations on the purchaser's right to indemnification, and the "upset date"
(the "Other Terms").
(b) Within ten Business Days after its receipt of the First Offer Notice, TCI
shall send a written notice to Century specifying whether TCI desires to begin
negotiations with the Seller concerning a purchase by TCI of the Offered
Interest on the terms specified in the First Offer Notice. If TCI sends a timely
notice to Century pursuant to this Section 9.1(b) specifying that TCI desires to
begin such negotiations, TCI and the Seller will undertake in good faith to
reach a binding, definitive agreement for the purchase and sale of the Offered
Interest, incorporating the terms specified in the First Offer Notice, with any
changes thereto that may be agreed to between TCI and the Seller, and any other
terms and conditions that may be agreed to between TCI and the Seller. If TCI
and the Seller reach a binding, definitive agreement for the purchase and sale
of the Offered Interest, such agreement shall govern the rights and obligations
of TCI and the Seller with respect to the purchase and sale of the Offered
Interest, and the Seller shall be permitted to consummate the sale of the
Offered Interest substantially in accordance with terms of such agreement.
9.2 Sale to Third Party; Re-Offer to TCI.
------------------------------------
(a) If TCI does not send a timely written notice to Century pursuant to Section
9.1(b) specifying that TCI desires to begin negotiations with the Seller
concerning a purchase by TCI of the Offered Interest, or if TCI and the Seller
commence such negotiations but are unable to enter into a binding, definitive
agreement for the sale of the Offered Interest within ninety days after TCI's
notice to Century pursuant to Section 9.1(b), then the Seller may undertake to
sell the Offered Interest to any Person in accordance with this Section 9.2.
(b) The Seller may agree to sell the Offered Interest to any Person so long as
(1) the terms and conditions of such sale are not materially different from the
terms specified in the First Offer Notice and (2) the binding, definitive
agreement between the Seller and the purchaser of the Offered Interest is
entered into within one year after (A) if TCI elected to commence negotiations
pursuant to Section 9.1 (b), the sixtieth day after TCI's receipt of the First
Offer Notice, or (B) in all other events, the tenth Business Day after TCI's
receipt of the First Offer Notice. For purposes of this Section 9.2, the terms
and conditions of a proposed sale of the Offered Interest will be materially
different from the terms specified in the First Offer Notice if, and only if,
(1) the Purchase Price is less than that specified in the First Offer Notice, or
(2) the Other Financial Terms are different from those specified in the First
Offer Notice, or (3) any of the Other Terms are different from those specified
in the First Offer Notice in any respect that materially reduces the value of
the transaction to the Seller.
(c) If the Seller desires to sell the Offered Interest to any Person on terms
and conditions that are materially different from the terms specified in the
First Offer Notice, then Century may send a written notice (the "Re-Offer
Notice") to TCI specifying all material terms and conditions on which the Seller
proposes to sell the Offered Interest (which terms shall not include the receipt
by the Seller of consideration other than cash or promissory notes) and
including an offer from the Seller to sell the Offered Interest to TCI on such
terms and conditions. TCI may accept the offer included in the Re-Offer Notice
by sending a written notice of acceptance to Century within three Business Days
after TCI's receipt of the Re-Offer Notice, and such offer and acceptance shall
constitute a binding agreement between TCI and the Seller concerning the sale of
the Offered Interest on the terms and conditions specified in the Re-Offer
Notice. If Century sends a Re-Offer Notice and TCI does not timely accept the
offer included in the Re-Offer Notice, the Seller may agree to sell the Offered
Interest to any Person on the terms and conditions specified in the Re-Offer
Notice so long as the binding, definitive agreement between the Seller and the
purchaser of the Offered Interest is entered into within sixty days after TCI's
receipt of the Re-Offer Notice.
(d) The Seller shall be permitted to consummate the sale of the Offered Interest
substantially in accordance with terms of any agreement entered into pursuant to
this Section 9.2. If any agreement entered into pursuant to this Section 9.2 is
terminated prior to the sale of the Offered Interest, then the terms of this
Article 9 shall apply to any subsequent proposal to sell such Offered Interest.
(e) If the Seller proposes to undertake to sell the Offered Interest in
accordance with this Section 9.2 through an auction or similar process, TCI
agrees that neither TCI nor any of its Controlled Affiliates will participate in
such auction or similar process. The provisions of Section 9.1 and Section 9.2
shall apply to any proposed sale by the Seller of the Offered Interest through
an auction or similar process.
9.3 Seller's Election Not to Sell.
-----------------------------
Subject to the terms of any binding agreement entered into pursuant to
this Article 9 and the Seller's obligation to negotiate with TCI in good-faith
pursuant to Section 9.1(b), the Seller may, at any time and in its sole
discretion, terminate its efforts to sell the Offered Interest and rescind any
notice or offer delivered to TCI pursuant to this Article 9. If the Seller
terminates its efforts to sell the Offered Interest, the terms of this Article 9
shall apply to any subsequent efforts by the Seller to sell such Offered
Interest.
ARTICLE 10........
OTHER BUSINESSES AND INVESTMENT OPPORTUNITIES
10.1 Prohibited Cross-Interests.
--------------------------
(a) Each Partner agrees that, during the term of this Agreement, neither such
Partner nor any Controlled Affiliate of such Partner shall, directly or
indirectly, acquire any interest in any business or in any Person if the
acquisition of such interest would cause the Partnership or any Subsidiary to be
in violation of any Ownership Restriction.
(b) If, during the term of this Agreement, there is a Formal Determination that
either Partner's holding of a Partnership Interest causes the Partnership or any
Subsidiary to be in violation of any Ownership Restriction, then the following
provisions of this Section 10.1(b) shall apply. For purposes of this Section
10.1(b), a "Formal Determination" means (1) an agreement between Century and
TCI, (2) a written determination by the FCC (including a determination by staff
employees of the FCC acting under delegated authority), regardless of whether
such determination is subject to administrative or judicial review,
reconsideration, or appeal (except to the extent that, so long as a stay of any
enforcement action by the FCC against the Partnership or any Subsidiary as a
result of any such violation of an Ownership Restriction is effective, the
Partner that caused the violation specifies that any such determination will not
constitute a Formal Determination during the pendency of any review,
reconsideration, or appeal), or (3) a decision of any court of competent
jurisdiction, regardless of whether such decision is subject to administrative
or judicial review, reconsideration, or appeal (except to the extent that
Century, and TCI agree that any such decision will not constitute a Formal
Determination during the pendency of any review, reconsideration, or appeal).
Century and TCI will use their respective good faith efforts, after consultation
with legal counsel, to reach an agreement as to whether either Partner's holding
of a Partnership Interest causes the Partnership or any Subsidiary to be in
violation of any Ownership Restriction.
(1) The Partnership will use reasonable efforts to obtain a stay of any
enforcement action by the FCC against the Partnership or any Subsidiary as a
result of any such violation of an Ownership Restriction (and the agreement of
the Partners shall be required for the Partnership to act otherwise), and the
Partners will cooperate reasonably with the Partnership in such efforts, to the
extent necessary to prevent such violation from having a material adverse effect
on the Partnership and the Subsidiaries before it is cured. For purposes of this
Section 10.1(b), a material adverse effect on the Partnership and the
Subsidiaries includes the loss of any license or licenses issued by the FCC
that, in the aggregate, are material to the conduct of the business of the
Partnership and the Subsidiaries, the imposition of any fines or forfeitures
that, in the aggregate, are material in amount, and limitations on the ability
of the Partnership or any Subsidiary to conduct its business in the ordinary
course consistent with its past practices.
(2) The Partnership and the Partners will cooperate reasonably with each other
and negotiate in good faith with the FCC to obtain a determination by the FCC
(including a determination by staff employees of the FCC acting under delegated
authority) that certain actions proposed to be taken by a Partner or its
Affiliates would cure any such violation of an Ownership Restriction. The
actions proposed to be taken by a Partner or its Affiliates to cure such
violation may be those that, in such Partner's judgment, are least detrimental
to such Partner and its Affiliates, and may include the divestiture of any asset
or the restructuring of any investment.
(3) If there is a Formal Determination that TCI's holding of a Partnership
Interest causes the Partnership or any Subsidiary to be in violation of any
Ownership Restriction, TCI agrees to take all reasonable actions necessary to
cure any such violation of an Ownership Restriction; provided, however, that:
(A) if the Partnership and the Partners receive a determination by the FCC
(including a determination by staff employees of the FCC acting under delegated
authority) that certain actions proposed to be taken by TCI or its Affiliates
would cure such violation, then, if TCI and its Affiliates take such actions,
TCI shall not be required to take any other action under this Section 10.1(b) to
cure such violation until such time, if any, that there is a subsequent Formal
Determination that such actions did not cure such violation; and
(B) TCI shall not be required to take any action to cure such violation prior to
the time that such violation would have a material adverse effect on the
Partnership and the Subsidiaries.
(4) The actions that TCI may be required to take pursuant to Section 10.1(b)(3)
(it being agreed by TCI that the following actions shall be deemed reasonable
for purposes of Section 10.1(b)(3)), subject to the limitations in Section
10.1(b)(3)(A) and Section 10.1(b)(3)(B), shall include, to the extent necessary
to cure such violation, executing amendments to this Agreement to eliminate any
right of TCI under this Agreement (other than its right to allocations of
income, its right to distributions, its rights under Section 5.1(c)(1), and its
right to approve any other action by the Partnership and the Subsidiaries if
such action (A) in the case of an action that does not uniquely affect either
Partner, such as an acquisition or disposition of assets or a financing, would
have a material adverse economic effect on TCI or (B) in the case of an action
that uniquely affects either Partner, such as a transaction between the
Partnership and an Affiliate of a Partner, would have an adverse economic effect
on TCI).
(5) If there is a Formal Determination that Century's holding of a Partnership
Interest causes the Partnership or any Subsidiary to be in violation of any
Ownership Restriction, Century will use its best efforts to cure any such
violation; provided, however, that:
(A) if the Partnership and the Partners receive a determination by the FCC
(including a determination by staff employees of the FCC acting under delegated
authority) that certain actions proposed to be taken by Century or its
Affiliates would cure such violation, then, if Century and its Affiliates take
such actions, Century shall not be required to take any other action under this
Section 10.1(b) to cure such violation until such time, if any, that there is a
subsequent Formal Determination that such actions did not cure such violation;
(B) Century shall not be required to take any action to cure such violation
prior to the time that such violation would have a material adverse effect on
the Partnership and the Subsidiaries; and
(C) Century shall not be required by this Section 10.1(b)(5) to convert the
Partnership Interest of Century to that of a Limited Partner or to eliminate any
right of Century under this Agreement.
(c) Neither Partner will approve the acquisition, directly or indirectly, by the
Partnership or any Subsidiary of any interest in any business or in any Person
if such Partner has actual knowledge that consummating such acquisition would
cause either Partner or any Affiliate of either Partner to be in violation of
any Ownership Restriction; provided that if the Managing Partner desires to
cause the Partnership or a Subsidiary to acquire assets or an interest in a
business or any Person, and the Managing Partner does not have actual knowledge
that such acquisition would cause the Partnership or a Subsidiary, either
Partner, or any Affiliate of either Partner to be in violation of any Ownership
Restriction, then the Managing Partner shall provide prior written notice to TCI
of such proposed acquisition at least 30 days prior to entering into a binding
agreement to effect such acquisition and, if TCI notifies the Managing Partner
within fifteen days of receiving such notice that such acquisition would cause
the Partnership or a Subsidiary or TCI to be in violation of any Ownership
Restriction, the Managing Partner shall not proceed with such acquisition
without first complying with this Section 10.1(c) again, it being understood
that if TCI does not so notify the Managing Partner within such fifteen-day
period then the Managing Partner shall be presumed not to have knowledge that
such acquisition would cause the Partnership or a Subsidiary, either Partner, or
any Affiliate of either Partner to be in violation of any Ownership Restriction.
10.2 Wireline All Distance Communications Services.
---------------------------------------------
(a) The Partnership will deliver a notice in writing (a "Notice") to AT&T Corp.
("AT&T") if the Partnership or any Subsidiary desires to offer consumer
residential wireline all-distance communications services ("All Distance
Services") in the Territory or in any other geographic area served by a cable
television system owned by the Partnership or any of its Subsidiaries
(collectively, with the Territory, the "Partnership Territory") accessible from
the Partnership's hybrid fiber coaxial infrastructure. AT&T will deliver a
Notice to the Partnership if AT&T desires to offer All Distance Services in the
Partnership Territory accessible from the hybrid fiber coaxial infrastructure of
an operator of a cable television system or an operator of a multichannel video
programming service. Any Notice or other notice to AT&T pursuant to this Section
10.2 shall be sent in the manner specified in Section 16.4 to AT&T Corp.,
Attention: Vice President-Law and Secretary, 295 North Maple Avenue, Basking
Ridge, New Jersey 07920, or to such other address as AT&T shall have furnished
to the Partnership in writing.
(b) The Partnership and AT&T will negotiate in good-faith for a period of 90
days from the receipt of a Notice (a "Negotiation Period") regarding the terms
and conditions upon which the Partnership and AT&T would offer, promote and make
available All Distance Services in the Partnership Territory accessible from the
Partnership's hybrid fiber coaxial infrastructure. The Partnership and AT&T
acknowledge that this Section 10.2 constitutes a statement of their good-faith
intention to negotiate during the Negotiation Period with respect to All
Distance Services in the Partnership Territory accessible from the Partnership's
hybrid fiber coaxial infrastructure and does not itself constitute an agreement,
agreement to agree, or a binding commitment by any party with respect thereto.
Any agreements between the Partnership and AT&T with respect to the offer of All
Distance Services in the Partnership Territory accessible from the Partnership's
hybrid fiber coaxial infrastructure shall be set forth in a definitive agreement
and any other necessary documentation with respect thereto, subject to the
conditions expressed therein.
(c) There will be only one Negotiation Period pursuant to this Section 10.2. The
obligations of the Partnership and AT&T under this Section 10.2 will terminate
on the earliest to occur of the following: (i) if a Negotiation Period ends
without the Partnership and AT&T having executed and delivered a definitive
agreement with respect to All Distance Services; or (ii) on the fifth
anniversary of the date hereof.
(d) Nothing in this Section 10.2 will require the Partnership to terminate any
agreement or arrangement that is described on Schedule V before the end of the
current term thereof or to take any action that would constitute a breach or
default by the Partnership in the performance of its obligations under any such
agreement or arrangement. Nothing in this Section 10.2 will require AT&T to
terminate any existing agreement or arrangement before the end of the current
term thereof or to take any action that would constitute a breach or default by
AT&T in the performance of its obligations under any such agreement or
arrangement.
10.3 No Other Restrictions.
---------------------
Except as specifically provided above in this Article 10, nothing in
this Agreement shall limit the ability of either Partner, or any partner,
Affiliate, Controlled Affiliate, agent, or representative of either Partner, to
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, whether currently existing or
hereafter created and whether or not competitive with or advanced by the
business of the Partnership. Neither the Partnership nor the other Partner shall
have any rights in or to the income or profits derived therefrom, nor shall
either Partner have any obligation to the other Partner with respect to, any
such enterprise or related transaction.
ARTICLE 11........
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
11.1 Events of Dissolution.
---------------------
The Partnership shall be dissolved upon the happening of any of the
following events:
(a) the failure of the Partners to select a successor Managing Partner in
accordance with the provisions of Section 7.1(b) after the withdrawal of Century
as Managing Partner;
(b) the expiration of the term of the Partnership as set forth in Section 2.4;
(c) the sale, exchange, involuntary conversion, or other disposition or transfer
of all or substantially all of the assets of the Partnership;
(d) subject to any restriction in any agreement to which the Partnership is a
party, an election to liquidate and dissolve the Partnership made by Century
with the approval of TCI; or
(e) subject to any provision of this Agreement that limits or prevents
dissolution, the happening of any event that, under applicable law, causes the
dissolution of a limited partnership.
11.2 Liquidation.
-----------
(a) Upon dissolution of the Partnership for any reason, the Partnership shall
immediately commence to wind up its affairs. A reasonable period of time shall
be allowed for the orderly termination of the Partnership business, discharge of
its liabilities, and distribution or liquidation of the remaining assets so as
to enable the Partnership to minimize the normal losses attendant to the
liquidation process.
(b) Liquidation of the assets of the Partnership shall be managed on behalf of
the Partnership by the "Liquidator," which shall be (1) if the Partnership is
being liquidated pursuant to Section 11.1(a), a liquidating trustee selected by
the Partners other than a Partner that has withdrawn and (2) in all other
events, the Managing Partner. The Liquidator shall be responsible for soliciting
offers to purchase the entirety of the Partnership's assets (including equity
interests in other Persons) or portions or clusters of assets of the
Partnership.
(c) The Liquidator shall cause a full accounting of the assets and liabilities
of the Partnership to be taken and a statement thereof to be furnished to each
Partner within thirty days after the distribution of all of the assets of the
Partnership.
(d) The property and assets of the Partnership and the proceeds from the
liquidation thereof shall be applied in the following order of priority:
(1) first, to payment of the debts and liabilities of the Partnership, in the
order of priority provided by law (including any loans by either Partner to the
Partnership) and payment of the expenses of liquidation;
(2) second, to setting up of such reserves as the Liquidator may deem reasonably
necessary for any contingent or unforeseen liabilities or obligations of the
Partnership or any obligation or liability not then due and payable; provided,
however, that any such reserve shall be paid over by the Liquidator to an escrow
agent, to be held by such escrow agent for the purpose of disbursing such
reserves in payment of such liabilities, and, at the expiration of such escrow
period as the Liquidator shall deem advisable, to distribute the balance
thereafter remaining in the manner hereinafter provided; and
(3) finally, to payment to the Partners, in accordance with Section 4.1(b). The
distributions pursuant to this Section 11.2(d)(3) shall, to the extent possible,
be made prior to the later of the end of the Fiscal Year in which the
dissolution occurs or the ninetieth day after the date of dissolution, or such
other time period which may be permitted under Treasury Regulations Section
1.704-1(b)(2)(ii)(b).
(e) If in the course of the liquidation and dissolution of the Partnership
pursuant to this Article 11 the Liquidator determines that a sale by all the
Partners to any Person of their Partnership Interests, instead of a sale by the
Partnership and the Subsidiaries of their respective assets, would more
efficiently effect the liquidation of the Partners' economic interests in the
Partnership or would reduce negative tax consequences to the Partners and the
Partnership, but would not adversely affect the rights and obligations of either
Partner (including the tax consequences to either Partner), then each Partner
agrees to sell its Partnership Interest to such Person, and the Liquidator shall
have the authority, pursuant to the power of attorney granted in Section
16.5(b), to execute, acknowledge, deliver, swear to, file, and record all
agreements, instruments, and other documents that may be necessary or
appropriate to effect the sale of such Partner's Partnership Interest.
(f) Following the dissolution of the Partnership pursuant to Section 11.1, the
Partners will use commercially reasonable efforts to structure the liquidation
of the Partnership in a manner that minimizes negative tax consequences to the
Partners and the Partnership to the extent doing so would not materially
adversely affect either Partner (except to the extent such Partner is adequately
compensated by the other Partner for such adverse effect). Any structure agreed
to by the Partners pursuant to this Section 11.2(f) shall supersede the other
provisions of this Article 11 to the extent it is inconsistent with such other
provisions, but nothing in this Section 11.2(f) shall modify or otherwise affect
the other provisions of this Article 11 if the Partners are unable to agree on
such a structure.
11.3 Distribution in Kind.
--------------------
The distribution to either Partner of a noncash asset in connection
with the liquidation of the Partnership shall be subject to Section 4.1(d). The
fair-market value of any noncash asset distributed in connection with the
liquidation of the Partnership shall be determined by an independent appraiser
(any such appraiser must be nationally recognized as an expert in valuing the
type of asset involved) selected by the Liquidator.
11.4 No Action for Dissolution.
-------------------------
The Partners acknowledge that irreparable damage would be done to the
goodwill and reputation of the Partnership if either Partner should bring an
action in court to dissolve the Partnership under circumstances where
dissolution is not required by Section 11.1. This Agreement has been drawn
carefully to provide fair treatment of all parties and equitable payment in
liquidation of the Partnership Interests of the Partners. Accordingly, except
where liquidation and dissolution are required by Section 11.1, each Partner
hereby waives and renounces its right to initiate legal action to seek
dissolution or to seek the appointment of a receiver or trustee to liquidate the
Partnership.
11.5 No Further Claim.
----------------
Upon dissolution, each Limited Partner shall look solely to the assets
of the Partnership for the return of its investment, and if the property of the
Partnership remaining after payment or discharge of the debts and liabilities of
the Partnership, including debts and liabilities owed to one or more of the
Partners, is insufficient to return the aggregate capital contributions of a
Limited Partner, such Limited Partner shall have no recourse against any other
Partner.
ARTICLE 12........
INDEMNIFICATION
12.1 General.
-------
The Partnership shall indemnify, defend, and hold harmless the Managing
Partner, the Managing Partner's officers, directors, shareholders, employees,
and agents, the employees, officers, and agents of the Partnership, the members
of the Advisory Committee, and either Partner that has designated a member of
the Advisory Committee (but only to the extent such Partner suffers any
liability, loss, or damage as a result of the actions of such member of the
Advisory Committee) (all indemnified persons being referred to as "Indemnified
Persons" for purposes of this Article 12) from any liability, loss, or damage
incurred by the Indemnified Person by reason of any act performed or omitted to
be performed by the Indemnified Person in connection with the business of the
Partnership, including costs and attorneys' fees (which attorneys' fees may be
paid as incurred) and any amounts expended in the settlement of any claims of
liability, loss, or damage; provided, however, that, if the liability, loss,
damage, or claim arises out of any action or inaction of an Indemnified Person,
indemnification under this Section 12.1 shall be available only if (a) either
(1) the Indemnified Person, at the time of such action or inaction, determined,
in good faith, that its or his course of conduct was in, or not opposed to, the
best interests of the Partnership, or (2) in the case of inaction by the
Indemnified Person, the Indemnified Person did not intend its or his inaction to
be harmful or opposed to the best interests of the Partnership, and (b) the
action or inaction did not constitute fraud, gross negligence, breach of
fiduciary duty (which shall not be construed to encompass mistakes in judgment
or any breach of any Indemnified Person's duty of care that did not constitute
gross negligence), or willful misconduct by the Indemnified Person; and
provided, further, however, that indemnification under this Section 12.1. I
shall be recoverable only from the assets of the Partnership and not from any
assets of the Partners. The Partnership may pay for insurance covering liability
of the Indemnified Persons for negligence in operation of the Partnership's
affairs.
12.2 Exculpation.
-----------
No Indemnified Person shall be liable, in damages or otherwise, to the
Partnership or to either Partner for any loss that arises out of any act
performed or omitted to be performed by it or him pursuant to the authority
granted by this Agreement if (a) either (1) the Indemnified Person, at the time
of such action or inaction, determined, in good faith, that its or his course of
conduct was in, or not opposed to, the best interests of the Partnership, or (2)
in the case of inaction by the Indemnified Person, the Indemnified Person did
not intend its or his inaction to be harmful or opposed to the best interests of
the Partnership, and (b) the conduct of the Indemnified Person did not
constitute fraud, gross negligence, breach of fiduciary duty (which shall not be
construed to encompass mistakes in judgment or any breach of any Indemnified
Person's duty of care that did not constitute gross negligence), or willful
misconduct by such Indemnified Person.
12.3 Persons Entitled to Indemnity.
-----------------------------
Any Person who is within the definition of "Indemnified Person" at the
time of any action or inaction in connection with the business of the
Partnership shall be entitled to the benefits of this Article 12 as an
"Indemnified Person" with respect thereto, regardless of whether such Person
continues to be within the definition of "Indemnified Person" at the time of his
or its claim for indemnification or exculpation hereunder.
ARTICLE 13........
BOOKS, RECORDS, ACCOUNTING, AND REPORTS
13.1 Books and Records.
-----------------
The Partnership shall maintain at its principal office all of the
following:
(a) A current list of the full name and last-known business or residence address
of each Partner together with the Capital Contributions and Partnership Interest
of each Partner;
(b) A copy of the Certificate, this Agreement, and any and all amendments to
either thereof, together with executed copies of any powers of attorney pursuant
to which any certificate or amendment has been executed;
(c) Copies of the Partnership's federal, state, and local income tax or
information returns and reports;
(d) The audited financial statements of the Partnership and its Subsidiaries for
the six most recent Fiscal Years; and
(e) The Partnership's books and records (including its Subsidiaries) for at
least the current and past three Fiscal Years and any necessary supporting
information for any tax or information returns and reports for any prior taxable
year for which the statute of limitations has not expired (taking into account
any extensions).
13.2 Delivery to Partner and Inspection.
----------------------------------
(a) Upon the request of a Partner, the Managing Partner shall promptly deliver
to the requesting Partner, at the expense of the Partnership, a copy of the
information required to be maintained by Section 13.1 except for Section
13.1(e).
(b) Each Partner, or its duly authorized representative, has the right, upon
reasonable request, to inspect and copy during normal business hours any of the
Partnership records.
13.3 Annual Statements.
-----------------
(a) The Managing Partner shall cause to be prepared for each Partner at least
annually, at Partnership expense, audited financial statements of the
Partnership and a consolidated audited financial statement for the Partnership
and the Subsidiaries (other than any Subsidiary the financial statements of
which cannot, under generally accepted accounting principles, be consolidated
with the financial statements of the Partnership), along with supplemental
information for the Partnership and each Subsidiary included in the consolidated
financial statements, all prepared in accordance with generally accepted
accounting principles and accompanied by a report thereon containing the opinion
of a nationally recognized accounting firm chosen by the Managing Partner. The
financial statements will include a balance sheet, statement of income or loss,
statement of cash flows, and statement of Partners' equity, including
appropriate notes required by generally accepted accounting principles. The
supplemental information will consist of a consolidating balance sheet and a
consolidating statement of operations and Partners' equity for the preceding
Fiscal Year. The Partnership shall distribute the financial statements or
portions thereof to each Partner as follows:
(1) the Managing Partner shall distribute to each Partner a statement setting
forth the net income or loss of the Partnership for each Fiscal Year within
forty-five days after the close of such Fiscal Year;
(2) the Managing Partner shall distribute to each Partner the balance sheet,
statement of income or loss, statement of cash flows, and statement of Partners'
equity (including appropriate notes required by generally accepted accounting
principles) to be included in the financial statements for each Fiscal Year
within forty-five days after the close of such Fiscal Year;
(3) the Managing Partner shall distribute to each Partner a preliminary draft of
the complete financial statements for each Fiscal Year as soon as practicable
after the close of such Fiscal Year; and
(4) the Managing Partner shall distribute to each Partner the complete audited
financial statements for each Fiscal Year as soon as practicable after the close
of such Fiscal Year and, in any event, by March 15 of the year following such
Fiscal Year.
(b) The Managing Partner shall have prepared at least annually, at Partnership
expense, Partnership information necessary for the preparation of each Partner's
federal and state income tax returns. The Partnership shall send the information
described in this paragraph to each Partner within seventy-five days after the
end of each Fiscal Year and shall use commercially reasonable efforts to send
such information to each Partner within sixty-five days after the end of each
Fiscal Year.
(c) The Managing Partner shall also cause to be distributed to each Partner,
within ten days after delivery to the Partnership, any audited financial
statements that are prepared with respect to any Subsidiary the financial
statements of which are not consolidated with the financial statements of the
Partnership.
(d) The Managing Partner shall distribute to each Partner, promptly after they
become available, copies of the Partnership's federal, state, and local income
tax or information returns for each taxable year.
13.4 Quarterly Financial Statements.
------------------------------
(a) At the close of each of the first three quarters of any Fiscal Year, the
Managing Partner shall cause to be distributed to each Partner a quarterly
report covering each fiscal quarter of the operations of the Partnership and
each Subsidiary, consisting of unaudited financial statements (comprising a
balance sheet, a statement of income or loss, and a statement of cash flows),
and a statement of other pertinent information regarding the Partnership and
each such Subsidiary and their activities. The Managing Partner shall cause
copies of the statements and other pertinent information (including a summarized
statement of operations data of the Partnership that complies with the
requirements of APB Opinion No. 18 and Rule 4-08(g) of Regulation S-X under the
Securities Act) to be distributed to each Partner within thirty days after the
close of the fiscal quarter to which the statements relate. The Managing Partner
shall also cause to be distributed to each Partner, within ten days after
delivery to the Managing Partner, any quarterly report that is prepared with
respect to any Subsidiary the operating results of which are not included in the
quarterly report of the Partnership.
(b) The Managing Partner shall also distribute to each Partner (1) a preliminary
draft of a statement setting forth the net income or loss of the Partnership for
each calendar quarter within twenty-one days after the close of such calendar
quarter, and (2) a final statement setting forth the net income or loss of the
Partnership for each calendar quarter (including each Partner's share of all
items of income, gain, loss, and deduction of the Partnership for such calendar
quarter and the Fiscal Year to date) within thirty days after the close of such
calendar quarter.
(c) The Managing Partner shall also distribute to each Partner, at least five
Business Days before the due date for each Federal estimated tax payment
required to be made by a calendar year corporate taxpayer, a statement
reflecting all information concerning Partnership income, gain, loss, and
deduction that is reasonably necessary to enable such Partner or any Affiliate
of such Partner to calculate its estimated tax payments.
13.5 Monthly Statements.
------------------
The Managing Partner shall cause to be distributed to each Partner a
monthly report covering each calendar month of the operations of the Partnership
and each Subsidiary, consisting of unaudited statements of income and loss for
the Partnership and each Subsidiary. The Managing Partner shall cause copies of
the statements to be distributed to each Partner as soon as practicable and, in
any event, within thirty days after the close of the calendar month covered by
such report. The Managing Partner shall also cause to be distributed to each
Partner, within ten days after delivery to the Managing Partner, any monthly
report that is prepared with respect to any Subsidiary the operating results of
which are not included in the monthly report of the Partnership.
13.6 Other Information.
-----------------
The Partnership shall provide to each Partner any other information and
reports relating to any cable television systems or other businesses owned by,
and the financial condition of, the Partnership, each Subsidiary, and any other
Person in which the Partnership owns, directly or indirectly, a partnership or
other equity interest, the Partner may reasonably request. The Partnership shall
distribute to each Partner, promptly after the receipt thereof by the
Partnership, any financial or other information with respect to any Person in
which the Partnership owns, directly or indirectly, a partnership or other
equity interest, but which is not a Subsidiary, that is received by the
Partnership or any Subsidiary with respect to any equity interest of the
Partnership or any Subsidiary in such Person.
13.7 Tax Matters.
-----------
The Partnership shall be treated as a partnership for federal and state
income tax and franchise tax purposes. The Partnership, at Partnership expense,
shall prepare and timely file with the appropriate authorities all tax returns
or reports for the Partnership required to be filed by the Partnership. The
Managing Partner shall cause a draft of any material federal or California
income tax return required to be filed by the Partnership to be sent to each
Partner for review at least thirty Business Days prior to filing, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such return prior to filing. The Managing Partner shall cause the
workpapers supporting allocations of Partnership income, gain, loss, and
deduction pursuant to Code Section 704(c) to be sent to each Partner for review
at least thirty Business Days prior to the filing of the Partnership's federal
income tax return containing such Code Section 704(c) allocations, and the
Managing Partner shall afford each Partner a reasonable opportunity to comment
on any such workpapers prior to the filing of such income tax return.
13.8 Other Filings.
-------------
The Partnership shall also prepare and timely file, with appropriate
federal and state regulatory and administrative bodies, all reports required to
be filed by the Partnership with those entities under then current applicable
laws, rules, and regulations. The reports shall be prepared on the accounting or
reporting basis required by the regulatory bodies. Upon written request, each
Partner shall be provided with a copy of any of the reports without expense to
the requesting Partner.
13.9 Non-Disclosure.
--------------
Each Partner agrees that, except as otherwise consented to by the other
Partner, all nonpublic information furnished to it or to which it has access
pursuant to this Agreement (including information relating to any dispute or the
resolution thereof pursuant to Section 16.6) will be kept confidential and will
not be disclosed by such Partner, or by any of its agents, representatives, or
employees, in any manner whatsoever, in whole or in part, except that:
(a) each Partner shall be permitted to disclose such information to those of its
agents, representatives, and employees who need to be familiar with such
information in connection with such Partner's investment in the Partnership,
(b) each Partner shall be permitted to disclose such information to its
Affiliates,
(c) each Partner shall be permitted to disclose information to the extent
required by law, including federal or state securities laws or regulations, or
by the rules and regulations of any stock exchange or association on which
securities of such Partner or any of its Affiliates are traded, so long as such
Partner shall have first afforded the Partnership with a reasonable opportunity
to contest the necessity of disclosing such information,
(d) each Partner shall be permitted to disclose information to the extent
necessary for the enforcement of any right of such Partner arising under this
Agreement,
(e) each Partner shall be permitted to disclose information to a permitted
Assignee, so long as (1) such Partner shall first have provided to the other
Partner written notice thereof and of the identity of the Person to whom the
disclosure is to be made and (2) such Person agrees (in a writing which provides
the Partnership with an independent right of enforcement) to be bound by the
provisions of this Section 13.9,
(f) each Partner shall be permitted to disclose information that is or becomes
generally available to the public other than as a result of a disclosure by such
Partner, its agents, representatives, or employees, and
(g) each Partner shall be permitted to disclose information that becomes
available to such Partner on a nonconfidential basis from a source (other than
the Partnership, any other Partner, or their respective agents, representatives,
and employees) that, to the best of such Partner's knowledge, is not prohibited
from disclosing such information to such Partner by a legal, contractual, or
fiduciary obligation to the Partnership or any other Partner.
ARTICLE 14........
REPRESENTATIONS BY TCI
TCI represents and warrants to, and agrees with, Century and the
Partnership as follows:
14.1 Investment Intent.
-----------------
It is acquiring its Partnership Interest with the intent of holding the
same for investment for its own account and without the intent or a view to
participating directly or indirectly in, or for resale in connection with, any
distribution of such Partnership Interest within the meaning of the Securities
Act or any applicable state securities laws, and it does not intend to divide
its participation with others, nor to resell, assign, or otherwise dispose of
all or any part of its Partnership Interest. In making such representation, TCI
acknowledges that a purchase now with an intent to resell by reason of any
foreseeable specific contingency, some predetermined event, or an anticipated
change in market value or in the condition of the Partnership would represent a
purchase with an intent inconsistent with the foregoing representation.
14.2 Securities Regulation.
---------------------
(a) It acknowledges and agrees that the Partnership Interest is being issued and
sold in reliance on the exemption from registration contained in Section 4(2) of
the Securities Act and exemptions contained in applicable state securities laws,
and that it cannot and will not be sold or transferred except in a transaction
that is exempt under the Securities Act and those state acts or pursuant to an
effective registration statement under those acts or in a transaction that is
otherwise in compliance with the Securities Act and those state acts.
(b) It understands that it has no contract right for the registration under the
Securities Act of the Partnership Interest for public sale and that, unless such
Partnership Interest is registered or an exemption from registration is
available, such Partnership Interest may be required to be held indefinitely.
14.3 Knowledge and Experience.
------------------------
It has such knowledge and experience in financial, tax, and business
matters as to enable it to evaluate the merits and risks of its investment in
the Partnership and to make an informed investment decision with respect
thereto.
14.4 Economic Risk.
-------------
It is able to bear the economic risk of an investment in its
Partnership Interest.
14.5 Binding Agreement.
-----------------
This Agreement is and will remain its valid and binding agreement,
enforceable in accordance with its terms (subject, as to the enforcement of
remedies, to any applicable bankruptcy, insolvency, or other laws affecting the
enforcement of creditor's rights).
14.6 Tax Position.
------------
Unless it provides prior written notice to the Partnership, it will not
take a position on its federal income tax return, on any claim for refund, or in
any administrative or legal proceedings that is inconsistent with any
information return filed by the Partnership or with the provisions of this
Agreement.
14.7 Information.
-----------
It has received all documents, books, and records pertaining to an
investment in the Partnership requested by it. It has had a reasonable
opportunity to ask questions of and receive answers concerning the Partnership,
and all such questions have been answered to its satisfaction.
ARTICLE 15........
AMENDMENTS AND WAIVERS
15.1 Amendments to Partnership Agreement.
-----------------------------------
(a) This Agreement may only be modified or amended with the consent of Century
and TCI, except that, so long as Century is the Managing Partner, this Agreement
may be amended from time to time by the Managing Partner without the consent or
approval of TCI:
(1) to reflect the rights and obligations of any Person admitted as a Partner
upon the issuance of Partnership Interests pursuant to Section 6.4 and any
change in the rights and obligations of any existing Partner upon the issuance
to any Person (including any existing Partner) of Partnership Interests pursuant
to Section 6.4; or
(2) to change the Partnership's principal office or other place of business.
(b) TCI may elect at any time to cause this Agreement to be amended to eliminate
any right of TCI under this Agreement.
(c) The Managing Partner shall cause to be prepared and filed any amendment to
the Certificate that may be required to be filed under the Act as a consequence
of any amendment to this Agreement.
15.2 Waivers.
-------
The observance or performance of any term or provision of this
Agreement may be waived (either generally or in a particular instance, and
either retroactively or prospectively) by the party entitled to the benefits of
such term or provision.
ARTICLE 16........
MISCELLANEOUS
16.1 Additional Documents.
--------------------
At any time and from time to time after the date of this Agreement,
upon the request of the other Partner, each Partner shall do and perform, or
cause to be done and performed, all such additional acts and' deeds, and shall
execute, acknowledge, and deliver, or cause to be executed, acknowledged, and
delivered, all such additional instruments and documents as may be required to
best effectuate the purposes and intent of this Agreement.
16.2 Inspection.
----------
Each Partner shall have the right at reasonable times to inspect the
books and records of the Partnership.
16.3 General.
-------
This Agreement: (a) shall be binding on the executors, administrators,
estates, heirs, and legal successors of the Partners; (b) be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to conflicts of law principles thereunder; (c) may be executed in more than one
counterpart as of the day and year first above-written; and (d) together with
the Contribution Agreement contains the entire contract between the Partners as
to the subject matter of this Agreement. The waiver of any of the provisions,
terms, or conditions contained in this Agreement shall not be considered as a
waiver of any of the other provisions, terms, or conditions of this Agreement.
16.4 Notices, Etc.
All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed effectively given upon personal
delivery, confirmation of telex or telecopy, or receipt (which may be evidenced
by a return receipt if sent by registered mail), addressed (a) if to either
Partner, at the address of such Partner set forth on Schedule I or at such other
address as such Partner shall have furnished to the Partnership in writing, (b)
if to the Partnership, at One North Main Street, Coudersport, Pennsylvania
16915.
16.5 Execution of Papers.
-------------------
(a) The Partners agree to execute such instruments, documents, and papers as the
Managing Partner deems necessary or appropriate to carry out the intent of this
Agreement.
(b) Each Partner, including each additional and substituted Partner, by the
execution of this Agreement, irrevocably constitutes and appoints the Liquidator
its true and lawful attorney-in-fact with full power and authority in its name,
place, and stead to execute, acknowledge, deliver, swear to, file, and record
all agreements, instruments, and other documents that may be necessary or
appropriate to effect the sale of such Partner's Partnership Interest pursuant
to Section 11.2(e).
(c) The power of attorney granted pursuant to Section 16.5(b) shall be deemed to
be a power coupled with an interest, in recognition of the fact that each of the
Partners under this Agreement will be relying upon the power of the Liquidator
to act as contemplated by this Agreement in any filing and other action by it on
behalf of the Partnership, and shall survive the bankruptcy, death, adjudication
of incompetence or insanity, or dissolution of any Person hereby giving such
powers and the transfer or assignment of all or any part of such Person's
Partnership Interest; provided, however, that in the event of an assignment by a
Partner, the powers of attorney given by the transferor shall survive such
assignment only until such time as the Assignee shall have been admitted to the
Partnership as a substituted Partner and all required documents and instruments
shall have been duly executed, filed, and recorded to effect such substitution.
(d) Each Partner agrees to be bound by any actions taken by the Liquidator
acting in good faith pursuant to the power of attorney granted pursuant to
Section 16.5(b) that are consistent with and subject to the provisions of this
Agreement and hereby waives any and all defenses that may be available to
contest, negate, or disaffirm any action of the Liquidator taken in good faith
under the power of attorney granted pursuant to Section 16.5(b) that are
consistent with and subject to the provisions of this Agreement.
16.6 Disputed Matters.
----------------
If a dispute arises out of or relates to this Agreement or any alleged
breach thereof, the Partners will attempt in good faith to resolve such dispute
through negotiation.
16.7 No Third-Party Beneficiaries.
----------------------------
This Agreement is not intended to, and shall not be construed to,
create any right enforceable by any Person not a party hereto, including any
member of either Partner or any creditor of the Partnership or of either of the
Partners.
16.8 @Home Matters.
-------------
(a) With respect to the cable television systems contributed to Century-TCI
California by TCI and the cable television systems transferred to Century-TCI
California pursuant to the Exchange Agreement between an Affiliate of TCI and
Century-TCI California (collectively, the "TCI Systems"), the Partnership will
cause Century-TCI California to (i) comply with the Cable Parent Exclusivity
Provisions in accordance with the terms thereof, as if the TCI Systems continued
to be operated by a Controlled Affiliate of Tele-Communications following the
contribution or transfer of the TCI Systems to Century-TCI California and (ii)
except as otherwise required by clause (i), manage the TCI Systems in accordance
with the provisions of the Century Distribution Agreement. For purposes of the
foregoing and notwithstanding anything in the @Home Distribution Agreement to
the contrary, compliance with the Cable Parent Exclusivity Provisions shall not
prohibit the provision by the Partnership (including to subscribers located in
the service areas of the TCI Systems) of any Internet Service which is not a
High Speed Residential Internet Service (any such service, a "Non-Exclusive
Service"), whether or not such Non-Exclusive Service entails the provision of an
Internet Backbone Service; provided, however, that if the provision of such
Non-Exclusive Service entails the provision of, or connection to, an Internet
Backbone Service, the foregoing shall be conditioned upon the Partnership having
complied with the provisions of Section 4 of the Century Distribution Agreement.
(b) TCI will promptly furnish the Partnership with a copy of any amendment to
the @Home Distribution Agreement that amends or changes the Cable Parent
Exclusivity Provisions. If the Cable Parent Exclusivity Provisions of the @Home
Distribution Agreement are amended and (1) such provisions as so amended do not
conform in all material respects to the Cable Parent Exclusivity Provisions as
in effect for purposes of this Agreement prior to such amendment, and (2) the
Partnership did not give its prior written consent to such amendment (which
consent shall be deemed to have been given to the extent that the Partnership
has agreed to substantially similar terms with respect to any of its cable
television systems other than the TCI Systems), and (3) the Partnership
reasonably determines that its compliance with such provisions as so amended
would have a material adverse effect on the operation of the TCI Systems, and
(4) the Partnership gives written notice to such effect to TCI, including a
detailed explanation of such material adverse effect, within twenty days after
the Partnership's receipt of the amendment to such provisions, then TCI, by
written notice delivered to the Partnership within twenty days after its receipt
of the Partnership's notice pursuant to clause (4), shall elect either (A) to
terminate the Partnership's obligations under Section 16.8(a) or (B) to require
that the Partnership's obligations under Section 16.8(a) continue, but such
amendment shall not be given effect for purposes of the definition of "Cable
Parent Exclusivity Provisions" in Section 16.8(c)(3). If TCI furnishes the
Partnership with a copy of an amendment to the @Home Distribution Agreement but
all of the conditions set forth in clauses (1) through (4) of the second
sentence of this Section 16.8(b) are not satisfied with respect to such
amendment, then the definition of Cable Parent Exclusivity Provisions" in
Section 16.8(c)(3) shall be amended to be the definition set forth in such
amendment.
(c) For purposes of this Section 16.8:
(1) "Century Distribution Agreement" means the @Home Network Distribution
Agreement, dated May 1, 1998, between At Home Corporation and Century/Texas;
(2) "@Home Distribution Agreement" means, collectively, the Master Distribution
Agreement Term Sheet and the Term Sheet for Form of LCO Agreement, each of which
are exhibits to the letter agreement, dated as of May 15, 1997, among At Home
Corporation and Tele-Communications, Inc., Comcast Corporation, Cox Enterprises,
Inc., Kleiner, Perkins, Caulfield & Byers and certain of their respective
affiliates, as each such term sheet has been amended by the letter agreement,
dated as of October 2, 1997, as amended as of October 10, 1997, among the
parties to the May 15, 1997 letter agreement and Cablevision Systems Corporation
and certain of its affiliates; provided, that, subject to Section 16.8(b), the
term "@Home Distribution Agreement" will include any definitive agreement
entered into by the parties with respect to the distribution of the @Home
service as contemplated by the May 15, 1997 letter agreement.
(3) "Cable Parent Exclusivity Provisions" has the meaning assigned to it in the
@Home Distribution Agreement, as amended by any amendment to the Cable Parent
Exclusivity Provisions that is required to be given effect pursuant to Section
16.8(b).
(4) "Controlled Affiliate," "Internet Service," and "Internet Backbone Service"
have the meanings assigned to them in the @Home Distribution Agreement; and
(5) "High Speed Residential Internet Service" has the meaning assigned to it in
the Century Distribution Agreement.
16.9 Programming Matters.
(a) After the date hereof, the Partnership will cause Century-TCI California to
continue to carry Starz! and Encore (including Encore Plex) on the cable
television systems contributed to Century-TCI California by TCI on the terms and
conditions applicable to such systems at the time of the Closing, and the
Partnership will use commercially reasonable efforts to cause Century-TCI
California to carry Starz! and Encore (including Encore Plex) on the cable
television systems contributed to Century-TCI California by Century and the
cable television systems transferred to Century-TCI California pursuant to the
Exchange Agreement between an Affiliate of TCI and Century-TCI California.
(b) To the extent that, as of the date hereof, any programming service listed on
Schedule IV is carried on any of the cable television systems contributed to
Century-TCI California by TCI, Century-TCI California will continue to carry
such service on such systems until the termination of TCI's present affiliation
agreement for such service, on the terms and conditions applicable to such
systems at the time of the Closing.
(c) After the date hereof, if requested by the Partnership, TCI agrees that it
will cause its Affiliate, Satellite Services, Inc. ("SSI"), to enter into an
agreement (the "Programming Supply Agreement") to provide programming to
Century-TCI California, in consideration of an annual fee equal to 1.5% (the
"SSI Administrative Fee") of the annual cost of any programming purchased by
Century-TCI California through SSI. The other terms and conditions of the
Programming Supply Agreement will be negotiated between SSI and Century-TCI
California and will be no less favorable to Century-TCI California in the
aggregate than the terms and conditions of similar programming supply agreements
then in effect between SSI and similarly situated SSI affiliates. In order for
Century-TCI California to obtain a favorable provision in the Programming Supply
Agreement that was made available to a similarly situated SSI affiliate, SSI may
require that Century-TCI California accept the other terms and conditions upon
which such favorable provision was made available to such similarly situated SSI
affiliate, so long as the terms and conditions offered to Century-TCI California
are not less favorable to Century-TCI California in the aggregate than the terms
and conditions of the programming supply agreement with such similarly situated
SSI affiliate. In no event will the "most favored nation" provisions of this
Section 16.9(c) be applicable to the SSI Administrative Fee, which is a fixed
percentage fee that will change only as mutually agreed to by Century-TCI
California and SSI. For purposes of this Section 16.9(c), a "similarly situated
SSI affiliate" is a Person that meets each of the following criteria:
(1) such Person has entered into a programming supply agreement with SSI; and
(2) TCI or an Affiliate of TCI owned an equity interest in such Person on that
date such programming supply agreement was entered into; and
(3) the equity interest in such Person that was owned by TCI and its Affiliates,
collectively, on that date such programming supply agreement was entered into,
expressed as a percentage of all outstanding equity interests in such Person,
was not more than five percent greater than TCI's Percentage Interest on the
date of the Partnership's request pursuant to this Section 16.9(c); and
(4) the number of subscribers served by the cable television systems that were
owned by such Person on that date such affiliation agreement was entered into
was not more than five percent greater than the number of subscribers served by
the cable television systems owned, directly or indirectly, by the Partnership
on the date of the Partnership's request pursuant to this Section 16.9(c).
(d) Notwithstanding the provisions of Section 16.9(c), if TCI hereafter desires
its Partnership Interest to be "non-attributable" (within the meaning of all
relevant rules of the FCC), then:
(1) If the Partnership is not party to a Programming Supply Agreement as of such
time, the provisions of Section 16.9(c) will terminate and be of no further
force or effect;
(2) If the Partnership is party to a Programming Supply Agreement as of such
time, the Programming Supply Agreement will provide that SSI may terminate the
Programming Supply Agreement under such circumstances and upon such termination,
the provisions of Section 16.9(c) will be of no further force or effect;
(3) The Partners will negotiate in good faith with respect to any other
amendments to this Agreement or any other agreement (e.g., the Management
Agreement) that may be required in order for TCI's Partnership Interest to be
"non-attributable;" and
(4) If the Partnership is party to a Programming Supply Agreement that is
terminated at such time, the Partners will negotiate in good faith with respect
to any payments to be made to the Partnership or Century to compensate it for
any increased costs the Partnership incurs as a result of the Partnership taking
over programming supply management for the Partnership.
<PAGE>
[AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P.]
IN WITNESS WHEREOF, the Partners have hereunto set their hands as of
the day first heretofore mentioned.
CENTURY EXCHANGE LLC
By: Century Southwest Cable Television, Inc., its manager
By: /S/ James P. Rigas
Name: James P. Rigas
Title: Executive Vice President
TCI CALIFORNIA HOLDINGS, LLC
By: TCI Cablevision of California, Inc., its manager
By: /s/ Derek Chang
Name: Derek Chang
Title: authorized officer
FOR PURPOSES OF SECTION 8.10(a) ONLY:
TELE-COMMUNICATIONS, INC.
By: /s/ Derek Chang
Name: Derek Chang
Title: Authorized officer
<PAGE>
[AGREEMENT OF LIMITED PARTNERSHIP
OF
CENTURY-TCI CALIFORNIA COMMUNICATIONS, L.P.]
FOR PURPOSES OF SECTION 8.10(B) AND ARTICLE 9 ONLY:
CENTURY COMMUNICATIONS CORP., A TEXAS CORPORATION
By: /s/ James P. Rigas
Name: James P. Rigas
Title: Executive Vice President
FOR PURPOSES OF SECTION 10.2, SECTION 10.3, AND SECTION 16.3 ONLY:
AT&T CORP.
By: /s/ Daniel E. Sommers
Name: Daniel E. Sommers
Title: Senior Exec.Vice Pres. and CFO
<PAGE>
SCHEDULE I
TO
AGREEMENT OF LIMITED PARTNERSHIP
ADDRESSES OF THE PARTNERS
Century Exchange, LLC
One North Main Street
Coudersport, PA 16915
TCI California Holdings, LLC
c/o Tele-Communications, Inc.
9197 S. Peoria Street
Englewood, Colorado 80112
<PAGE>
SCHEDULE II
TO
AGREEMENT OF LIMITED PARTNERSHIP
INITIAL MEMBERS OF THE ADVISORY COMMITTEE
1. Members designated by Century pursuant to Section 5.2(a):
Michael J. Rigas
Timothy J. Rigas
James P. Rigas
2. Members designated by TCI pursuant to Section 5.2(a):
Derek Chang
William R. Fitzgerald
<PAGE>
SCHEDULE III
TO
AGREEMENT OF LIMITED PARTNERSHIP
FIVE-YEAR OPERATING PLAN
<PAGE>
SCHEDULE IV
TO
AGREEMENT OF LIMITED PARTNERSHIP
PROGRAMMING SERVICES
American Movie Classics
American Sports Classics or its successor
Animal Planet
Bravo
Discovery Channel
DMX
ESPN
Fox News
Home and Garden
Home Shopping Network (the home shopping service)
Home Team Sports
MSNBC
Showtime
The Movie Channel
Romance Classics
The Learning Channel
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE V
TO
AGREEMENT OF LIMITED PARTNERSHIP
CERTAIN AGREEMENTS
<S> <C>
1. Facilities Agreement among Century Cable of Southern California, Century Cable of Northern California, Century Southwest
Cable Television, and TCG Los Angeles.
2. TCG Express Master Agreement among Century Cable of Southern California, Century Cable of Northern California, Century
Southwest Cable Television, and TCG Los Angeles.
3. Letter, dated November 23, 1994, from J. Curt Hockemeier to Robert E. Braden.
4. @Home Network Distribution Agreement, dated May 1, 1998, between At Home Corporation and Century Communications Corp.
5. Any agreement to which Century, the Partnership or Century-TCI
California is or becomes a party pursuant to which Centuryor the
Partnership agrees to license fiber optic facilities to or from a third
party which agreement is not prohibited by the provisions of Section
10.2.
</TABLE>
<PAGE>
EXHIBIT A
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made and entered into on the _____ day of
_________________, by and between Century-TCI California, L.P., a Delaware
limited partnership company (the "Partnership"), and Century
______________________, a __________________ corporation (the "Manager").
RECITALS
A. Pursuant to the Agreement of Limited Partnership (as the same may be
amended or modified from time to time, the "Partnership Agreement"), the
Partnership has been formed to own and operate certain cable television systems
and certain other assets, as more fully described in the Partnership Agreement.
The business and operations of the Partnership, as the same may be conducted
from and after the date hereof, are hereinafter referred to as the "Business."
B. Manager has the experience and ability to manage the Business and is
willing to do so, and the Partnership desires to enter into this Agreement with
Manager providing for the management of the Business on the terms and conditions
set forth herein.
AGREEMENTS
In consideration of the covenants and agreements contained herein, the
Partnership and Manager agree as follows:
SECTION 1. DEFINITIONS.
Except as otherwise defined herein, the following terms shall have the following
meanings when used in this Agreement:
Affiliate. With respect to either the Partnership or Manager, any other
Person that directly or indirectly through one or more intermediaries controls
or is controlled by or under direct or indirect common control with such party.
Applicable Law. Any statute, ordinance, law, rule or regulation of any
Governmental Authority, or any order, decree, injunction, writ, judgment or
award of any court, arbitrator or other Governmental Authority, applicable to
the Partnership or the Business.
Authorizations. Any governmental or nongovernmental license, permit,
franchise or other authorization, and applications therefor, which are necessary
to conduct the Business.
GAAP. Generally accepted accounting principles as in effect from time
to time.
Governmental Authority. Any governmental authority or regulatory body,
or any department, agency, division, bureau or other legal body thereof having
jurisdiction over the Partnership, the Business, or general jurisdiction over
all Persons.
Person. Any individual, corporation, partnership, firm, limited
liability company, joint venture, association, trust, joint stock company,
unincorporated organization or other entity, or a government or any agency or
political subdivision thereof.
Capitalized terms not otherwise defined herein shall have the meanings
given such terms in the Partnership Agreement.
SECTION 2. APPOINTMENT. On the terms and conditions hereinafter
provided, the Partnership hereby appoints Manager, and Manager hereby accepts
such appointment, as manager for all of the operations and conduct of the
Business for a period commencing on the date of Closing, as defined in the Asset
Contribution Agreement dated November 18, 1998, as the same may be amended from
time to time in accordance with its terms, by and among the Partnership and the
other parties thereto, and expiring as provided in Section 5 hereof.
SECTION 3. MANAGEMENT AUTHORITY; MANAGEMENT SERVICES.
-----------------------------------------
3.1 Authority and Services to Be Performed by Manager. (a)(i) Subject
to the limitations set forth in Section 3.1(b) below, Manager shall have full
and exclusive authority to do all such acts and things as may be incidental to,
or necessary, proper or advisable in the furtherance of, the management of the
day-to-day operations and conduct of the Business, including, without
limitation, all rights accorded the Managing Partner under the Partnership
Agreement. Subject to the terms and conditions of this Agreement, Manager shall
provide the Partnership with such services as may, from time to time, be
appropriate or reasonably required for the proper and efficient operation and
conduct of the Business in accordance with sound business principles and
practices customary in the cable television industry (collectively, the
"Management Services"). The Management Services shall be provided both at such
times as Manager may reasonably deem appropriate and at such times as the
Partnership may reasonably request.
(ii) Without limiting the generality of the preceding
paragraph, the Management Services shall include the following, but subject to
any applicable limitations set forth in this Agreement:
(1) (A) Evaluation of new equipment, materials and techniques
and making recommendations in accordance with its evaluations, (B) establishment
of general technical standards and procedures and directing their
implementation, and (C) establishment of programs for preventive maintenance and
monitoring their effectiveness;
(2) Supervision of all construction and development arising
out of or related to the operation of the Business, including, without
limitation, the selection and appointment of all subcontractors, equipment
suppliers and vendors;
(3) Supervision of the purchasing of property, real, personal
or mixed, and all materials and supplies, if any, necessary to complete any
construction and development arising out of or related to the Business;
(4) Sale, lease, trade, exchange or other disposition of the
Partnership's assets in the ordinary course of business and the negotiation of,
and entrance into, in the name of and on behalf of the Partnership, all
agreements relating to any of the foregoing;
(5) Negotiation of, and entrance into, in the name of and on
behalf of the Partnership, all contracts, leases, deeds, releases, assignments
and any other agreements on behalf of the Partnership for the purchase, lease,
license or use of such properties and rights as may be necessary or reasonably
desirable in connection with the Business;
(6) Formulation and supervision of all advertising, marketing
and sales programs and engagement and appointment on behalf of the Partnership
of advertising, marketing and public relations agencies and consultants for such
purposes;
(7) Subject to the provisions of all Authorizations,
Applicable Law and applicable agreements to which the Partnership is a party,
the selection and pricing of all services to be provided to the customers of the
cable television systems included in the Business;
(8) Supervision of performance of all aspects of the daily
operation and maintenance of the Business, instruction and supervision of all
personnel necessary to conduct daily operations of the Business and the setting
of salaries and wages for such personnel (with all such employees to be paid by
the Partnership);
(9) Entrance into, in the name of and on behalf of the
Partnership, any agreements arising out of or related to the Business,
including, without limitation, cable television franchises or collective
bargaining agreements with employees of the Partnership;
(10) Supervision of the maintenance of all accounting,
bookkeeping, billing, collections and other financial systems and records
relating to the Business;
(11) Engagement of, on behalf of the Partnership, attorneys,
accountants, engineers, consultants and other qualified professionals;
(12) Preparation and filing, or causing to be prepared and
filed, all necessary applications, filings, reports, statements and other
documents as are required in connection with the Business with Governmental
Authorities (including any income tax filings);
(13) Purchase of such policies of insurance (including
Manager's blanket coverage) as Manager may from time to time consider necessary
and appropriate in accordance with normal industry practice, with such policy
naming both the Partnership and Manager (and any other Partner of the
Partnership) as insured thereunder as their interests may appear;
(14) Representation of the Partnership before all Governmental
Authorities with respect to any matter necessary or desirable to the management
of the Business; and
(15) Taking of any other action in connection with the
construction, development, operation and maintenance of the Business in the
ordinary course of business which is commercially reasonable, appropriate and
necessary.
(b) Notwithstanding the foregoing in Section 3.1(a), the
Manager acknowledges that the Manager shall be subject to all express
limitations of the Partnership Agreement requiring approvals of the Partners of
the Partnership prior to taking of certain actions by the Partnership and shall
otherwise be subject to the terms of the Partnership Agreement.
3.2. Compliance With Authorizations. Notwithstanding anything in this
Agreement to the contrary, the Partnership shall continue to be the franchisee,
licensee and permittee, as applicable, of all Authorizations of any nature
whatsoever issued by any Governmental Authority in connection with the operation
of the Business and shall retain ultimate control over the Business. The
Partnership shall also retain ultimate responsibility for compliance with all
Applicable Law and the terms of any applicable Authorizations.
3.3 Payment of Expenses. The Partnership shall be responsible
for the payment of all costs, expenses and liabilities of any nature whatsoever
in connection with the construction, development, operation, maintenance, repair
and ownership of the Business, and the Partnership shall be the responsible
party under all agreements entered into on behalf of the Partnership by Manager
pursuant hereto.
3.4 Inspection of Records. Originals or copies of all books
and records related to this Management Agreement shall be maintained at the
principal office of Manager and shall be open to the inspection and examination
of the Partnership and its Partners during normal business hours upon reasonable
notice.
SECTION 4. COMPENSATION AND EXPENSES.
-------------------------
4.1 Management Fee. As compensation to Manager for the
performance of its services hereunder, the Partnership shall pay to Manager a
management fee ("Management Fee") for each twelve-month period during the term
of this Agreement, commencing on the date hereof, of three percent (3%) of the
total Gross Partnership Revenues of the Partnership for that year.
4.2 Gross Partnership Revenues. The term "Gross Partnership
Revenues" means all revenues arising out of or in connection with the operation
of the Business computed in accordance with GAAP, but exclusive of any taxes
imposed by law on subscribers or other persons which the Partnership passes on,
in full, to the applicable tax authority or authorities, late fee charges,
proceeds from the sale of assets or from other extraordinary or nonrecurring
items and exclusive of all interest, dividends, royalties and other similar
types of investment income that do not arise from the operation of the Business
in the ordinary course.
4.3 Quarterly Statement. Within 30 days after the end of each
fiscal quarter, the Manager shall submit to the Partnership a quarterly and a
cumulative year-to-date Gross Partnership Revenues statement indicating the
quarterly Management Fee payable and the cumulative year-to-date Management Fee
payable to Manager together with appropriate supporting documentation. Each
quarterly Management Fee payable hereunder shall be adjusted to reflect any
cumulative year-to-date adjustments in Gross Partnership Revenues. The
Management Fee shall be payable each quarter within 10 days after the Management
Fee statement for such quarter has been received by the Partnership.
4.4 Annual Statement. Within 90 days after the end of each
fiscal year, the Partnership shall cause its independent public accountants to
determine the Gross Partnership Revenues of the Partnership for that year and
the amount of the Management Fee payable to Manager for that year and deliver a
copy to Manager. Manager shall have the right to consult with the accountants
regarding the determination of Gross Partnership Revenues prior to the final
determination of Gross Partnership Revenues by the accountants. The accountants'
determination shall be final and binding on the Partnership and Manager.
4.5 Expense Reimbursement. The Management Fee described above
shall be exclusive of reimbursement by the Partnership to Manager for all
direct, out-of-pocket expenditures incurred by or on behalf of Manager relating
to its obligations under this Agreement as provided for herein, including,
without limitation, reimbursement for travel expenses. Manager shall be entitled
to reimbursement by the Partnership for services that would ordinarily be direct
expenditures of the Partnership. Manager shall act in good faith and in a
reasonable manner in making determinations of reimbursement. It is understood
and agreed that the intent of the expense reimbursement provisions contained in
this Section 4.5 is to reimburse Manager only for expenses incurred that are
directly related to the operation of the Business and not to reimburse Manager
for any corporate overhead (including bonuses and health, welfare, retirement
and other benefits and overhead expenses of its corporate office management,
development, internal accounting, human resource, legal and finance management
personnel), which shall be paid out of the Management Fee. Payment of expense
reimbursement shall be made monthly by the Partnership to Manager within ten
business days after receipt by the Partnership of a statement (the "Monthly
Expense Statement") of Manager's estimated reimbursable expenses for the
preceding month. The Monthly Expense Statement shall include an adjustment to
reflect the amount by which actual reimbursable expenses incurred during the
month immediately preceding the month of payment exceeded, or were exceeded by,
Manager's estimated reimbursable expenses with respect to such month.
4.6 Subordination. Manager acknowledges and agrees that,
notwithstanding anything else contained herein, payment of the Management Fee
may be limited by the provisions of loan agreements of the Partnership and that
the Management Fee shall be paid if and only to the extent that such payment
will not create a default under such loan agreements. To the extent that all or
any portion of the Management Fee may not be paid because of the terms of the
loan agreements, any portion of the Management Fee that is deferred shall be
paid as soon as the same may be paid without violating the provisions of the
loan agreements. Payments of any outstanding Management Fees (whether or not
deferred) shall be paid prior to payment of any partner's distributions or
similar payments to the partners of the Partnership.
SECTION 5. DEFAULT AND TERMINATION.
-----------------------
5.1 A default by Manager or the Partnership shall occur under
this Agreement if Manager or the Partnership shall willfully breach in any
material respect any material covenant of this Agreement to be kept and
performed by it.
5.2 Subject to Section 5.3 hereof, this Agreement shall be
terminated automatically upon the termination of the Partnership and may be
terminated earlier as follows:
(a) by either the Partnership or Manager on written
notice to the other party in the event of any default (as defined in Section 5.1
hereof) by the other party, as provided in Section 5.1, which is not cured
within 60 days after written notice thereof is received by the defaulting party
(or, if not curable within that time period, within a reasonable time
thereafter); or
(b) by either the Partnership or Manager on written
notice to the other party upon a sale or other disposition of all or
substantially all of the assets of the Partnership.
5.3 In the event of termination of this Agreement pursuant to
the terms hereof, Manager shall be entitled to receive promptly following
termination, and in any event within 30 days thereafter, the amount of any
accrued but unpaid Management Fees and any expense reimbursements.
SECTION 6. INDEMNIFICATION.
---------------
6.1 Indemnification by the Partnership. The Partnership will
indemnify and hold harmless Manager, its Affiliates, and all direct and indirect
officers, directors, employees, stockholders, partners, members and agents of
Manager and its Affiliates (individually, a "Manager Indemnitee"), from and
against any and all claims, demands, costs, damages, losses, liabilities, joint
and several, expenses of any nature (including reasonable attorneys',
accountants' and experts' fees and disbursements, all of which shall be paid by
the Partnership as incurred by the Manager Indemnitee(s)), judgments, fines,
settlements and other amounts (collectively, "Damages") arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative (collectively "Claims"), in which a Manager Indemnitee may be
involved or threatened to be involved, as a party or otherwise, arising out of
Manager's performance of its obligations under this Agreement or arising out of,
related to or in connection with the Business regardless of whether this
Agreement continues to be in effect or such Manager Indemnitee continues to be
an Affiliate, or an officer, director, employee, stockholder, partner or agent
of Manager, at the time any such Claims are made or Damages incurred, provided
that in respect of any matter in which indemnification is sought, to the extent
applicable: (i) the Manager Indemnitee acted in good faith and in a manner it
reasonably believed to be in the best interest of the Partnership and, with
respect to any criminal proceeding, had no reasonable cause to believe its
conduct was unlawful, and (ii) the Manager Indemnittee's conduct for which
indemnification is sought does not constitute gross negligence or willful
misconduct. Any indemnification hereunder will be satisfied solely out of the
assets of the Partnership.
6.2 Indemnification by Manager. Manager will indemnify and
hold harmless the Partnership, its Affiliates, and all officers, directors,
employees, stockholders, partners, members and agents of the Partnership and its
Affiliates (individually, a "Partnership Indemnitee"), from and against all
Damages arising from any Claim in which a Partnership Indemnitee may be involved
or threatened to be involved, as a party or otherwise, arising solely out of the
gross negligence or willful misconduct by Manager or of any of its officers,
agents or employees. All of the obligations of Manager hereunder have been
undertaken by Manager solely for the benefit of the Partnership and nothing set
forth in this Agreement shall (or shall be deemed to) grant to any other person
any interest (whether as a third-party beneficiary or otherwise) herein.
6.3 Right to Indemnification Not Exclusive Remedy. The
indemnification rights contained in this Section 6 will be cumulative of and in
addition to any and all other rights, remedies and recourse to which a Manager
Indemnitee or a Partnership Indemnitee, its heirs, successors, assigns and
administrators are entitled, whether pursuant to some other provision of this
Agreement, at law or in equity; provided, however, it is understood and agreed
that notwithstanding anything contained herein to the contrary, neither Manager
(nor any of its shareholders, officers, directors, employees or agents) shall
have any liability with respect to a breach of, or nonperformance under, this
Agreement except as expressly specified in this Agreement. The indemnification
provided in this Section 6 will inure to the benefit of the heirs, successors,
assigns and administrators of each Manager Indemnitee and Partnership
Indemnitee.
6.4 Insurance. Manager may purchase, at the Partnership's
expense, and maintain insurance on behalf of Manager and such other persons as
Manager may reasonably determine against any liability that may be asserted
against it or them in connection with the performance of Manager's obligations
under this Agreement. Provided, however, that the amount of the premium payments
that cover acts or omissions that were not made in good faith or which
constituted gross negligence or willful misconduct shall be borne by Manager.
6.5 Interested Transactions. A Manager Indemnitee will not be
denied indemnification in whole or in part under this Section 6 solely because
the Manager Indemnitee had an interest in the transaction with respect to which
the indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement. Nothing in this Agreement shall preclude transactions
between Manager, or any affiliate of Manager acting in and for its own account,
and the Partnership, provided that any services performed by Manager, or any
affiliate of Manager, and any such transactions, are on terms which are not
prohibited by the Partnership Agreement.
SECTION 7. MISCELLANEOUS.
-------------
7.1 Relationship Among the Parties. Nothing herein contained
shall be deemed to make Manager a partner, coventurer or other participant in
the business or operations of the Partnership or in any manner to render Manager
liable as a principal, surety, guarantor, agent or otherwise for any of the
debts, obligations or liabilities of the Partnership, whether incurred directly
by the Partnership or by Manager on behalf of the Partnership in accordance with
this Agreement.
7.2 Other Activities of Manager. Nothing in this Agreement
shall limit or restrict the right of Manager to engage in any other business or
to devote its time and attention to the management or other aspects of any other
business or to render services of any kind. The Partnership acknowledges that
Manager and its Affiliates own, manage or operate cable television systems
throughout the United States. Manager will devote such of its attention, time,
efforts and resources to the Business as shall be reasonably necessary for it to
carry out its duties hereunder.
7.3 Notices. All notices and other communications given or
made pursuant to this Agreement shall be in writing and shall be deemed to have
been duly given or made as of the date delivered if delivered by hand, by
telecopier device (confirmed by hand delivery or overnight courier service) or
by overnight courier service to the parties at the following address (or at such
other address for a party as shall be specified by like notice):
if to the Partnership, to:
c/o Century-TCI California, L.P.
Attention:
Telephone:
Telecopier:
with a copy to:
c/o Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Attention: Mr. William R. Fitzgerald
Telephone: (303) 267-4720
Telecopier: (303) 267-6672
if to Manager, to:
Attention:
Telephone:
Telecopier:
with a copy to:
Leavy Rosensweig & Hyman
11 East 44th Street, 10th Floor
New York, NY 10017
Attention: David Z. Rosensweig, Esq.
7.4 Assignability; Benefit and Binding Effect. The Partnership
agrees that Manager may assign this Agreement, without the consent of the
Partnership, to any Affiliate of Manager, or any successor to Manager by merger,
consolidation or otherwise. Except as set forth in the preceding sentence,
neither party hereto may assign this Agreement without the prior written consent
of the other party. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
7.5 Governing Law. This Agreement shall be governed by the
laws of the State of Delaware as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies (without
giving effect to the principles of conflicts of law thereof).
7.6 Headings. The headings preceding the text of sections and
subsections of this Agreement are included for ease of reference only and shall
not be deemed part of this Agreement.
7.7 Gender and Number. Words used herein, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine or neuter, and any other number, singular
or plural, as the context requires.
7.8 Entire Agreement. This Agreement represents the entire
understanding and agreement between the Partnership and Manager with respect to
the specific subject matter hereof. This Agreement supersedes all prior
negotiations between the parties and cannot be amended, supplemented or changed
except by an agreement in writing which makes specific reference to this
Agreement or an agreement delivered pursuant hereto, as the case may be, and
which is signed by the party against which enforcement of any such amendment,
supplement or modification is sought.
7.9 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement or that may be reasonably
requested by any other party hereto. Each party will cooperate with the other
party and provide any assistance reasonably requested by the other party to
effectuate the intent of this Agreement.
7.10 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to either party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner that is not invalid, illegal or against public policy, to the end that
transactions contemplated hereby are fulfilled to the greatest extent possible.
7.11 Counterparts. This Agreement may be signed in
counterparts, each of which shall be deemed to be an original but which, when
taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Management Agreement has been executed by the
parties hereto as of the date first above-written.
THE PARTNERSHIP
CENTURY-TCI CALIFORNIA, L.P.
By:
By:
By:
By:
Name:
Title:
MANAGER
By:
By:
By:
Name:
Title:
EXHIBIT 10.116
================================================================================
CREDIT AGREEMENT
dated as of December 3, 1999
among
CENTURY-TCI CALIFORNIA, L.P.
CERTAIN LENDERS
SOCIETE GENERALE
and
DEUTSCHE BANK SECURITIES INC.,
as Co-Syndication Agents
SALOMON SMITH BARNEY INC.,
as Lead Arranger and Sole Book Manager
MELLON BANK, N.A.,
as Documentation Agent
and
CITIBANK, N.A.,
as Administrative Agent
================================================================================
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience of reference only.
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C>
Section 1.01. Certain Defined Terms..............................................................................2
Section 1.02. Computation of Time Periods.......................................................................25
Section 1.03. Accounting Terms; Changes in GAAP.................................................................25
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
Section 2.01. The Advances......................................................................................26
Section 2.02. Making the Advances...............................................................................27
Section 2.03. Repayment.........................................................................................28
Section 2.04. Termination or Reduction of the Commitments.......................................................29
Section 2.05. Prepayments, Etc..................................................................................31
Section 2.06. Interest..........................................................................................32
Section 2.07. Fees..............................................................................................33
Section 2.08. Conversion and Continuation of Advances...........................................................34
Section 2.09. Increased Costs, Illegality, Etc..................................................................35
Section 2.10. Payments and Computations.........................................................................36
Section 2.11. Taxes.............................................................................................38
Section 2.12. Sharing of Payments, Etc..........................................................................40
Section 2.13. Letters of Credit.................................................................................41
Section 2.14. Replacement of Lenders, Etc.......................................................................44
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Initial Extensions of Credit......................................................................45
Section 3.02. Conditions Precedent to Term Borrowing............................................................48
Section 3.03. Conditions Precedent to Each Borrowing and Issuance...............................................48
Section 3.04. Determinations Under Section 3.01.................................................................48
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Organization; Powers..............................................................................49
Section 4.02. Authorization.....................................................................................49
Section 4.03. Enforceability....................................................................................49
Section 4.04. Governmental Approvals............................................................................50
Section 4.05. Financial Statements..............................................................................50
Section 4.06. No Material Adverse Change........................................................................50
Section 4.07. Title to Properties, Etc..........................................................................51
Section 4.08. Subsidiaries; Other Equity Investments............................................................51
Section 4.09. Litigation; Compliance with Laws..................................................................51
Section 4.10. Agreements........................................................................................52
Section 4.11. Federal Reserve Regulations.......................................................................52
Section 4.12. Investment Company Act; Public Utility Holding Company Act........................................52
Section 4.13. Tax Returns.......................................................................................52
Section 4.14. No Material Misstatements.........................................................................52
Section 4.15. Pension and Welfare Plans.........................................................................53
Section 4.16. Environmental Matters.............................................................................53
Section 4.17. Insurance.........................................................................................53
Section 4.18. Solvency..........................................................................................53
Section 4.19. Intellectual Property.............................................................................54
Section 4.20. Year 2000.........................................................................................54
Section 4.21. Franchises........................................................................................54
Section 4.22. FCC Licenses, Utilities Etc.......................................................................54
Section 4.23. The CATV Systems..................................................................................55
Section 4.24. Certain Agreements................................................................................56
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01. Financial Statements, Reports, Etc................................................................56
Section 5.02. Other Notices.....................................................................................58
Section 5.03. Existence; Businesses and Properties..............................................................58
Section 5.04. Insurance.........................................................................................59
Section 5.05. Obligations and Taxes.............................................................................59
Section 5.06. Notice of Certain Events Relating to Pension Plans................................................59
Section 5.07. Maintaining Records; Access to Properties and Inspections.........................................59
Section 5.08. Environmental Laws................................................................................60
Section 5.09. Guarantees and Collateral; Ownership of Restricted Subsidiaries...................................60
Section 5.10. Franchises........................................................................................61
Section 5.11. Use of Proceeds...................................................................................61
Section 5.12. Accuracy of Information...........................................................................61
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01. Indebtedness......................................................................................62
Section 6.02. Liens.............................................................................................63
Section 6.03. No Other Negative Pledge; Restrictive Agreements..................................................65
Section 6.04. Unrestricted Subsidiaries.........................................................................66
Section 6.05. Sale and Lease-Back Transactions..................................................................66
Section 6.06. Investments.......................................................................................66
Section 6.07. Prohibition of Fundamental Changes................................................................67
Section 6.08. Restricted Transactions...........................................................................70
Section 6.09. Transactions with Affiliates......................................................................71
Section 6.10. Management Fees...................................................................................71
Section 6.11. Lines of Business.................................................................................71
Section 6.12. Certain Restrictions Applicable to Senior Unsecured and Subordinated Indebtedness.................71
Section 6.13. Financial Covenants...............................................................................72
Section 6.14. Modifications to Certain Agreements, Etc..........................................................73
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default.................................................................................73
Section 7.02. Actions in Respect of the Letters of Credit Upon Default..........................................76
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Section 8.01. Authorization and Action..........................................................................76
Section 8.02. Administrative Agent's Reliance, Etc..............................................................77
Section 8.03. Citibank and Affiliates...........................................................................77
Section 8.04. Lender Credit Decision............................................................................77
Section 8.05. Indemnification...................................................................................78
Section 8.06. Right to Request Further Indemnification..........................................................78
Section 8.07. Successor Administrative Agent....................................................................78
Section 8.08. Co-Syndication Agents and other Titles............................................................78
ARTICLE IX
THE GUARANTEE
Section 9.01. The Guarantee.....................................................................................79
Section 9.02. Obligations Unconditional, Etc....................................................................79
Section 9.03. Reinstatement.....................................................................................85
Section 9.04. Subrogation.......................................................................................85
Section 9.05. Remedies..........................................................................................85
Section 9.06. Instrument for the Payment of Money...............................................................85
Section 9.07. Continuing Guarantee..............................................................................86
Section 9.08. Rights of Contribution............................................................................86
Section 9.09. General Limitation on Guarantee Obligations.......................................................86
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Consents, Etc........................................................................87
Section 10.02. Notices, Etc.....................................................................................88
Section 10.03. No Waiver; Remedies..............................................................................88
Section 10.04. Costs, Expenses and Indemnification..............................................................89
Section 10.05. Right of Setoff..................................................................................90
Section 10.06. Governing Law; Submission to Jurisdiction........................................................90
Section 10.07. Assignments and Participations...................................................................91
Section 10.08. Execution in Counterparts........................................................................95
Section 10.09. No Liability of Any Issuing Bank.................................................................95
Section 10.10. Confidentiality..................................................................................95
Section 10.11. Waiver Of Jury Trial.............................................................................96
Section 10.12. Survival.........................................................................................96
Section 10.13. Captions.........................................................................................96
Section 10.14. Successors and Assigns...........................................................................96
Section 10.15. Limited Recourse.................................................................................96
</TABLE>
<PAGE>
<TABLE>
SCHEDULES
<S> <C>
Schedule 2.01 List of Commitments
Schedule 4.08 Subsidiaries; other Equity Investments
Schedule 4.10 Restrictive Agreements
Schedule 4.16 Environmental Matters
Schedule 4.17 Insurance
Schedule 4.21 Franchises
Schedule 4.23 Certain Matters Relating to Systems
Schedule 6.01(b) Certain Existing Indebtedness
Schedule 6.01(h) Terms of Subordination Applicable to New Affiliate Indebtedness
Schedule 6.02 Certain Existing Liens
EXHIBITS
EXHIBIT A-1....... Form of Revolving Credit Note
EXHIBIT A-2....... Form of Term Note
EXHIBIT B......... Form of Notice of Borrowing
EXHIBIT C-1....... Form of Opinion of Special Counsel to the Credit Parties
EXHIBIT C-2....... Form of Opinion of Deputy General Counsel to Adelphia
EXHIBIT D......... Form of Opinion of Special New York Counsel to Citibank
EXHIBIT E......... Form of Assignment and Acceptance
EXHIBIT F......... Form of Management Fee Subordination Agreement
EXHIBIT G......... Form of Assumption Agreement
EXHIBIT H-1....... Form of Partners Pledge Agreement
EXHIBIT H-2....... Form of Credit Party Pledge Agreement
EXHIBIT I......... Form of Compliance Calculation
</TABLE>
<PAGE>
- 8 -
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of December 3, 1999 among:
(1) CENTURY-TCI CALIFORNIA, L.P., a Delaware limited partnership
(the "Borrower")
(2) each of the GUARANTORS identified on the signature pages
hereto under the caption "Guarantors", and each other entity
that becomes a "Guarantor" after the date hereof pursuant to
Section 5.09 (individually, a "Guarantor" and, collectively,
the "Guarantors" and, together with the Borrower, the "Credit
Parties");
(3) each of the lenders (the "Initial Lenders") listed on the
signature pages hereof; and
(4) CITIBANK, N.A., as administrative agent (together with its
successors in such capacity, the
"Administrative Agent") for the Lenders hereunder.
PRELIMINARY STATEMENTS:
Capitalized terms used in these Preliminary Statements and not
otherwise defined have the meanings assigned to them in Section 1.01.
(a) The Borrower is a limited partnership formed to own and
operate certain cable television systems and related businesses in
various municipalities located in Southern California. In that
connection, the Borrower has requested that the Lenders extend credit
to the Borrower in an aggregate principal or face amount not exceeding
$1,000,000,000 (i) to fund distributions to Century and TCI in
connection with the contribution of such cable systems by Century and
TCI to the Borrower, (ii) to refinance existing indebtedness of the
Borrower assumed by the Borrower upon the contribution of such cable
systems, (iii) to provide working capital from time to time to the
Borrower and its Subsidiaries, (iv) for other general business purposes
and (v) to pay certain fees and expenses, in each case as more
particularly described herein.
(b) To induce the Lenders to extend such credit, the parties
hereto propose to enter into this Agreement providing, inter alia, for
the Lenders to extend such credit to the Borrower by means of loans and
letters of credit and for each Guarantor to guarantee the credit so
extended, each of the Guarantors expecting to derive benefit, directly
or indirectly, from the credit so extended to the Borrower.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"Accountants" means any of PricewaterhouseCoopers, Ernst &
Young, Arthur Andersen, KPMG Peat Marwick or Deloitte and Touche, any of their
respective successors or any other independent public accountants reasonably
acceptable to the Administrative Agent.
"Acquisition" means any acquisition by the Borrower or its
Restricted Subsidiaries of (a) any other Person which owns and operates a CATV
System or those businesses in which other Persons in the cable industry are
engaged, which Person shall then become consolidated with the Borrower in
accordance with GAAP or (b) any CATV System or those businesses in which other
Persons in the cable industry are engaged. The term "Acquisition" shall exclude
Asset Swaps.
"Adelphia" means Adelphia Communications Corporation, a
Delaware corporation.
"Administrative Agent" has the meaning specified in the
recital of parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent at Citibank at its
office at Two Penns Way, Suite 200, New Castle, Delaware, 19720, Attention: Tim
Cassidy, Assistant Manager (or his successor), or such other account maintained
by the Administrative Agent as may be designated by the Administrative Agent in
a written notice to the Lenders, the Issuing Banks and the Borrower.
"Administrative Questionnaire" means an administrative
questionnaire in a form supplied by the Administrative Agent.
"Advance" means a Revolving Credit Advance or a Term Advance
as the context shall require.
"Affiliate" means, with respect to any Person (the
"Principal") any other Person (a) which directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under common control
with, the Principal, or (b) thirty-five percent (35%) or more of the voting
stock (or in case such other Person is not a corporation, thirty-five percent
(35%) or more of the equity interest) of which is beneficially owned or held by
the Principal. The term "Control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
"Annualized Operating Cash Flow" means, as at any date,
Operating Cash Flow for the fiscal quarter ending on or most recently ended
prior to such date multiplied by four.
"Applicable Commitment Fee Rate" means 0.375%; provided that,
if the Leverage Ratio as at the last day of any fiscal quarter of the Borrower
shall fall below 5.00 to 1 then, subject to the delivery to the Administrative
Agent of a certificate of a Financial Officer of the Borrower demonstrating such
fact (which certificate shall accompany the financial statements for such fiscal
quarter delivered under Section 5.01 on which the calculation of such Leverage
Ratio is based) prior to the end of the next succeeding fiscal quarter (or prior
to such later date as the financial statements for such fiscal quarter are
required to be delivered pursuant to Section 5.01), the "Applicable Commitment
Fee Rate" shall be adjusted downwards to .250% per annum during the period
commencing on the second Business Day following the date of receipt of such
certificate to but not including the date the next succeeding such certificate
to be delivered hereunder is delivered or due, whichever is earlier.
Notwithstanding the foregoing, the Applicable Commitment Fee
Rate otherwise applicable on any day shall be increased by 0.125% during all
periods in which the sum of the then aggregate unpaid principal amount of the
Advances and the then aggregate amount of all outstanding Letter of Credit
Liabilities is less than 50% of the sum of the Commitments during such period
(it being understood that, after the Term Advances have been made and the Term
Commitment utilized in full, the aggregate outstanding Term Commitments for
purposes hereof on any day shall be deemed to be equal to the aggregate
outstanding principal amount of the Term Advances on such day).
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance
and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Applicable Letter of Credit Fee Rate" means, at any time, a
rate per annum equal to the Applicable Margin for Eurodollar Rate Advances in
effect at such time.
"Applicable Margin" means (a) with respect to all Base Rate
Advances, 0.750% per annum and (b) with respect to all Eurodollar Rate Advances,
1.750% per annum; provided that at all times after the date six months following
the Closing Date, if the Leverage Ratio as at the last day of any fiscal quarter
of the Borrower shall fall within any of the ranges specified in the schedule
below, then, subject to the delivery to the Administrative Agent of a
certificate of a Financial Officer of the Borrower demonstrating such fact
(which certificate shall accompany the financial statements for such fiscal
quarter delivered under Section 5.01 on which the calculation of such Leverage
Ratio is based) prior to the end of the next succeeding fiscal quarter (or prior
to such later date as the financial statements for such fiscal quarter are
required to be delivered pursuant to Section 5.01), the "Applicable Margin"
shall be adjusted upwards or downwards, as the case may be, to the percentage
per annum for the respective Type of Advance set forth opposite the reference to
such range in such schedule during the period commencing on the second Business
Day following the date of receipt of such certificate to but not including the
date the next succeeding such certificate to be delivered hereunder is delivered
or due, whichever is earlier:
<TABLE>
<CAPTION>
Applicable Margin (% p.a.)
Range of Leverage Ratio Base Rate Eurodollar Rate
Advances Advances
<S> <C> <C>
Greater than or equal to 6.00 to 1 1.000% 2.000%
Greater than or equal to 5.75 to 1
but less than 6.00 to 1 0.750% 1.750%
Greater than or equal to 5.25 to 1
but less than 5.75 to 1 0.500% 1.500%
Greater than or equal to 4.75 to 1
but less than 5.25 to 1 0.250% 1.250%
Greater than or equal to 4.00 to 1
but less than 4.75 to 1 0.000% 1.000%
Less than 4.00 to 1 0.000% 0.750%
</TABLE>
"Arranging Agents" means, collectively, Salomon Smith Barney
Inc., Societe Generale, Deutsche
Bank Securities Inc., and Mellon Bank, N.A.
"Asset Sale" means any sale, lease, assignment, transfer or
other disposition of any property (whether now owned or hereafter acquired,
whether in one transaction or a series of related transactions and whether by
way of merger or otherwise) by the Borrower or any Restricted Subsidiary,
including, without limitation, any such sale, assignment, transfer or other
disposition of any capital stock or other ownership interests of any Subsidiary
of the Borrower or a Subsidiary of a Restricted Subsidiary of the Borrower, and
the sale of any one or more CATV Systems. The term "Asset Sale" shall exclude
Asset Swaps.
"Asset Swap" means any transaction or series of related
transactions pursuant to which the Borrower or one or more of its Restricted
Subsidiaries shall exchange one or more CATV Systems owned by the Borrower and
its Restricted Subsidiaries for one or more CATV Systems owned by third parties.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent, in accordance with Section 10.07 and in substantially the form of Exhibit
E.
"Available Amount" of any Letter of Credit means the maximum
amount available to be drawn under such Letter of Credit (assuming compliance
with all conditions to drawing specified therein).
"Bankruptcy Code" means Title 11 of the United States Code, as
from time to time amended.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the higher of (a) the rate of interest announced publicly by Citibank in New
York, New York, from time to time, as Citibank's base rate and (b) 0.50% per
annum above the Federal Funds Rate. Each change in any interest rate provided
for herein based upon the Base Rate resulting from a change in the Base Rate
shall take effect at the time of such change in the Base Rate.
"Base Rate Advance" means an Advance that bears interest as
provided in Section 2.06(a)(i).
"Borrower" has the meaning specified in the recital of parties
to this Agreement.
"Borrower's Account" means the account of the Borrower
maintained with Citibank, at its office at 399 Park Avenue, New York, New York
10043; or such other account maintained by the Borrower with Citibank and
designated by the Borrower in a written notice to the Administrative Agent.
"Borrowing" means a Revolving Credit Borrowing or a Term
Borrowing as the context shall require.
"Business Day" means any day on which banks are not required
or authorized to close in New York City, and, if such Business Day relates to a
Eurodollar Rate Advance, on which dealings are carried on in the London
interbank market.
"Capital Contribution" means, as at any date of determination
thereof, the sum of (a) the aggregate net cash proceeds received (i) by the
Borrower during the period commencing on the date immediately following the
Closing Date through and including such date of determination in respect of
equity contributions and New Affiliate Indebtedness and (ii) by Restricted
Subsidiaries during such period in respect of equity contributions (other than
equity contributions made by the Borrower or other Restricted Subsidiaries) plus
(b) the fair market value of any property (including any CATV Systems)
contributed (i) to the Borrower as additional equity capital during such period
and (ii) to the Restricted Subsidiaries as additional equity capital during such
period (other than any such contribution made by the Borrower or other
Restricted Subsidiaries).
"Capital Expenditures" means, for any period, the sum (for the
Borrower and its Restricted Subsidiaries determined on a consolidated basis
without duplication in accordance with GAAP), of (a) the aggregate amount of
payments made for the rental, lease, purchase, construction or use of any
property the value or cost of which, under GAAP, would appear on a consolidated
balance sheet of the Borrower and its Restricted Subsidiaries in the category of
property, plant or equipment during such period, minus (b) the aggregate Capital
Contributions made in cash to finance such payments.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Security" means (a) any share, membership,
partnership or other percentage interest, unit of participation, membership
interests or limited liability company interests in any limited liability
company or in each case other equivalent (however designated) of a corporate
equity security or other equity interest in a Person; and (b) any debt security
or other evidence of Indebtedness which is convertible into or exchangeable for,
or any option, warrant or other right to acquire, any Capital Security of any
type referred to in clause (a) of this definition.
"Cash Interest Coverage Ratio" means, as of the last day of
any fiscal quarter, the ratio of (a) Operating Cash Flow for such fiscal quarter
to (b) Interest Expense for such fiscal quarter.
"CATV System" means any cable distribution system that
receives broadcast signals by antennae, microwave transmission, satellite
transmission or any other form of transmission and that amplifies such signals
and distributes them to Persons who pay to receive such signals.
"Century" means Century Exchange L.L.C., a Delaware limited
liability company.
"Change in Control" means (a) Adelphia shall cease for any
reason to own, directly or indirectly, at least 51% of the partnership interests
of the Borrower, (b) Adelphia or its Subsidiaries shall cease for any reason to
be the only managing general partner of the Borrower or (c) the Rigas Family
shall fail to control, directly or indirectly, more than 50% of the total number
of votes that holders of Adelphia's Capital Securities (of the type described in
clause (a) of the definition of Capital Security) are then entitled to vote
(which, on the date hereof, consists of the Class "A" common stock and Class "B"
common stock of Adelphia).
"Citibank" means Citibank, N.A., a national banking
association, and its successors.
"Closing Date" means the date upon which the initial extension
of credit hereunder is made.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"Commitment" means a Revolving Credit Commitment or a Term
Commitment, as the context shall require.
"Confidential Information" means information identified as
being confidential that the Borrower or any of its Restricted Subsidiaries
furnishes to the Administrative Agent or any Lender, but does not include any
such information once such information has become generally available to the
public or once such information has become available to the Administrative Agent
or any Lender from a source other than the Borrower or any of its Restricted
Subsidiaries (unless, in either case, such information becomes so available as a
result of the breach by the Administrative Agent or a Lender of its duty of
confidentiality set forth in Section 10.10).
"Confidential Information Memorandum" means the Confidential
Information Memorandum of the Borrower dated October, 1999.
"Continuation", "Continue" and "Continued" each refers to a
continuation of Eurodollar Rate Advances from one Interest Period to the next
Interest Period pursuant to Section 2.08.
"Contributed Systems" means the CATV Systems to be contributed
to the Borrower by Century, TCI and their respective Affiliates pursuant to the
Contribution Agreement and the Exchange Agreement.
"Contribution Agreement" means the Asset Contribution
Agreement dated as of November 18, 1998 among the Borrower, Century, certain
Affiliates of Century, TCI, and certain Affiliates of TCI, as amended by
Amendment No. 1 to Asset Contribution Agreement dated as of January 29, 1999,
pursuant to which Century and TCI agree to contribute CATV Systems to the
Borrower, as said Agreement shall, subject to Section 6.14, be modified and
supplemented and in effect from time to time.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Conversion", "Convert" and "Converted" each refers to a
conversion of Advances of one Type into Advances of the other Type pursuant to
Section 2.08 or 2.09.
"Credit Agreement Transactions" means the transactions
contemplated by this Agreement and the other Loan Documents (including, without
limitation, the execution, delivery and performance by the Obligors of the Loan
Documents, the incurrence of liabilities by the Obligors under the Loan
Documents and the extensions of credit hereunder) and any actual or proposed use
by the Borrower or any of its Subsidiaries of the proceeds of any of the
extensions of credit hereunder.
"Credit Parties" has the meaning assigned to such term in the
recitals of parties to this Agreement.
"Credit Party Pledge Agreement" means a Pledge Agreement
between the Credit Parties and the Administrative Agent, substantially in the
form of Exhibit H-2 hereto, as said Agreement shall be modified and supplemented
and in effect from time to time.
"Default" means any event that would constitute an Event of
Default but for the requirement that notice be given or time elapse or both.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" in the
Administrative Questionnaire of such Lender or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other office of such Lender as
such Lender may from time to time specify to the Administrative Agent.
"Environment" means ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata or as otherwise defined in any Environmental Law.
"Environmental Claim" means any written allegation, notice of
violation, claim, demand, order, directive, cost recovery action or other cause
of action by, or on behalf of, any Governmental Authority or any Person for
damages, injunctive or equitable relief, personal injury (including sickness,
disease or death), Remedial Action costs, tangible or intangible property
damage, natural resource damages, nuisance, pollution, any adverse effect on the
environment caused by any Hazardous Material, or for fines, penalties or
restrictions, resulting from or based upon (a) the threat, the existence, or the
continuation of the existence, of a Release (including sudden or non-sudden,
accidental or non-accidental Releases), (b) exposure of human beings to any
Hazardous Material, (c) the presence, use, handling, transportation, storage,
treatment or disposal of any Hazardous Material or (d) the violation or alleged
violation of any Environmental Law or Environmental Permit.
"Environmental Law" means any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C.ss.ss.9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Action of 1976 and Hazardous and Solid Waste Amendments of 1984, 42
U.S.C.ss.ss.6901 et seq., the Federal Water Pollution Control Act, as amended,
33 U.S.C.ss.ss.1251 et seq., the Clean Air Act of 1970, as amended, 42
U.S.C.ss.ss. 7401 et seq., the Toxic Substances Control Act of 1976, 15
U.S.C.ss.ss.2601 et seq., those portions of the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C.ss.ss.651 et seq., applicable to employees,
the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C.ss.ss.11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42
U.S.C.ss.ss.300(f) et seq., the Hazardous Materials Transportation Act, 49
U.S.C.ss.ss. 5101 et seq., and all amendments or regulations promulgated under
any of the foregoing.
"Environmental Permit" means any permit, approval,
authorization, certificate, license, variance, filing or permission required by
or from any Government Authority pursuant to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Base Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, the rate
appearing on Page 3750 of the Telerate Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service, providing rate quotations comparable to those currently provided on
such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
U.S. dollar deposits in the London interbank market) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Interest
Period, as the rate for U.S. dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "Eurodollar Base Rate" with respect to such Eurodollar Rate
Advance for such Interest Period shall be the rate at which U.S. dollar deposits
of $5,000,000, and for a maturity comparable to such Interest Period, are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" in the
Administrative Questionnaire of such Lender or in the Assignment and Acceptance
pursuant to which it became a Lender (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate
per annum equal to the rate per annum obtained by dividing (a) Eurodollar Base
Rate for such Eurodollar Rate Advance by (b) a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest
as provided in Section 2.06(a)(ii).
"Eurodollar Rate Reserve Percentage" means, for any Interest
Period for each Eurodollar Rate Advance comprising part of the same Borrowing,
the reserve percentage (if any) applicable two Business Days before the first
day of such Interest Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City with deposits exceeding
$1,000,000,000 with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on Eurodollar
Rate Advances is determined) having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 7.01.
"Excess Cash Balance" means the sum of unencumbered cash and
cash equivalents.
"Exchange Agreement" means the Asset Exchange Agreement dated
as of November 18, 1998 among the Borrower and TCI of East San Fernando, L.P.
("TCI San Fernando") as amended by Amendment No. 1 to Asset Exchange Agreement
dated as of January 29, 1999, pursuant to which the Borrower conveys certain
assets to TCI San Fernando and TCI San Fernando conveys CATV Systems to the
Borrower, as said Agreement shall, subject to Section 6.14, be modified and
supplemented and in effect from time to time.
"Excluded Period" means, with respect to any additional amount
payable under Section 2.09 or 2.13, the period ending 180 days prior to the
applicable Lender's delivery of a certificate referenced in Section 2.09(a),
2.09(b) or 2.13(d), as applicable, with respect to such additional amount.
"Existing Affiliate Indebtedness" means Indebtedness of the
Borrower to one or more of its Affiliates assumed upon the contribution to the
Borrower of the Contributed Systems pursuant to the Contribution Agreement.
"Existing Credit Agreements" means (a) the Credit Agreement
dated as of August 4, 1995 among CCC-I Inc., Pullman TV Cable Co., Inc., and
Kootenai Cable, Inc., each as Borrowers, the Lenders therein, certain Co-Agents,
and Citibank, N.A., as Managing Agent, as such Agreement is in effect on the
date hereof, (b) the Credit Agreement dated as of June 30, 1994 among CCC-II
Inc., as Borrower, the Lenders therein, certain Co-Agents, and Citibank, N.A.,
as Managing Agent, as such Agreement is in effect on the date hereof, and (c)
the Credit Agreement dated as of April 15, 1997, among Citizens Century Cable
Television Venture, as Borrower, Societe Generale, New York Branch, as Agent,
the Syndication Agent and Co-Agents named therein, and the lenders from time to
time parties thereto, as such Agreement is in effect on the date hereof.
"Facility" means the Revolving Credit Facility or the Term
Facility and "Facilities" means both of them.
"FCC" means the Federal Communications Commission or any
governmental authority substituted therefor.
"FCC License" means any license or permit issued by the FCC,
including licenses issued in connection with the operation of community antenna
television systems, community antenna relay systems, microwave systems, earth
stations and businesses and other two-way radios.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day that is a Business Day, the average of the quotations for such day
for such transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Financial Officer" of any Person means the chief financial
officer, chief accounting officer, treasurer or controller of such Person and,
in the case of the Borrower, Mike Mulcahey, so long as he is the Assistant
Treasurer of the Borrower.
"Fixed Charges" means, for any period, the sum (for the
Borrower and its Restricted Subsidiaries determined on a consolidated basis
without duplication in accordance with GAAP), of (a) all Interest Expense plus
(b) the aggregate outstanding principal amount of Revolving Credit Advances at
the beginning of such period less the maximum amount that will be available
under the Revolving Credit Commitment at the end of such period (which shall
never be less than zero) plus (c) with respect to Term Advances and any other
debt, the required amortization of principal thereof during such period plus (d)
Capital Expenditures plus (e) cash income taxes.
"Fixed Charges Ratio" means, as at (a) March 31, 2001, the
ratio of (x) Operating Cash Flow for the three month period then ended to (y)
Fixed Charges for such period, (b) June 30, 2001, the ratio of (x) Operating
Cash Flow for the three month period then ended multiplied by two to (y) Fixed
Charges for the six month period then ended, (c) September 30, 2001, the ratio
of (x) Operating Cash Flow for the three month period then ended multiplied by
three to (y) Fixed Charges for the nine month period then ended, and (d)
December 31, 2001 and the last day of each fiscal quarter ending thereafter, the
ratio of (x) Annualized Operating Cash Flow as at such date to (y) Fixed Charges
for the period of four fiscal quarters ending on such date.
"Franchise" means a franchise, license, authorization or right
by contract or otherwise to construct, own, operate, promote, extend and/or
otherwise exploit any CATV System operated or to be operated by the Borrower or
any of its Restricted Subsidiaries granted by any state, county, city, town,
village or other local or state government authority or by the FCC. The term
"Franchise" shall include each of the Franchises set forth on Schedule 4.21
hereto.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means any Federal, state, provincial,
municipal, local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantee" of or by any Person means any obligation,
contingent or otherwise, of such Person guaranteeing any Indebtedness of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness, (b) to purchase or lease
property, securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness or (c) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness; provided that the term "Guarantee" shall not include endorsements
for collection or deposit in the ordinary course of business.
"Guaranteed Obligations" has the meaning specified in Section
9.01.
"Guarantors" has the meaning specified in the recital of
parties to this Agreement.
"Hazardous Materials" means all explosive or radioactive
substances or wastes; hazardous or toxic substances or wastes; pollutants; and
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos-containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, radon gas, infectious or medical wastes
and all other substances or wastes of any nature to the extent regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any Interest Rate Protection
Agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Impermissible Qualification" means, relative to the opinion
or certification of any independent public accountant as to any financial
statement of the Borrower and its Restricted Subsidiaries on a consolidated
basis, any qualification or exception to such opinion or certification (a) which
is of a "going concern" or similar nature, (b) which relates to the limited
scope of examination of matters relevant to such financial statement, or (c)
which relates to the treatment or classification of any item in such financial
statement and which, as a condition to its removal, would require an adjustment
to such item the effect of which would be to cause the Borrower to be in default
of any of its obligations under Section 6.13.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money;
(b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments;
(c) all obligations of such Person under conditional sale or
other title retention agreements relating to property or assets
purchased by such Person;
(d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services (excluding trade
accounts payable and accrued obligations incurred in the ordinary
course of business);
(e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by
such Person, whether or not the obligations secured thereby have been
assumed;
(f) all Guarantees by such Person of Indebtedness of others;
(g) all Capital Lease Obligations of such Person; and
(h) all obligations of such Person as an account party in
respect of letters of credit and bankers' acceptances.
The Indebtedness of any Person shall include the Indebtedness of any partnership
in which such Person is a general partner, to the extent such Person is liable
therefor as a result of such ownership interest, except where the terms of such
Indebtedness otherwise provide that such Person is not liable therefor.
"Indemnified Party" means the Administrative Agent, each
Issuing Bank, each Lender, each Co-Syndication Agent named on the cover page of
this Agreement, the Lead Arranger and Sole Book Manager and Documentation Agent
identified on the signature pages hereof, and each of their respective officers,
partners, directors, employees, agents and advisors, and each other Person
controlling any of the foregoing within the meaning of either Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act
of 1934, as amended.
"Initial Lenders" has the meaning specified in the recital of
the parties to this Agreement.
"Intellectual Property" means, collectively, copyrights,
patents and trademarks (including both registered and unregistered trade-marks
and service marks, designs and logos and all goodwill associated with the
foregoing).
"Interest Expense" means, for any period, the sum (for the
Borrower and its Restricted Subsidiaries determined on a consolidated basis
without duplication in accordance with GAAP), of (a) all accrued interest on
Total Debt (excluding, however, accrued interest on New Affiliate Indebtedness,
whether or not paid during such period) plus (b) the net amounts payable (or
minus the net amounts receivable) under Interest Rate Protection Agreements
accrued during such period (whether or not actually paid or received during such
period) plus (c) all fees and all other amounts that under GAAP would be treated
as interest expense, incurred hereunder during such period.
Notwithstanding the foregoing, if during any period for which
Interest Expense is being determined, the Borrower or any of its Restricted
Subsidiaries shall have consummated any Acquisition, Asset Sale or Asset Swap,
or any capital contribution of CATV Systems or other property shall have been
made to the Borrower or any of its Restricted Subsidiaries, then, for all
purposes of this Agreement, Interest Expense shall be determined on a pro forma
basis as if such Acquisition, Asset Sale, Asset Swap or capital contribution (as
the case may be) had been made or consummated (and any related Indebtedness
incurred or repaid) on the first day of such period.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance
into such Eurodollar Rate Advance, and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below. The duration of each such Interest
Period shall be one, two, three or six months, or (if agreed to by all Lenders
required to make such Advance) twelve months, as the Borrower may, upon notice
received by the Administrative Agent not later than 12:00 noon (New York City
time) on the third Business Day prior to the first day of such Interest Period,
select; provided that:
(a) no Interest Period for any Advance may end after the
Revolving Credit Commitment Termination Date;
(b) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided that, if such extension would cause the last day
of such Interest Period to occur in the next following calendar month,
the last day of such Interest Period shall occur on the next preceding
Business Day; and
(c) whenever the first day of any Interest Period occurs on
the last day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month), such Interest Period shall end on the last Business Day of the
appropriate subsequent calendar month.
"Interest Rate Protection Agreement" means any interest rate
swap, cap or other agreement satisfactory to the Administrative Agent entered
into by the Borrower that is designed to protect the Borrower against
fluctuations in interest rates and not for speculation.
"Investment" means as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of stock 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
expenditures in the ordinary course of business) or capital contribution by such
Person to any other Person, including all debt and accounts receivable from such
other Person which are not current assets or did not arise from sales to such
other Person in the ordinary course of business, or any guarantee of the
indebtedness of any other Person.
"Issuing Banks" means any one or more of Citibank, Societe
Generale, Deutsche Bank A.G. and Mellon Bank, N.A., together with their
respective successors in the capacity of an "Issuing Bank".
"L/C Related Documents" means this Agreement and each other
agreement or instrument relating to any Letter of Credit, in each case as
hereafter amended, supplemented or otherwise modified from time to time.
"Lenders" means the Initial Lenders and each other Person that
becomes a "Lender" hereunder pursuant to Section 10.07. When reference is made
in this Agreement or any other Loan Document to any "relevant" Lender in
connection with either Facility, such reference shall be deemed to refer to a
Lender that has a Commitment or outstanding Advances under such Facility. Unless
the context clearly indicates otherwise, the term "Lenders" shall include each
Issuing Bank.
"Letter of Credit" has the meaning specified in Section
2.13(a).
"Letter of Credit Liability" means, at any time, all of the
liabilities of the Borrower to the Issuing Banks in respect of Letters of
Credit, whether such liability is contingent or fixed, and shall consist of the
sum of (a) the aggregate Available Amount of all Letters of Credit then
outstanding plus (b) the aggregate amount that has then been paid by, and has
not been reimbursed to, the Issuing Banks under Letters of Credit.
"Letter of Credit Sublimit" means $100,000,000.
"Leverage Ratio" means, (a) for any day during the period
commencing on the Closing Date to and including December 31, 1999, the ratio of
Total Debt on such date to Annualized Operating Cash Flow determined on a pro
forma basis as of such date, and (b) as at any subsequent date, the ratio of (x)
Total Debt on such date to (y) Annualized Operating Cash Flow on such date.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Partners Pledge Agreement, the Credit Party Pledge Agreement, each
Minority Owner Pledge Agreement and the Management Fee Subordination Agreement.
"Management Agreement" means the management agreement to be
entered into between the Borrower and the Manager as contemplated by Section
3.01(l) providing for management services to be provided by the Manager to the
Borrower and its Restricted Subsidiaries, as said management agreement shall,
subject to Section 6.14, be modified and supplemented and in effect from time to
time.
"Management Fee Subordination Agreement" means a Subordination
Agreement between the Manager, the Borrower and the Administrative Agent in
substantially the form of Exhibit F, as said Agreement shall, subject to Section
6.14, be modified and supplemented and in effect from time to time.
"Management Fees" means, for any period, the sum of all fees,
salaries, awards, bonuses and other compensation paid or incurred (in each case,
whether in cash or otherwise) by the Borrower and its Restricted Subsidiaries to
Affiliates (other than Affiliates that are employees of the Borrower and its
Restricted Subsidiaries) in respect of services rendered in connection with the
management or supervision of the Borrower and its Subsidiaries.
"Manager" means Chelsea Communications, LLC, a Delaware
limited liability company, or Century or any Affiliate of Century succeeding to
the rights and obligations of Chelsea Communications, LLC under the Management
Agreement.
"Margin Stock" has the meaning specified in Regulations U and
X.
"Material Adverse Effect" means (a) a material adverse effect
on the business, assets, operations, properties, condition (financial or
otherwise) or contingent liabilities of the Borrower and its Restricted
Subsidiaries, taken as a whole, (b) a material impairment of the ability of
either the Borrower or the Borrower and its Restricted Subsidiaries, taken as a
whole, to perform their respective obligations under the Loan Documents, or (c)
a material impairment of the rights of or benefits available to the
Administrative Agent and the Lenders under the Loan Documents.
"Maturity Date" means December 31, 2007, provided that if such
date is not a Business Day, the Maturity Date shall be the immediately preceding
Business Day.
"Minority Owner" means any Person, other than a Credit Party,
that owns less than 51% of the Capital Securities of any Restricted Subsidiary.
"Minority Owner Pledge Agreement" a Pledge Agreement to be
executed and delivered by a Minority Owner, in substantially the form of the
Credit Party Pledge Agreement with such changes as the Administrative Agent may
reasonably request, as said Agreement shall be modified and supplemented and in
effect from time to time.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Available Proceeds" means, in the case of any Asset Sale
or Asset Swap, the aggregate amount of all cash payments as and when received by
the Borrower and its Restricted Subsidiaries directly or indirectly in
connection with such Asset Sale or Asset Swap (as the case may be); provided
that:
(a) such Net Available Proceeds shall be net of (x) the amount
of any legal, accounting, title and recording tax expenses, commissions
and other reasonable fees and expenses (including reasonable expenses
of preparing the relevant property for sale) paid by the Borrower and
its Restricted Subsidiaries in connection with such Asset Sale or Asset
Swap (as the case may be) and (y) any Federal, state and local income
and other taxes estimated in good faith to be payable by the Borrower
and its Restricted Subsidiaries as a result of such Asset Sale or Asset
Swap (as the case may be);
(b) such Net Available Proceeds shall be net of any repayments
of Indebtedness by the Borrower and its Restricted Subsidiaries to the
extent that such Indebtedness is secured by a Lien on the property that
is the subject of such Asset Sale or Asset Swap (as the case may be)
and such Indebtedness is in fact repaid from the proceeds of such Asset
Sale or Asset Swap; and
(c) in the case of an Asset Sale or Asset Swap consisting of a
substantially contemporaneous exchange (including by way of a
substantially contemporaneous purchase and sale) of discrete assets the
Borrower and its Restricted Subsidiaries for one or more other assets
used for similar purposes, Net Available Proceeds shall be net of cash
payments made by the Borrower and its Restricted Subsidiaries in
connection with such exchange.
"New Affiliate Indebtedness" means Indebtedness of the
Borrower to one or more of its Affiliates incurred after the Closing Date in
accordance with the requirements of Section 6.01(h).
"non-appealable" includes, for purposes of Sections 2.11(c),
2.13(e) and 10.04(b), any judgment as to which all appeals have been taken or as
to which the time for taking an appeal shall have expired.
"Notes" means the Revolving Credit Notes and the Term Notes.
-----
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Issuance" has the meaning specified in Section
2.13(b)(i).
"Obligors" means, collectively, the Credit Parties and the
Pledgors party to the Partner Pledge Agreement and each Minority Owner Pledge
Agreement.
"OECD" means the Organization for Economic Cooperation and
Development.
"Operating Cash Flow" means, for any period, the sum (for the
Borrower and its Restricted Subsidiaries determined on a consolidated basis
without duplication in accordance with GAAP), of net income from operations plus
Interest Expense, interest accrued in respect of New Affiliate Indebtedness,
depreciation, amortization, income taxes and other non-cash expenses in
accordance with GAAP minus the portion of net income from operations (or plus
the portion of net loss from operations) allocable to minority interests in
Restricted Subsidiaries (to the extent not already deducted (or added) in
determining net income (or net loss) from operations).
Notwithstanding the foregoing, if during any period for which
Operating Cash Flow is being determined the Borrower or any of its Restricted
Subsidiaries shall have consummated any Acquisition, Asset Sale or Asset Swap,
or any capital contribution of CATV Systems or other property shall have been
made to the Borrower or any of its Restricted Subsidiaries, then, for all
purposes of this Agreement, Operating Cash Flow shall be determined on a pro
forma basis as if such Acquisition, Asset Sale, Asset Swap or capital
contribution (as the case may be) had been made or consummated on the first day
of such period.
"Other Taxes" has the meaning specified in Section 2.11(b).
"Partnership Agreement" means the partnership agreement
pursuant to which the Borrower has been formed, as said Agreement shall be
modified and supplemented and in effect from time to time.
"Partners" means Century-TCI California Communications, L.P.
and Century-TCI Holdings, L.L.C., and any other Person that shall at any time be
a general or limited partner of the Borrower.
"Partners Pledge Agreement" means a Pledge Agreement between
each Partner and the Administrative Agent, substantially in the form of Exhibit
H-1 hereto, as said Agreement shall be modified and supplemented and in effect
from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined
in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which the
Borrower or any corporation, trade or business that is, along with the Borrower,
a member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of Section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under Section 4069 of ERISA.
"Permitted Investments" means:
---------------------
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, one of the two highest credit ratings obtainable from
Standard & Poor's or from Moody's;
(c) investments in certificates of deposit, banker's
acceptances, time deposits and demand deposits maturing within one year
from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the
United States of America or any state thereof that has a combined
capital and surplus and undivided profits of not less than
$500,000,000;
(d) demand deposits made in the ordinary course of business
and consistent with the Borrower's customary cash management policy in
any domestic office of any commercial bank organized under the laws of
the United States of America or any state thereof;
(e) deposits issued by commercial banks of the type described
in clause (d) above and fully insured by the Federal Deposit Insurance
Corporation or similar federal agency;
(f) repurchase obligations with a term of not more than 90
days for, and secured by, underlying securities of the types described
in clauses (a) through (c) above entered into with a bank meeting the
qualifications described in clause (c) above;
(g) mutual funds whose investment guidelines restrict such
funds' investments primarily to those satisfying the provisions of
clauses (a) through (c) above; and
(h) other investment instruments approved in writing by the
Administrative Agent and offered by financial institutions which have a
combined capital and surplus and undivided profits of not less than
$500,000,000.
"Person" means any individual, corporation (including a
business trust), company, voluntary association, partnership, limited liability
company, joint venture, trust, unincorporated organization or Governmental
Authority or other entity of whatever nature.
"Pledge Agreements" means, collectively, the Partners Pledge
Agreement, the Credit Party Pledge Agreement and each Minority Owner Pledge
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.
"Pole Rental Lease" means any lease under which the Borrower
or any of its Restricted Subsidiaries has the right to use telephone or utility
poles, conduits or trenches for the purpose of supporting or housing cables of
any CATV System owned or operated by the Borrower or any of its Subsidiaries.
"Post-Default Rate" means (a) with respect to principal of or
interest on any Eurodollar Rate Advance, a rate per annum equal to 2% plus the
Applicable Margin plus (x) until the last day of the Interest Period for such
Advance, the Eurodollar Rate applicable to such Advance and (y) thereafter, the
Base Rate as in effect from time to time and (b) with respect to principal of
and interest on any Base Rate Advance, and on any other amount payable
hereunder, a rate per annum equal to 2% plus the Applicable Margin plus the Base
Rate as in effect from time to time.
"Principal Payment Date" means the Quarterly Dates falling on
or nearest to March 31, June 30, September 30, and December 31 of each year,
commencing with March 31, 2003 through and including December 31, 2007.
"Pro Forma Debt Service" means, as at the last day of any
fiscal quarter, the sum (for the Borrower and its Restricted Subsidiaries
determined on a consolidated basis without duplication in accordance with GAAP),
of (a) the aggregate amount of Interest Expense that will be payable during the
period of four fiscal quarters immediately following such fiscal quarter plus
(b) the aggregate outstanding principal amount of Revolving Credit Advances at
the beginning of such period, net of the Excess Cash Balance at the beginning of
such period, to the extent that such net amount of Revolving Credit Advances
shall exceed the maximum amount that will be available under the Revolving
Credit Commitment at the end of such period (which shall never be less than
zero) plus (c) with respect to Term Advances and any other debt, the required
amortization of principal thereof during such period.
For purposes hereof, the aggregate amount of Interest Expense
to be payable during any period shall be determined under the assumptions that
(i) the rate of interest applicable to any Indebtedness outstanding during such
period will be equal to the blended average rate of interest in effect on the
last day of the fiscal quarter immediately preceding the first day of such
period, (ii) the aggregate amount of Revolving Credit Advances outstanding
during such period will not change from the aggregate amount of Revolving Credit
Advances outstanding on such first day other than to reflect prepayments
required to be made upon reductions in the Revolving Credit Commitments
scheduled to be made during such period under Section 2.04(b)(ii), (iii) the
aggregate amount of Term Advances outstanding during such period will not change
from the aggregate amount of Term Advances outstanding on such first day other
than to reflect payments scheduled to be made during such period under Section
2.03(b) and (iv) Indebtedness outstanding on such first day will be deemed to be
reduced during such period as and when required to be reduced in order to comply
with Section 6.13(b) to the extent that the reductions referred to in the
foregoing clauses (ii) and (iii) will be insufficient to achieve such
compliance.
"Pro Forma Debt Service Coverage Ratio" means, as of the last
day of any fiscal quarter, the ratio of (a) Annualized Operating Cash Flow on
such date to (b) Pro Forma Debt Service on such date.
"Pro Rata Share" of any amount means, with respect to any
Lender under either Facility at any time, the product of (a) a fraction the
numerator of which is the amount of such Lender's Commitments under such
Facility (or, if such Commitments shall have expired or been terminated, the
amount of such Lender's Advances under such Facility), and the denominator of
which is the aggregate Commitments or Advances, as the case may be, under such
Facility at such time, multiplied by (b) such amount.
"Purchase Price" means, without duplication, with respect to
any Acquisition, an amount equal to the sum of (i) the aggregate consideration,
whether cash, property or securities (including, without limitation, any
Indebtedness incurred pursuant to Section 6.01(g)), paid or delivered by the
Borrower and its Restricted Subsidiaries in connection with such Acquisition
plus (ii) the aggregate amount of liabilities of the acquired business (net of
current assets of the acquired business) that would be reflected on a balance
sheet (if such were to be prepared) of the Borrower and its Restricted
Subsidiaries after giving effect to such Acquisition.
"Quarterly Dates" means March 31, June 30, September 30 and
December 31 in each year, the first of which shall be the first such day after
the Closing Date, provided that, if any such day is not a Business Day, the
relevant Quarterly Date shall be the immediately succeeding Business Day.
"Register" has the meaning specified in Section 10.07(c).
"Regulation U" and "Regulation X" mean Regulations U and X of
the Board of Governors of the Federal Reserve System, respectively, as in effect
from time to time.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the environment in violation of applicable
Environmental Laws or Environmental Permits.
"Remedial Action" means (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority, or voluntarily undertaken by the
Borrower or any of its Restricted Subsidiaries, to: (i) cleanup, remove, treat,
abate or in any other way address any Hazardous Material in the environment;
(ii) prevent the Release or threat of Release, or minimize the further Release
of any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the environment; or (iii) perform studies and
investigations in connection with, or as a precondition to, the actions referred
to in clause (i) or (ii) above.
"Required Lenders" means at any time Lenders holding in the
aggregate more than 51% of the sum of (1) the then aggregate unpaid principal
amount of the Advances plus (2) the then aggregate amount of all outstanding
Letter of Credit Liabilities plus (3) the then aggregate unused Term Commitments
and the Unused Revolving Credit Commitments, or, if no such amounts in (1) and
(2) are outstanding, the Lenders holding more than 51% of the Commitments.
"Required Revolving Credit Lenders" means at any time
Revolving Credit Lenders holding in the aggregate more than 51% of the sum of
(1) the then aggregate unpaid principal amount of the Revolving Credit Advances
plus (2) the then aggregate amount of all outstanding Letter of Credit
Liabilities plus (3) the then aggregate Unused Revolving Credit Commitments.
"Required Term Lenders" means at any time Lenders holding in
the aggregate more than 51% of the sum of (1) the then aggregate unpaid
principal amount of the Term Advances plus (2) the then aggregate unused Term
Commitments.
"Responsible Officer" means any officer of the Borrower
(including, without limitation, any Financial Officer of the Borrower).
"Restricted Investments" means any Investments to or in any
Person by the Borrower or any of its Restricted Subsidiaries (including any
Investments in Unrestricted Subsidiaries).
"Restricted Payment" means, collectively, (a) all
distributions (in cash, property or obligations) on, or other payments or
distributions on account of, or the setting apart of money for a sinking or
other analogous fund for, or the purchase, redemption, retirement or other
acquisition of, any portion of any partnership interest in the Borrower or
equity interest in any Restricted Subsidiary or of any warrants, options or
other rights to acquire any such partnership interest or equity interest (or to
make any payments to any Person, such as "phantom equity" payments, where the
amount thereof is calculated with reference to fair market or equity value of
the Borrower or any of its Restricted Subsidiaries), (b) any payments to any
holders of any partnership interests in the Borrower or equity interests in any
Restricted Subsidiary that are designed to reimburse such holders for the
payment of any taxes attributable to the operations of the Borrower and its
Restricted Subsidiaries, (c) any payments of principal of any Existing Affiliate
Indebtedness or New Affiliate Indebtedness, (d) any payments of interest on New
Affiliate Indebtedness (but not any payments of interest on Existing Affiliate
Indebtedness) and (e) any payments in respect of Management Fees that have been
deferred as provided in Section 6.10. Notwithstanding the foregoing, the term
"Restricted Payment" shall not include any dividend or distribution by any
Restricted Subsidiary to the Borrower or any other Restricted Subsidiary (but
shall include any such dividend or distribution to a Minority Owner).
"Restricted Transaction" means, collectively, all Restricted
Payments and Restricted Investments.
"Restricted Subsidiary" means any Subsidiary of the Borrower
other than an Unrestricted Subsidiary.
"Revolving Credit Advance" means an Advance made pursuant to
Section 2.01(a).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type.
"Revolving Credit Commitment" means, with respect to each
Lender, the commitment, if any, of such Lender to make Revolving Credit Advances
(expressed as the maximum aggregate amount of such Lender's Revolving Credit
Advances and the aggregate amount of such Lender's Pro Rata Share of the Letter
of Credit Liabilities that may be outstanding at any time), as such commitment
may be (a) reduced from time to time pursuant to Section 2.04 or 2.05 and (b)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 10.07. The initial amount of each Lender's Revolving
Credit Commitment is set forth on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Revolving Credit
Commitment, as applicable. The initial aggregate amount of the Lenders'
Revolving Credit Commitments is $500,000,000.
"Revolving Credit Commitment Reduction Dates" means the
Quarterly Dates falling on or nearest to March 31, June 30, September 30 and
December 31 of each year, commencing with March 31, 2003 through and including
September 30, 2007, provided that the final Revolving Credit Commitment
Reduction Date shall occur on December 31, 2007 (or, if such day is not a
Business Day, the next preceding Business Day).
"Revolving Credit Commitment Termination Date" means the
earlier of (a) the Maturity Date and (b) the termination or cancellation of the
Revolving Credit Commitments pursuant to the terms of this Agreement.
"Revolving Credit Facility" means the revolving credit
facility provided hereunder in respect of the aggregate Revolving Credit
Commitments.
"Revolving Credit Lender" means each Lender specified in
Schedule 2.01 (or in an Assignment and Acceptance pursuant to which it becomes a
Lender hereunder) as having a Revolving Credit Commitment and, after the
expiration or termination of the Revolving Credit Commitments, each Lender
holding a Revolving Credit Advance.
"Revolving Credit Note" means a promissory note of the
Borrower payable to the order of a Revolving Credit Lender, in substantially the
form of Exhibit A-1, as from time to time amended.
"Rigas Family" means John J. Rigas, Timothy J. Rigas, Michael
J. Rigas, James P. Rigas, Ellen K. Rigas, or any of their respective spouses,
estates, or lineal descendants, or any trust created for the direct and sole
benefit of any such Persons or, while and to the extent they are serving in such
capacity, the executors, administrators or personal representatives of such
Persons.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, 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, contingent liabilities, of such Person, (b) the fair value of the
assets of such Person on a going concern basis is not less than the amount that
will be required to pay the probable liability of such Person on its
Indebtedness as they become absolute and matured, (c) such Person does not
intend to, and does not believe that it will, incur Indebtedness or liabilities
beyond such Person's ability to pay as such Indebtedness 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 amount of capital. The portion of
contingent liabilities of any Person at any time that shall be included for
purposes of the above determinations shall be the amount of such contingent
liabilities that, in light of all facts and circumstances existing at such time,
could reasonably be expected to become actual matured liabilities of such
Person.
"Standard & Poor's" means Standard & Poor's Ratings Services,
a division of The McGraw-Hill Companies, Inc., and its successors.
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership or other entity of which
more than 50% of the outstanding Capital Securities having ordinary voting power
to elect the board of directors, managers or other voting members of the
governing body of such corporation, limited liability company, partnership or
other entity (irrespective of whether at the time securities (or other ownership
interests) of any other class or classes of such corporation, limited liability
company, partnership or other entity shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more other Subsidiaries of
such Person, or by one or more other Subsidiaries of such Person. Unless the
context otherwise specifically requires, the terms "Subsidiary", "Restricted
Subsidiary" and "Unrestricted Subsidiary" shall be references to a Subsidiary of
the Borrower.
"Tax Indemnitee" means each Issuing Bank, each Lender and the
Administrative Agent.
"TCI" means TCI California Holdings, L.L.C., a Delaware
limited liability company.
"Term Advance" means an advance made pursuant to Section
2.01(b).
"Term Borrowing" means a borrowing consisting of simultaneous
Term Advances of the same Type.
"Term Commitment" means, with respect to each Lender, the
commitment, if any, of such Lender to make a Term Advance on and after the
Closing Date to and including the Term Commitment Expiry Date (expressed as the
maximum principal amount of the Term Advance to be made by such Lender
hereunder), as such commitment may be (a) reduced from time to time pursuant to
Section 2.04 or 2.05 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 10.07. The initial amount
of each Lender's Term Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Term Commitment, as applicable. The initial aggregate amount of the Lenders'
Term Commitments is $500,000,000.
"Term Commitment Expiry Date" has the meaning specified in
Section 2.04(b)(i).
"Term Facility" means the term loan facility provided
hereunder in respect of the aggregate Term Commitments.
"Term Lender" means each Lender specified in Schedule 2.01 (or
in an Assignment and Acceptance pursuant to which it becomes a Lender hereunder)
as having a Term Commitment and, after the termination or expiration of the Term
Commitments, each Lender holding a Term Advance.
"Term Note" means a promissory note of the Borrower payable to
the order of a Term Lender, in substantially the form of Exhibit A-2, as from
time to time amended.
"Total Debt" means, as of any date as of which the amount
thereof is to be determined, all Indebtedness for borrowed money (excluding New
Affiliate Indebtedness), all obligations, contingent or otherwise, relative to
drawn or undrawn letters of credit or banker's acceptances, all Capital Lease
Obligations and any Guarantee of the Indebtedness of another, in each case of
the Borrower and its Restricted Subsidiaries (including Indebtedness under this
Agreement), less the Excess Cash Balance on the date of such determination.
"Type" refers to the distinction between Advances bearing
interest at the Base Rate and Advances bearing interest at the Eurodollar Rate.
"Unrestricted Subsidiaries" means any Subsidiary of the
Borrower that (a) shall have been designated as an "Unrestricted Subsidiary" in
accordance with the provisions of Section 6.04 and (b) any Subsidiary of an
Unrestricted Subsidiary.
"Unused Revolving Credit Commitment" means, with respect to
any Lender at any time, (a) such Lender's Revolving Credit Commitment at such
time minus (without duplication) (b) the sum of (i) the aggregate outstanding
principal amount of all Revolving Credit Advances made by such Lender and (ii)
such Lender's Pro Rata Share of the aggregate amount of all Letter of Credit
Liabilities.
"U.S. Dollars" and "$" means lawful money of the United States
of America.
"Welfare Plan" means a "welfare plan", as such term is defined
in Section 3(1) of ERISA.
"Wholly Owned Subsidiary" means, with respect to any Person,
any corporation, partnership or other entity of which all of the equity
securities or other ownership interests (other than, in the case of a
corporation, directors' qualifying shares) are directly or indirectly owned or
controlled by such Person or one or more Wholly Owned Subsidiaries of such
Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person. A "Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary of
the Borrower that is a Restricted Subsidiary.
Section 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
mean "to but excluding".
Section 1.03. Accounting Terms; Changes in GAAP. Except as
otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP. If the Borrower notifies the
Administrative Agent that the Borrower requests an amendment to any provision
hereof to eliminate the effect of any change occurring after the date hereof in
GAAP or in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required Lenders request an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have become effective
until such notice shall have been withdrawn or such provision amended in
accordance herewith.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
Section 2.01. The Advances.
------------
(a) Revolving Credit Facility. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances ("Revolving Credit Advances") to the Borrower from time to time on any
Business Day during the period from the Closing Date until the Revolving Credit
Commitment Termination Date in an aggregate amount at any one time outstanding
not to exceed the amount of such Lender's Revolving Credit Commitment, and, as
to all Lenders, in an aggregate amount at any one time outstanding not to exceed
$500,000,000. All Revolving Credit Advances shall be made by the Lenders ratably
according to their respective Revolving Credit Commitments.
Within the limits of each Lender's Revolving Credit Commitment
in effect from time to time, the Borrower may borrow under this Section 2.01(a)
and/or obtain the issuance of Letters of Credit under Section 2.13, prepay
Revolving Credit Advances pursuant to Section 2.05(a) and reborrow under this
Section 2.01(a); provided that the aggregate outstanding principal amount of
Revolving Credit Advances when added to the aggregate Letter of Credit Liability
may not at any time exceed the aggregate amount of the Revolving Credit
Commitments at such time.
(b) Term Facility. Each Term Lender severally agrees, on the
terms and conditions hereinafter set forth, to make an advance (collectively,
the "Term Advances") to the Borrower on a single date during the period from the
Closing Date to and including the Term Commitment Expiry Date in an aggregate
amount not to exceed such Lender's Term Commitment, and, as to all Term Lenders,
in an aggregate amount not to exceed $500,000,000. All Term Advances shall be
made by the Lenders ratably according to their respective Term Commitments. The
Borrower may prepay Term Advances pursuant to Section 2.05(a). Term Advances
once repaid or prepaid may not be reborrowed.
(c) Minimum Amounts. Each Borrowing shall be in an aggregate
amount at least equal to $5,000,000 or an integral multiple of $1,000,000 in
excess thereof.
(d) Use of Proceeds. The proceeds of the Revolving Credit
Advances shall be used (i) to fund distributions to Century and TCI in
connection with the contribution to the Borrower of the Contributed Systems,
(ii) to refinance existing indebtedness of the Borrower assumed by the Borrower
upon the contribution of such systems, (iii) to provide working capital from
time to time to the Borrower and its Subsidiaries, (iv) for other general
business purposes and (v) to pay certain fees and expenses, in each case as more
particularly described herein. The proceeds of the Term Advances shall be used
solely to repay Existing Affiliate Indebtedness (or, alternatively, if no
Existing Affiliate Indebtedness is assumed by the Borrower upon the contribution
to the Borrower of the Contributed Systems pursuant to the Contribution
Agreement, for any of the purposes described in clauses (i) and (ii) above).
(e) No Responsibility to Third Parties. Neither the
Administrative Agent nor any Lender nor any Issuing Bank shall have any
responsibility as to the application or use of any of the proceeds of any
Advance or the use of any Letter of Credit.
Section 2.02. Making the Advances.
(a) Notices of Borrowing. Except as otherwise provided in
Section 2.13, each Borrowing shall be made on notice, given not later than 12:00
noon (New York City time) on the Business Day of (or, with respect to a
Borrowing of Eurodollar Rate Advances, 12:00 noon (New York City time) on the
third Business Day prior to the date of) the proposed Borrowing, by the Borrower
to the Administrative Agent. Each such notice of a Borrowing (a "Notice of
Borrowing") shall be by telex, telecopier or cable, confirmed immediately in
writing, in substantially the form of Exhibit B, specifying therein (1) the
requested date of such Borrowing, (2) the Facility under which such Borrowing is
to be made, (3) the requested Type of Advances comprising such Borrowing, (4)
the requested aggregate amount of such Borrowing and (5) in the case of a
Borrowing consisting of Eurodollar Rate Advances, the requested initial Interest
Period therefor. The Borrower may request more than one Borrowing on any given
day, each individual Borrowing to comprise Advances of the same Type under the
same Facility on the same date.
The Administrative Agent shall give to each Lender prompt
notice of each Notice of Borrowing received from the Borrower and, in the case
of a proposed Borrowing comprised of Eurodollar Rate Advances, the applicable
interest rate under Section 2.06(a)(ii).
Each Lender shall, before 1:00 P.M. (New York City time) on
the date of each Borrowing, make available for the account of its Applicable
Lending Office to the Administrative Agent at the Administrative Agent's
Account, in same day funds, such Lender's ratable portion of such Borrowing.
After the Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Administrative Agent
will transfer same day funds to the Borrower's Account; provided that in the
case of any Revolving Credit Borrowing, the Administrative Agent shall first
make a portion of such funds equal to any unreimbursed drawings under any
Letters of Credit available to the respective Issuing Banks for reimbursement of
such drawing.
(b) Certain Limitations upon Eurodollar Rate Advances.
Anything in paragraph (a) above to the contrary notwithstanding, (i) the
Borrower may not select Eurodollar Rate Advances (1) for any Borrowing if the
aggregate amount of such Borrowing is less than $5,000,000 or (2) if the
obligation of the relevant Lenders to make Eurodollar Rate Advances shall then
be suspended pursuant to Section 2.08 or 2.09, and (ii) Eurodollar Rate Advances
may not be outstanding under more than 20 separate Interest Periods at any one
time.
(c) Notices Irrevocable; Breakfunding. Each Notice of
Borrowing shall be irrevocable and binding on the Borrower. In the case of any
Borrowing that the related Notice of Borrowing specifies is to be comprised of
Eurodollar Rate Advances, the Borrower shall indemnify each relevant Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of Borrowing
the applicable conditions set forth in Article III, including, without
limitation, any loss (excluding loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender as part of
such Borrowing when such Advance, as a result of such failure, is not made on
such date.
(d) Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a relevant Lender prior to
1:00 p.m. (New York City time) on the date of any Borrowing that such Lender
will not make available to the Administrative Agent such Lender's ratable
portion of such Borrowing, the Administrative Agent may assume that such Lender
has made such portion available to the Administrative Agent on the date of such
Borrowing in accordance with Section 2.02(a) and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent and the
Administrative Agent shall have made available such corresponding amount to the
Borrower, such Lender and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Administrative Agent,
at (i) in the case of the Borrower, the interest rate applicable at such time
under Section 2.06 to Advances comprising such Borrowing and (ii) in the case of
such Lender, the Federal Funds Rate (it being understood that repayments by the
Borrower pursuant to this sentence shall not be subject to Sections 2.05(a) and
10.04(c)). If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Lender's
Advance as part of such Borrowing for purposes of this Agreement.
(e) Obligations of Lenders Several. The failure of any Lender
to make the Advance to be made by it as part of any Borrowing shall not relieve
any other Lender of its obligation, if any, hereunder to make its Advance on the
date of such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on the date
of any Borrowing.
Section 2.03. Repayment.
---------
(a) Revolving Credit Advances. The Borrower hereby promises to
pay to the Administrative Agent for the account of each Revolving Credit Lender
the entire outstanding principal amount of such Lender's Revolving Credit
Advances, and each Revolving Credit Advance shall mature, on the Revolving
Credit Commitment Termination Date.
(b) Term Advances. The Borrower hereby promises to pay to the
Administrative Agent for the account of each Term Lender the outstanding
principal amount of such Lender's Term Advances on each Principal Payment Date
set forth below in the aggregate principal amount set forth opposite such
Principal Payment Date:
<TABLE>
<CAPTION>
Principal Payment Date
on or nearest to Principal Amount
<S> <C>
March 31, 2003 $13,750,000
June 30, 2003 $13,750,000
September 30, 2003 $13,750,000
December 31, 2003 $13,750,000
March 31, 2004 $18,750,000
June 30, 2004 $18,750,000
September 30, 2004 $18,750,000
December 31, 2004 $18,750,000
March 31, 2005 $27,500,000
June 30, 2005 $27,500,000
September 30, 2005 $27,500,000
December 31, 2005 $27,500,000
March 31, 2006 $31,250,000
June 30, 2006 $31,250,000
September 30, 2006 $31,250,000
December 31, 2006 $31,250,000
March 31, 2007 $33,750,000
June 30, 2007 $33,750,000
September 30, 2007 $33,750,000
December 31, 2007 $33,750,000
</TABLE>
If the Borrower does not borrow the full amount of the Term Commitments on or
before the Term Commitment Expiry Date, or if the Term Commitments are reduced
prior to the Term Commitment Expiry Date, the shortfall or reduction shall be
applied to reduce the foregoing scheduled repayments ratably.
(c) All Advances. All repayments of principal under this
Section 2.03 shall be made together with interest accrued to the date of such
repayment on the principal amount repaid.
Section 2.04. Termination or Reduction of the Commitments.
(a) Optional. The Borrower may at any time or from time to
time, upon not less than three Business Days' notice to the Administrative
Agent, terminate in whole or reduce in part the Commitments under either
Facility, provided that (i) each partial reduction of the Commitments under such
Facility shall be in an aggregate amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof (and, in the case of a reduction of Revolving
Credit Commitments, shall be applied to the installments thereof set forth in
Section 2.04(b)(ii) ratably in accordance with the respective principal amounts
thereof) and (ii) the aggregate amount of the Revolving Credit Commitments shall
not be reduced below an amount equal to the sum of (x) the aggregate outstanding
principal amount of all Revolving Credit Advances plus (y) the aggregate amount
of all Letter of Credit Liabilities.
(b) Mandatory.
(i) Termination of Commitments. The Revolving Credit
Commitments shall be automatically and permanently reduced to zero on the
Revolving Credit Commitment Termination Date. The unused Term Commitments shall
be automatically and permanently reduced to zero at the close of business on the
earlier of (x) the date upon which the Term Advances are made and (y) date (the
"Term Commitment Expiry Date") which is 364 days after the date hereof.
(ii) Reductions of Revolving Credit Commitments. The aggregate
amount of the Revolving Credit Commitments shall be automatically reduced at the
close of business on each Revolving Credit Commitment Reduction Date set forth
below to the amount set forth below opposite such Revolving Credit Commitment
Reduction Date:
<TABLE>
<CAPTION>
Revolving Credit Commitment Revolving Credit Commitment
Reduction Date Falling On Reduced to the
Or Nearest To: Following Amounts:
-------------- ------------------
<S> <C>
March 31, 2003 $ 486,250,000
June 30, 2003 $ 472,500,000
September 30, 2003 $ 458,750,000
December 31, 2003 $ 445,000,000
March 31, 2004 $ 426,250,000
June 30, 2004 $ 407,500,000
September 30, 2004 $ 388,750,000
December 31, 2004 $ 370,000,000
March 31, 2005 $ 342,500,000
June 30, 2005 $ 315,000,000
September 30, 2005 $ 287,500,000
December 31, 2005 $ 260,000,000
March 31, 2006 $ 228,750,000
June 30, 2006 $ 197,500,000
September 30, 2006 $ 166,250,000
December 31, 2006 $ 135,000,000
March 31, 2007 $ 101,250,000
June 30, 2007 $ 67,500,000
September 30, 2007 $ 33,750,000
December 31, 2007 $ 0
</TABLE>
(c) Reductions Pro Rata; No Reinstatements. Each reduction of
the Commitments under a Facility shall be applied to the respective Commitments
of the Lenders according to their respective Pro Rata Shares of such Facility.
Commitments once terminated or reduced may not be reinstated.
Section 2.05. Prepayments, Etc.
(a) Optional Prepayments. The Borrower may, upon at least
three Business Days' notice (in the case of prepayment of Eurodollar Rate
Advances) or upon notice given on the date of prepayment (in the case of
prepayments of Base Rate Advances) to the Administrative Agent (which notice
shall state the Facility to be prepaid and the proposed date and aggregate
principal amount of the prepayment), and if such notice is given the Borrower
shall, prepay the outstanding principal amount of the Advances under the
specified Facility in the aggregate amount and on the date specified in such
notice, together with accrued interest to the date of such prepayment on the
principal amount prepaid; provided that (x) each partial prepayment shall be in
an aggregate principal amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, (y) any such prepayment of a Eurodollar Rate
Advance other than on the last day of the Interest Period therefor shall be
accompanied by, and subject to, the payment of any amount payable under Section
10.04(c) in respect of such prepayment and (z) each such notice shall be made on
the relevant day not later than 12:00 noon (New York City time).
(b) Mandatory Prepayments; Commitment Reductions.
(i) Asset Sales and Asset Swaps. Without limiting the
obligation of the Borrower to obtain the consent of the Required
Lenders pursuant to Section 6.07 to an Asset Sale or an Asset Swap not
otherwise permitted hereunder, on the date twelve months after the
consummation of any Asset Sale or Asset Swap the Borrower shall prepay
the Advances (and/or cash collateralize Letter of Credit Liabilities in
the manner specified in Section 2.05(d)), and the Revolving Credit
Commitments shall be subject to automatic reduction, in an aggregate
amount equal to the Net Available Proceeds of such Asset Sale or Asset
Swap (as the case may be); provided that no prepayment shall be
required pursuant to this clause (i) with respect to:
(1) any sale, lease, assignment, transfer or other
disposition of inventory, obsolete or worn out assets, scrap,
Permitted Investments and cash and cash equivalents, in each
case if disposed of in the ordinary course of business for
fair value; and
(2) any Asset Sale or Asset Swap to the extent the
Net Available Proceeds thereof have been reinvested in one or
more CATV Systems and related assets within the twelve-month
period following the date of such Asset Sale or Asset Swap, as
the case may be.
(ii) Issuance of Indebtedness. Upon any issuance of senior
unsecured or subordinated Indebtedness pursuant to Section 6.01(g), the
Borrower will prepay the Advances, and the Revolving Credit Commitments
shall be subject to reduction, as provided in Section 6.01(g).
(iii) Change in Control. Upon the occurrence of a Change in
Control (unless otherwise consented to by the Required Lenders), the
Borrower shall prepay all Advances in full, the Commitments shall be
automatically and permanently reduced to zero and the Borrower shall
cash collateralize Letter of Credit Liabilities (less any portion
thereof for which the Borrower has provided an alternate letter of
credit acceptable to each Issuing Bank and the Administrative Agent) in
the manner specified in Section 2.05(d).
(c) Application. Prepayments of the Term Advances pursuant to
Section 2.05(a) shall be applied ratably to the remaining installments thereof
in accordance with the respective principal amounts of such installments.
Prepayments pursuant to Sections 2.05(b)(i) and 2.05(b)(ii) shall be applied
first to the prepayment of the Term Advances, ratably to the remaining
installments thereof in accordance with the respective principal amounts of such
installments, second, after the prepayment in full of the Term Advances, to the
prepayment of outstanding Revolving Credit Advances, with pro tanto reductions
of the Revolving Credit Commitments (which shall be applied to the installments
thereof set forth in Section 2.04(b)(ii) ratably in accordance with the
respective principal amounts thereof) and finally to cash collateralize Letter
of Credit Liabilities in the manner specified in paragraph (d) below.
(d) Cash Collateral for Letter of Credit Liabilities. In the
event that the Borrower shall be required pursuant to Section 2.05(b) to cash
collateralize Letter of Credit Liabilities, the Borrower shall effect the same
by paying to the Administrative Agent same day funds in an amount equal to the
required amount, which funds shall be deposited in a segregated account with the
Administrative Agent until such time as the Letters of Credit shall have been
terminated and all of the Letter of Credit Liabilities paid in full.
(e) Terms Applicable to All Prepayments. All prepayments under
this Section 2.05 shall be made together with accrued interest to the date of
such prepayment on the principal amount prepaid. Each prepayment of Advances
under this Section 2.05 shall be made for the account of the relevant Lenders
according to their respective Pro Rata Shares of the principal amount of the
Advances then outstanding under the relevant Facility.
Section 2.06. Interest.
(a) Ordinary Interest. The Borrower shall pay interest on the
unpaid principal amount of each Advance owing to each Lender from the date of
such Advance until such principal amount shall be paid in full, at the following
rates per annum:
(i) Base Rate Advances. While such Advance is a Base Rate
Advance, a rate per annum equal at all times to the sum of (1) the Base
Rate in effect from time to time plus (2) the Applicable Margin in
effect from time to time, payable in arrears quarterly on each
Quarterly Date and on the date such Base Rate Advance shall be
Converted (but only on the amount Converted) or paid in full.
(ii) Eurodollar Rate Advances. While such Advance is a
Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period for such Advance to the sum of (1) the Eurodollar
Rate for such Interest Period for such Advance plus (2) the Applicable
Margin in effect from time to time, payable in arrears on the last day
of such Interest Period and, if such Interest Period has a duration of
more than three months, on each three-month anniversary of the first
day of such Interest Period occurring during such Interest Period.
(b) Post-Default Interest. In the event that the Borrower
shall fail to pay any amount when due hereunder or under any Note then, during
the period from the date upon which such amount shall have become due until the
date such amount shall be paid in full, the Borrower shall, notwithstanding
anything else in this Agreement to the contrary, pay to the Administrative Agent
for the account of each Lender interest on such amount at the applicable
Post-Default Rate, such interest to be payable from time to time on demand.
Section 2.07. Fees.
(a) Commitment Fee. The Borrower hereby promises to pay to the
Administrative Agent for the account of each Term Lender and Revolving Credit
Lender a commitment fee, in an amount equal to the Applicable Commitment Fee
Rate calculated on the average daily unused Term Commitment and Unused Revolving
Credit Commitment of such Lender (such daily average to be calculated for the
period for which the commitment fee is then payable) for the period from the
Closing Date (or from the effective date specified in the Assignment and
Acceptance pursuant to which it became a Lender in the case of each other Lender
other than the Initial Lenders) until the Term Commitment Expiry Date and the
Revolving Credit Commitment Termination Date (as the case may be), payable in
arrears (x) quarterly after the date of this Agreement on each Quarterly Date,
(y) in the case of commitment fee payable on the Term Commitments, on the Term
Commitment Expiry Date and (z) in the case of the Revolving Credit Commitments,
on the Revolving Credit Commitment Termination Date.
(b) Letter of Credit Commission, Etc. The Borrower hereby
promises to pay to the Administrative Agent (A) for the account of each Issuing
Bank a non-refundable fronting fee of 1/4 of 1% per annum of the face amount of
each Letter of Credit issued by such Issuing Bank for the period from the date
of issuance thereof until such Letter of Credit has been drawn in full, expires
or is terminated and (B) for the account of each Lender a non-refundable
commission on such Lender's Pro Rata Share of the average daily aggregate
Available Amount of all Letters of Credit then outstanding at the Applicable
Letter of Credit Fee Rate, such fees to be payable in arrears on each Quarterly
Date and on the Revolving Credit Commitment Termination Date and calculated, for
any day, after giving effect to any payments made under such Letter of Credit on
such day.
(c) Letter of Credit Expenses. The Borrower shall pay to each
Issuing Bank, for its own account, such commission, issuance fees, transfer fees
and other fees and charges in connection with the issuance or administration of
the Letters of Credit issued by such Issuing Bank as the Borrower and such
Issuing Bank shall agree.
Section 2.08. Conversion and Continuation of Advances.
(a) Optional Conversion. The Borrower may on any Business Day,
upon notice given to the Administrative Agent not later than 12:00 noon (New
York City time) on the third Business Day prior to the date of the proposed
Conversion and subject to the provisions of Section 2.09, Convert all or any
portion of the Advances of one Type outstanding under a Facility (and, in the
case of Eurodollar Rate Advances, having the same Interest Period) into Advances
of the other Type under such Facility; provided that any Conversion of
Eurodollar Rate Advances into Base Rate Advances shall be made only on the last
day of an Interest Period for such Eurodollar Rate Advances, any Conversion of
Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less
than $5,000,000 or integral multiples of $1,000,000 in excess thereof and no
Conversion of any Advances shall result in a more than 20 separate Interest
Periods being outstanding. Each such notice of Conversion shall, within the
restrictions specified above, specify (i) the date of such Conversion, (ii) the
aggregate amount, Type and Facility of the Advances (and, in the case of
Eurodollar Rate Advances, the Interest Period therefor) to be Converted and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of the
initial Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower.
(b) Certain Mandatory Conversions.
(i) On the date on which the aggregate unpaid principal amount
of Eurodollar Rate Advances comprising any Borrowing shall be reduced,
by payment or prepayment or otherwise, to less than $5,000,000 such
Advances shall automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any outstanding Eurodollar Rate Advances in
accordance with the provisions contained in the definition of "Interest
Period" in Section 1.01 and in clause (a) or (c) of this Section 2.08,
the Administrative Agent will forthwith so notify the Borrower and the
relevant Lenders, whereupon each such Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period
therefor, Convert into a Base Rate Advance.
(iii) Upon the occurrence and during the continuance of any
Event of Default and upon notice from the Administrative Agent to the
Borrower at the request of the Required Lenders, (x) each Eurodollar
Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (y) the
obligation of the Lenders to make, or to Convert Advances into, or to
Continue, Eurodollar Rate Advances shall be suspended.
(c) Continuations. The Borrower may, on any Business Day, upon
notice given to the Administrative Agent not later than 12:00 noon (New York
City time) on the third Business Day prior to the date of the proposed
Continuation and subject to the provisions of Section 2.09, Continue all or any
portion of the Eurodollar Rate Advances outstanding under a Facility having the
same Interest Period as such Eurodollar Rate Advances; provided that any such
Continuation shall be made only on the last day of an Interest Period for such
Eurodollar Rate Advances, any Continuation of Eurodollar Rate Advances shall be
in an amount not less than $5,000,000 and no Continuation of any Eurodollar Rate
Advances shall result in more than 20 separate Interest Periods being
outstanding. Each such notice of Continuation shall, within the restrictions
specified above, specify (i) the date of such Continuation, (ii) the aggregate
amount and Facility of, and the Interest Period for, the Advances being
Continued and (iii) the duration of the initial Interest Period for the
Eurodollar Rate Advances subject to such Continuation. Each notice of
Continuation shall be irrevocable and binding on the Borrower.
Section 2.09. Increased Costs, Illegality, Etc.
(a) Change in Law. If, due to either (i) the introduction of
or any change in or in the interpretation of (to the extent any such
introduction or change occurs after the date hereof) any law or regulation or
(ii) the compliance with any guideline or request from any central bank or other
governmental authority adopted or made after the date hereof (whether or not
having the force of law), there shall be any increase in the cost to any Lender
of agreeing to make or making, funding or maintaining Eurodollar Rate Advances
under any Facility, then the Borrower shall from time to time, upon demand by
such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost; provided that,
before making any such demand, each Lender agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions) to
designate a different Applicable Lending Office if the making of such a
designation would avoid the need for, or reduce the amount of, such increased
cost and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender. A certificate as to the amount of such increased
cost, submitted to the Borrower by such Lender, shall be conclusive and binding
for all purposes, absent manifest error.
(b) Capital Requirements. If any Lender determines in good
faith that compliance with any law or regulation enacted or introduced after the
date hereof or any guideline or request from any central bank or other
governmental authority adopted or made after the date hereof (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Lender or any corporation controlling such
Lender and that the amount of such capital is increased by or based upon the
existence of such Lender's commitment to lend hereunder and other commitments of
this type or the issuance of the Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender (with a copy of such demand to
the Administrative Agent), the Borrower shall pay to the Administrative Agent
for the account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder or to the issuance or maintenance of any Letters of Credit. A
certificate as to such amounts submitted to the Borrower by such Lender, shall
be conclusive and binding for all purposes, absent manifest error.
(c) Rates Not Covering Costs. If, with respect to any
Eurodollar Rate Advances, the Required Revolving Credit Lenders or Required Term
Lenders (as applicable) reasonably determine and notify the Administrative Agent
that the Eurodollar Rate for any Interest Period for such Advances will not
adequately reflect the cost to such Required Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances for such Interest Period,
the Administrative Agent shall forthwith so notify the Borrower and the Lenders,
whereupon (x) each Eurodollar Rate Advance will automatically, on the last day
of any then existing Interest Period therefor, Convert to a Base Rate Advance,
and (y) the obligation of the Lenders to make, or to Convert Advances into, or
to Continue, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and such Lenders that the
circumstances causing such suspension no longer exist.
(d) Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of or any change in or in the interpretation of
(to the extent any such introduction or change occurs after the date hereof) any
law or regulation shall make it unlawful, or any central bank or other
governmental authority having appropriate jurisdiction shall assert in writing
after the date hereof that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance of such
Lender will automatically, upon such demand, Convert to a Base Rate Advance and
(ii) the obligation of such Lender to make, or to Convert Advances into, or to
Continue, Eurodollar Rate Advances shall be suspended until the Administrative
Agent shall notify the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist; provided that, before
making any such demand, such Lender agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different Eurodollar Lending Office if the making of such a designation would
allow such Lender or its Eurodollar Lending Office to continue to perform its
obligations to make Eurodollar Rate Advances or to continue to fund or maintain
Eurodollar Rate Advances and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
(e) Excluded Periods. The Borrower shall not be obligated to
pay any additional amounts arising pursuant to clauses (a) and (b) of this
Section 2.09 that are attributable to the Excluded Period with respect to such
additional amount; provided that if an applicable law, rule, regulation,
guideline or request shall be adopted or made on any date and shall be
applicable to the period (a "S2.09(e) Retroactive Period") prior to the date on
which such law, rule, regulation, guideline or request is adopted or made, the
limitation on the Borrower's obligation to pay such additional amounts hereunder
shall not apply to the additional amounts payable in respect of such S2.09(e)
Retroactive Period so long as the Borrower receives written notice of such law,
rule, regulation, guideline or request from the Administrative Agent or any
Lender within 180 days after its adoption.
Section 2.10. Payments and Computations.
(a) Manner of Payments. The Borrower shall make each payment
hereunder and under the Notes not later than 12:00 noon (New York City time) on
the day when due in U.S. Dollars to the Administrative Agent at the
Administrative Agent's Account in same day funds and without deduction, set-off
or counterclaim. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or
commitment fees under or in respect of a particular Facility ratably (other than
amounts payable pursuant to Section 2.09(a), 2.09(b), 2.11, 2.13(d) or 10.04(c),
or amounts payable to any Issuing Bank in respect of Letters of Credit) to the
relevant Lenders for the account of their Applicable Lending Offices, and like
funds relating to the payment of any other amount payable to any Lender to such
Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Upon its acceptance of
an Assignment and Acceptance and recording of the information contained therein
in the Register pursuant to Section 10.07(d), from and after the effective date
of such Assignment and Acceptance, the Administrative Agent shall make all
payments hereunder and under the Notes in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.
(b) Presumption as to Allocation of Funds. If the
Administrative Agent receives funds for application to the obligations under the
Loan Documents under circumstances for which the Loan Documents do not specify
the Advances or the Facility to which, or the manner in which, such funds are to
be applied, and the Borrower has not otherwise directed how such funds are to be
applied (which direction is consistent with the terms of the Loan Documents),
the Administrative Agent may, but shall not be obligated to, elect to distribute
such funds to each Lender ratably in accordance with such Lender's proportionate
share of the principal amount of all outstanding Revolving Credit Advances, then
to such Lender's proportionate share of the principal amount of all outstanding
Term Advances and then to the Available Amount of all Letters of Credit then
outstanding, in repayment or prepayment of such of the outstanding Advances or
other obligations owed to such Lender, and for application to such principal
installments, as the Administrative Agent shall direct.
(c) Charging of Accounts. The Borrower hereby authorizes each
Lender, if and to the extent payment owed to such Lender is not made by the
Borrower when due hereunder or under any Note held by such Lender, to charge
from time to time against any or all of the Borrower's accounts with such Lender
any amount so due (with notice to the Administrative Agent and the Borrower
promptly following such charge).
(d) Computations. All computations of interest and Letter of
Credit commissions shall be made by the Administrative Agent on the basis of a
year of 360 days (or, in the case of Base Rate Advances bearing interest based
upon clause (a) in the definition of "Base Rate" in Section 1.01, 365 or 366
days, as the case may be), and all computations of commitment fees shall be made
by the Administrative Agent on the basis of a year of 365 days, in each case for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest, fees or commissions are
payable. Each determination by the Administrative Agent of an interest rate, fee
or commission hereunder made in accordance with the provisions of this Agreement
shall be conclusive and binding for all purposes, absent manifest error.
(e) Payments Due on Non-Business Days. Whenever any payment
hereunder or under the Notes 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 in such case be included in the computation of
payment of interest or commitment fee, as the case may be; provided that, if
such extension would cause payment of interest on or principal of Eurodollar
Rate Advances to be made in the next following calendar month, such payment
shall be made on the immediately preceding Business Day.
(f) Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due to any Lender hereunder that the Borrower will
not make such payment in full, the Administrative Agent may assume that the
Borrower has made such payment in full to the Administrative Agent on such date
and the Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each such Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Administrative Agent, each such Lender shall repay
to the Administrative Agent forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Rate.
Section 2.11. Taxes.
(a) Payments to be Made Free of Taxes. Any and all payments by
each Credit Party hereunder or under the Notes shall be made, in accordance with
Section 2.10, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Tax Indemnitee,
income and franchise taxes and general taxes on capital imposed on such Tax
Indemnitee by a jurisdiction as a result of such Tax Indemnitee being organized
under the laws of such jurisdiction (or a political subdivision thereof) or of
its principal office or Applicable Lending Office being located in such
jurisdiction (or a political subdivision thereof) (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If a Credit Party shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Tax Indemnitee, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.11) such Tax
Indemnitee receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Credit Party shall make such deductions and
(iii) such Credit Party shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) Other Taxes. In addition, each Credit Party agrees to pay
any present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made by it
hereunder or under the Notes or from the execution, delivery or registration of
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) Indemnification by Credit Parties. Each Credit Party will
indemnify each Tax Indemnitee for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.11) paid by such Tax
Indemnitee and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto; provided that the
Credit Parties shall not be liable for any such Taxes, Other Taxes or liability
that is found in a final, non-appealable judgment to have resulted from (1) the
gross negligence or willful misconduct of such Tax Indemnitee or (2) the failure
by the Administrative Agent to perform any of its obligations under this
Agreement (but only to the extent such failure is found in a final,
non-appealable judgment to have resulted from the gross negligence or willful
misconduct of the Administrative Agent). This indemnification shall be made
within 30 days from such date such Tax Indemnitee makes written demand therefor.
(d) Delivery of Evidence of Payment. Within 30 days after the
date of any payment of Taxes, each Credit Party will furnish to the
Administrative Agent, at its address referred to in Section 10.02, appropriate
evidence of payment thereof. If such Credit Party shall make a payment hereunder
or under the Notes through an account or branch outside the United States, or a
payment is made on behalf of such Credit Party by a payor that is not a United
States Person, such Credit Party will, if no taxes are payable in respect of
such payment, furnish, or will cause such payor to furnish, to the
Administrative Agent, at such address, a certificate from the appropriate taxing
authority or authorities, or an opinion of counsel acceptable to the
Administrative Agent, in either case stating that such payment is exempt from or
not subject to Taxes. For purposes of this subsection (d) and subsection (e),
the terms "United States" and "United States Person" has the meanings specified
in Section 7701 of the Code.
(e) Certain Obligations of Non-U.S. Lenders. Each Lender
organized under the laws of a jurisdiction outside the United States shall, on
or prior to the date of its execution and delivery of this Agreement (in the
case of each Initial Lender) and on the date of the Assignment and Acceptance
pursuant to which it became a Lender (in the case of each other Lender), and
from time to time thereafter if requested in writing by the Borrower or the
Administrative Agent or promptly upon the occurrence of any event requiring a
change in the last form delivered by such Lender (but, in each case, only so
long as such Lender remains lawfully able to do so after the date such Lender
becomes a Lender hereunder), provide the Administrative Agent and the Borrower
with either (i) Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue Service, certifying that
such Lender is entitled to benefits under an income tax treaty to which the
United States is a party that reduces the rate of withholding tax on payments
under this Agreement and the Notes or certifying that the income receivable
pursuant to this Agreement and the Notes is effectively connected with the
conduct of a trade or business in the United States or (ii) Internal Revenue
Service form W-8, upon which the Borrower is entitled to rely, from a Lender
that has not at the time such Lender becomes a Lender hereunder been named in
any notice issued by the Secretary of the Treasury (or such Secretary's
authorized delegate) pursuant to Sections 881(c)(2)(B) or 871(h)(5) of the Code,
or any successor form or statement prescribed by the Internal Revenue Service in
order to establish that such Lender is entitled to treat the interest payments
under this Agreement and the Notes as portfolio interest that is exempt from
withholding tax under the Code, together with a certificate stating that such
Lender is not described in Section 881(c)(3) of the Code.
If the form provided by a Lender at the time such Lender first
becomes a party to this Agreement indicates a United States interest withholding
tax rate in excess of zero (or if the Lender cannot provide at such time such
form because it is not entitled to reduced withholding under a treaty, the
payments are not effectively connected income and the payments do not qualify as
portfolio interest), withholding tax at such rate (or at the then existing U.S.
statutory rate if the Lender cannot provide the form) shall be excluded from
Taxes unless and until such Lender provides the appropriate form certifying that
a lesser rate applies, whereupon withholding tax at such lesser rate only shall
be excluded from Taxes for periods governed by such form; provided that, if at
the date of the Assignment and Acceptance pursuant to which a Lender assignee
becomes a party to this Agreement, the Lender assignor was entitled to payments
under subsection (a) in respect of United States withholding tax with respect to
interest paid at such date, then, to the extent such tax results in liability
for such payments, the term Taxes shall include (in addition to withholding
taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States interest withholding tax, if any, applicable with respect
to the Lender assignee on such date.
(f) Limitation upon Indemnification of Non-U.S. Lenders. For
any period with respect to which a Lender has failed to provide the Borrower and
the Administrative Agent with the appropriate form described in Section 2.11(e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under paragraph (e) above), such Lender shall not be entitled to
indemnification under paragraph (a) or (c) above with respect to Taxes imposed
by the United States.
(g) Mitigation. Any Lender claiming any additional amounts
payable pursuant to this Section 2.11 shall use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office(s) if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender.
(h) Survival. Without prejudice to the survival of any other
agreement of the Credit Parties hereunder, the agreements and obligations of the
Credit Parties contained in this Section 2.11 shall survive the payment in full
of principal and interest hereunder and under the Notes.
Section 2.12. Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances owing to it under
either Facility (other than pursuant to Section 2.09(a), 2.09(b), 2.11, 2.13(d)
or 10.04(c), or payments to any Issuing Bank in respect of Letters of Credit) in
excess of its ratable share of payments on account of the Advances under such
Facility obtained by all the relevant Lenders, such Lender shall forthwith
purchase from the other relevant Lenders such participations in the Advances
under such Facility owing to them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them; provided that if
all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each relevant Lender shall be rescinded
and such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.12
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
Section 2.13. Letters of Credit.
(a) Issuance of Letters of Credit, Etc. On and after the
Closing Date the Borrower may request any Issuing Bank to issue or have
outstanding, on the terms and conditions hereinafter set forth, letters of
credit for the account of the Borrower or its Restricted Subsidiaries (the
"Letters of Credit") from time to time on any Business Day during the period
from the Closing Date until the date 90 days prior to the Revolving Credit
Commitment Termination Date; provided that:
(i) the aggregate Available Amount of all Letters of Credit
shall not exceed at any time the Letter of Credit Sublimit and the
aggregate outstanding principal amount of all Revolving Credit Advances
when added to the aggregate amount of Letter of Credit Liabilities
shall not at any time exceed the aggregate amount of Revolving Credit
Commitments;
(ii) no Letter of Credit shall have an expiration date later
than, or shall permit the account party or the beneficiary to require
the renewal thereof to a date beyond, the earlier of (x) the date one
year after the issuance thereof and (y) the date five Business Days
prior to the Revolving Credit Commitment Termination Date, provided
that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no
event extend beyond the date referred to in the foregoing clause (y).
On each day during the period commencing with the issuance by any Issuing Bank
of any Letter of Credit and until such Letter of Credit shall have been drawn in
full or expired or been terminated, the Revolving Credit Commitment of each
Lender shall be deemed to be utilized for all purposes of this Agreement in an
amount equal to such Lender's Pro Rata Share of the then undrawn amount of such
Letter of Credit. Each Letter of Credit shall be denominated and payable in U.S.
Dollars.
(b) Request for Issuance.
(i) Notices of Issuance. Each Letter of Credit shall be issued
upon notice, given not later than 1:00 P.M. (New York City time) three
Business Days prior to the date of the proposed issuance of such Letter
of Credit, by the Borrower to any Issuing Bank and the Administrative
Agent, which shall give to each Lender prompt notice thereof by telex
or telecopier. Each such notice of issuance of a Letter of Credit (a
"Notice of Issuance") shall be by telex or telecopier, confirmed
promptly in writing, specifying therein (A) the requested date of such
issuance (which shall be a Business Day), (B) the Available Amount
requested for such Letter of Credit, (C) the identity of the Issuing
Bank with respect to such Letter of Credit, (D) the expiration date of
such Letter of Credit, (E) the account party or parties for such Letter
of Credit, (F) the name and address of the beneficiary of such Letter
of Credit and (G) the form of such Letter of Credit, together with a
description of the nature of the transactions or obligations proposed
to be supported thereby. If the requested form of such Letter of Credit
is acceptable to such Issuing Bank in its sole discretion, such Issuing
Bank will, upon fulfillment of the applicable conditions set forth in
Article III, make such Letter of Credit available to the Borrower at
its office referred to in Section 10.02 or as otherwise agreed with the
Borrower in connection with such issuance.
(ii) Reports by Issuing Banks. Each Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week
a written report summarizing the issuance and expiration dates of
Letters of Credit issued by it during the previous week and drawings
during such week under all Letters of Credit issued by it, (B) to each
Lender and to the Borrower on the first Business Day of each month, a
written report summarizing the issuance and expiration dates of the
Letters of Credit issued by it during the preceding month and drawings
during such month under all Letters of Credit issued by it and (C) to
the Administrative Agent and each Lender on the first Business Day of
each calendar quarter, a written report setting forth the average daily
aggregate Available Amount during the preceding calendar quarter of all
Letters of Credit issued by it.
(c) Drawing and Reimbursement.
(i) Reimbursement Upon Drawings, Etc. The payment by an
Issuing Bank of a draft drawn under any Letter of Credit shall
constitute for all purposes of this Agreement the making by such
Issuing Bank of a Revolving Credit Advance to the Borrower in the
amount of such payment, which the Borrower agrees to repay on demand
and, if not paid on demand, shall bear interest, from the date demanded
to the date paid in full (and which interest shall be payable on
demand), (x) from and including the date of demand to but not including
the second Business Day thereafter at the Base Rate in effect for each
such day plus the Applicable Margin in effect for each such day, and
(y) from and including said second Business Day thereafter at the
Post-Default Rate. Without limiting the obligations of the Borrower
hereunder, upon demand by such Issuing Bank through the Administrative
Agent, each Lender having a Revolving Credit Commitment shall make
Revolving Credit Advances in an aggregate amount equal to the amount of
such Lender's Pro Rata Share of such advance by making available for
the account of its Applicable Lending Office to the Administrative
Agent for the account of such Issuing Bank, by deposit to the
Administrative Agent's Account, in same day funds, an amount equal to
the sum of (A) its Pro Rata Share of the outstanding principal amount
of such advance plus (B) interest accrued and unpaid to and as of such
date on the outstanding principal amount of such advance.
(ii) Reimbursement From Revolving Credit Advances. Each Lender
agrees to make such Revolving Credit Advances on the Business Day on
which demand therefor is made by any Issuing Bank through the
Administrative Agent (provided that notice of such demand is given not
later than 12:00 noon (New York City time) on such Business Day) or (if
notice of such demand is given after such time) the first Business Day
next succeeding such demand.
(iii) Interest Upon Failure to Make Revolving Credit Advances.
If and to the extent that any Revolving Credit Lender shall not have so
made the amount of such Revolving Credit Advance available to the
Administrative Agent for the account of any Issuing Bank, such Lender
agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of
demand by such Issuing Bank until the date such amount is paid to the
Administrative Agent, at the Federal Funds Rate.
(iv) Obligations of Revolving Credit Lenders Absolute. The
Revolving Credit Advances provided for in this Section 2.13 shall be
made by the Lenders irrespective of whether there has occurred and is
continuing any Default or Event of Default or of whether any other
condition precedent specified in Article III has not been satisfied,
and the obligation of each Lender under the Revolving Credit Facility
to make such Revolving Credit Advances is absolute and unconditional.
(d) Increased Costs.
(i) Change in Law. If any change in any law or regulation or
in the interpretation thereof (to the extent any such change occurs after the
date hereof) by any court or administrative or governmental authority charged
with the administration thereof shall either (x) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit or guarantees issued by, or assets held by, or deposits in or for the
account of, any Issuing Bank or any Lender or (y) impose on any Issuing Bank or
any Lender any other condition regarding this Agreement, such Issuing Bank or
such Lender or any Letter of Credit, and the result of any event referred to in
the preceding clause (x) or (y) shall be to increase the cost to such Issuing
Bank or such Lender of issuing or maintaining any Letter of Credit or any
commitment hereunder in respect of Letters of Credit, then, upon demand by such
Issuing Bank or such Lender, the Borrower shall immediately pay to such Issuing
Bank or such Lender, from time to time as specified by such Issuing Bank or such
Lender, additional amounts that shall be sufficient to compensate such Issuing
Bank or such Lender for such increased cost. A certificate as to the amount of
such increased cost, submitted to the Borrower by such Issuing Bank or such
Lender shall be conclusive and binding for all purposes, absent manifest error.
(ii) Excluded Periods. The Borrower shall not be obligated to
pay any additional amounts arising pursuant to this Section 2.13(d) that are
attributable to the Excluded Period with respect to such additional amounts;
provided that if an applicable law, rule, regulation, guideline or request shall
be adopted or made on any date and shall be applicable to the period (a
"ss.2.13(d) Retroactive Period") prior to the date on which such law, rule,
regulation, guideline or request is adopted or made, the limitation on the
Borrower's obligation to pay such additional amounts hereunder shall not apply
to the additional amounts payable in respect of such ss.2.13(d) Retroactive
Period so long as the Borrower receives written notice of such law, rule,
regulation, guideline or request from the Administrative Agent or any Lender
within 180 days after its adoption.
(e) Obligations of Borrower Absolute. The obligations of the
Borrower under this Agreement and any other L/C Related Document shall, to the
extent permitted by law, be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of such L/C Related Document under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of any one or more
of such other documents and agreements, including, but not limited to,
the L/C Related Documents;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), any Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of such Letter of Credit, except to the extent that such
payment resulted from such Issuing Bank's willful misconduct or gross
negligence, as found in a final, non-appealable judgment by a court of
competent jurisdiction, in determining whether such draft or
certificate complies on its face with the terms of such Letter of
Credit;
(vi) any exchange, release or nonperfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any guarantee, for all or any of the obligations of the Borrower in
respect of the L/C Related Documents; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor.
Section 2.14. Replacement of Lenders, Etc.
(a) Replacement of Lenders. Subject to clause (b) below, if
any Lender requests compensation pursuant to Section 2.09(a), 2.09(b), 2.11 or
2.13(d), or the obligation of any Lender to make, or to Convert Base Rate
Advances into, or to Continue, Eurodollar Rate Advances shall be suspended
pursuant to Section 2.09(c) or 2.09(d) (such Lender being herein called an
"Affected Lender"), then, so long as such condition exists, the Borrower may,
after the date 30 days after the date of such request or suspension, (x)
designate an assignee acceptable to the Administrative Agent and each Issuing
Bank (which acceptance will not be unreasonably withheld) that is not an
Affiliate of the Borrower (such assignee being herein called a "Replacement
Lender") to assume the Affected Lender's Commitments and other obligations
hereunder and to purchase the Affected Lender's Advances and other rights under
the Loan Documents (all without recourse to or representation or warranty by, or
expense to, the Affected Lender) for a purchase price equal to the aggregate
principal amount of the outstanding Advances held by the Affected Lender plus
all accrued but unpaid interest on such Advances and accrued but unpaid fees
owing to the Affected Lender (and upon such assumption, purchase and
substitution, and subject to the execution and delivery to the Administrative
Agent by the Replacement Lender of documentation satisfactory to the
Administrative Agent and compliance with the requirements of Section 10.07(c),
the Replacement Lender shall succeed to the rights and obligations of the
Affected Lender hereunder and the other Loan Documents), (y) pay to the Affected
Lender all amounts payable to such Affected Lender under Section 10.04(c),
calculated as if the purchase by the Replacement Lender constituted a mandatory
prepayment of Advances by the Borrower, and (z) pay to the Administrative Agent
the processing and recordation fee specified in Section 10.07(a)(vi) with
respect to such assignment. If the Borrower exercises its rights under the
preceding sentence, the Affected Lender shall no longer be a party hereto or
have any rights or obligations hereunder or under the other Loan Documents;
provided that the obligations of the Borrower to the Affected Lender under
Sections 2.09, 2.11 and 10.04 with respect to events occurring or obligations
arising before or as a result of such replacement shall survive such exercise.
(b) Certain Limitations Upon Exercise of Rights by Borrower.
The Borrower may not exercise its rights under this Section 2.14 (i) with
respect to any Affected Lender unless the Borrower simultaneously exercises such
rights with respect to all Affected Lenders, (ii) if a Default or an Event of
Default has occurred and is then continuing or (iii) with respect to any Lender
that has taken action to eliminate the need for any additional compensation
under Section 2.09(a), 2.09(b), 2.11 or 2.13(d), as applicable.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Initial Extensions of Credit. The obligation of
any Lender or any Issuing Bank to make its initial extension of credit hereunder
(whether by making an Advance or issuing a Letter of Credit) is subject to the
condition precedent that (1) such extension of credit shall be made on or before
December 10, 1999 and (2) the Administrative Agent shall have received the
following in form and substance satisfactory to it:
(a) Notes. The Notes, duly executed by the Borrower.
(b) Organizational Documents, Etc. For each Obligor, such
documents and certificates as the Administrative Agent shall have
reasonably requested relating to the organization, existence and good
standing of each Obligor, the authorization of the Credit Agreement
Transactions and any other legal matters relating to the Obligors, this
Agreement, the other Loan Documents or the Credit Agreement
Transactions, all in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.
(c) Opinions of Counsel to the Credit Parties. Favorable
opinions of Buchanan Ingersoll Professional Corporation, special
counsel for the Credit Parties, and Colin Higgin, Deputy General
Counsel of Adelphia, in substantially the form of Exhibit C-1 and C-2,
respectively, and otherwise reasonably satisfactory to the
Administrative Agent and the Lenders (and each Credit Party hereby
requests such counsel to deliver such opinions).
(d) Opinion of Special FCC Counsel. A favorable opinion of
Cole, Raywid & Braverman, L.L.P., special FCC counsel for the Credit
Parties, in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders (and each Credit Party hereby
requests such counsel to deliver such opinion).
(e) Opinion of Counsel to Citibank. A favorable opinion of
Milbank, Tweed, Hadley & McCloy LLP, special New York counsel for
Citibank, in substantially the form of Exhibit D (and Citibank hereby
requests such counsel to deliver such opinion).
(f) Certificate of Financial Officer of Borrower. A
certificate of a Financial Officer of the
Borrower:
(i) to the effect that the representations and
warranties contained in each Loan Document are correct on and
as of the Closing Date, before and after giving effect to the
transactions contemplated hereby (and in each case giving
effect also to the contribution to the Borrower of the
Contributed Systems as contemplated by the Contribution
Agreement and the Exchange Agreement), as though made on and
as of such date (or, if any such representation or warranty is
expressly stated to have been made as of a specific date, as
of such specific date);
(ii) to the effect that no event has occurred and is
continuing that constitutes a
Default or an Event of Default; and
(iii) demonstrating compliance on a pro forma basis
with the Borrower's financial covenants contained in Section
6.13 (the determination of such compliance to be calculated on
a pro forma basis, as at the end of and for the most recent
fiscal quarter, under the assumption that the Advances made on
the Closing Date shall have been made at the beginning of the
applicable period).
(g) Contribution of Systems. Evidence that Century and TCI
shall have transferred to the Borrower the Contributed Systems and
related assets contemplated by the provisions of the Contribution
Agreement and the Exchange Agreement to be transferred to the Borrower,
in all material respects in accordance with the terms of the
Contribution Agreement and the Exchange Agreement (and no material
provision thereof shall have been waived, amended, supplemented or
otherwise modified in any material respect without the consent of the
Required Lenders); and the Administrative Agent shall have received a
certificate of a Financial Officer to such effect and to the effect
that attached thereto are true and complete copies of the documents
delivered in connection with the closing thereunder.
(h) Repayment of Existing Credit Agreements, Etc. Evidence
that the Borrower shall have repaid (or is simultaneously repaying) all
amounts outstanding under the Existing Credit Agreements and all other
Indebtedness (other than any Existing Affiliate Indebtedness) that is
(x) to be assumed by the Borrower upon contribution of Contributed
Systems to the Borrower by Century and TCI and (y) not permitted under
Section 6.01(b), that all commitments to lend thereunder shall have
been (or shall simultaneously be) terminated, and that all Liens
securing such obligations that are not permitted under Section 6.02(b)
have been released in a manner satisfactory to the Administrative Agent
and that all commitments to extend credit thereunder shall have been
terminated.
(i) Governmental and Third-Party Approvals. Evidence of
receipt of all governmental and third party consents and approvals
necessary in connection with this Agreement and that the same remain in
effect, including approvals from all Governmental Authorities required
with respect to the transfer to the Borrower of the Contributed Systems
and related assets by Century and TCI or their respective Affiliates
pursuant to the Contribution Agreement and the Exchange Agreement.
(j) Lien Search. The results of a recent lien search in each
of the jurisdictions requested by the Administrative Agent, and such
searches shall reveal no liens on any of the assets of any Obligor
except for Liens permitted by Section 6.02 or Liens to be discharged on
or prior to the Closing Date pursuant to documentation satisfactory in
form and substance to the Administrative Agent.
(k) Evidence of Insurance. Evidence of the existence of all
insurance required to be maintained by the Borrower and its Restricted
Subsidiaries hereunder.
(l) Management Agreement; Management Fee Subordination
Agreement. The Management Agreement, duly executed and delivered by the
respective parties thereto, in form and substance satisfactory to the
Administrative Agent, together with a Management Fee Subordination
Agreement, duly executed and delivered by the Borrower and the Manager.
(m) Payment of Certain Fees. Evidence that the Borrower shall
have paid all fees required to be paid, and all expenses for which
invoices have been presented, on or before the Closing Date (including,
without limitation, the reasonable fees and expenses of Milbank, Tweed,
Hadley & McCloy LLP, special New York counsel to Citibank).
(n) Pledge Agreements. The Administrative Agent shall have
received the Partners Pledge Agreement and the Credit Party Pledge
Agreement (and, to the extent that on the Closing Date any Restricted
Subsidiary shall not be a Wholly Owned Subsidiary of the Borrower, an
appropriate Minority Owner Pledge Agreement) each duly executed and
delivered by the respective pledgors party thereto, and each of such
pledgors shall have taken such action (including delivery of any
certificates evidencing any Capital Securities pledged pursuant to any
of such Pledge Agreements) as the Administrative Agent shall have
reasonably requested to perfect the Lien created thereunder under
applicable law. In addition, the Administrative Agent shall be
satisfied that (i) the Lien granted to the Administrative Agent
pursuant to each such Pledge Agreement constitutes a first priority
perfected security interest; and (ii) no Lien exists on any of Capital
Securities pledged pursuant to any of such Pledge Agreements other than
the Lien created in favor of the Administrative Agent thereunder.
(o) Other Documents. Such other documents as the
Administrative Agent or any Lender or
special New York counsel to Citibank may reasonably request.
Section 3.02. Conditions Precedent to Term Borrowing. The
obligation of each Term Lender to make the Term Advances shall be subject to the
conditions precedent that either (a) the principal of and interest on all
Existing Affiliate Indebtedness shall be paid in full from the proceeds thereof
(and from any other funds necessary at the time to repay interest to the extent
that the aggregate amount of such principal and interest shall exceed the
aggregate amount of the Term Commitments) or (b) no Existing Affiliate
Indebtedness has been assumed by the Borrower upon the contribution to the
Borrower of the Contributed Systems pursuant to the Contribution Agreement.
Section 3.03. Conditions Precedent to Each Borrowing and
Issuance. The obligation of each Lender to make an Advance on the occasion of
each Borrowing (excluding, however, the making of any Advance pursuant to
Section 2.13), and the right of the Borrower to request the issuance of Letters
of Credit, shall be subject to the further conditions precedent that on the date
of such Borrowing or issuance the following statements shall be true (and each
of the giving of the applicable Notice of Borrowing or Notice of Issuance and
the acceptance by the Borrower of the proceeds of such Borrowing or of such
Letter of Credit shall constitute a representation and warranty by the Borrower
that on the date of such Borrowing or issuance such statements are true):
(a) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of the date of
such Borrowing or issuance, before and after giving effect to such
Borrowing or issuance and to the application of the proceeds therefrom
(and, in the case of the initial Borrowing, giving effect also to the
contribution to the Borrower of the Contributed Systems as contemplated
by the Contribution Agreement and the Exchange Agreement), as though
made on and as of such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such
specific date); and
(b) no event has occurred and is continuing, or would result
from such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default or an Event of Default.
Section 3.04. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Administrative Agent responsible for the transactions contemplated by the
Loan Documents shall have received notice from such Lender prior to the Closing
Date specifying its objection thereto and such Lender shall not have made
available to the Administrative Agent such Lender's ratable portion of the
Borrowings made on the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Credit Party represents and warrants to the
Administrative Agent and each of the Lenders that:
Section 4.01. Organization; Powers. It (i) is a corporation
(or, as the case may be, a limited liability company or partnership) duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) is duly qualified and in good standing as
a foreign corporation (or limited liability company or partnership, as the case
may be) in each other jurisdiction in which the conduct of its business requires
it to so qualify or be licensed and where, in each case, failure so to qualify
and be in good standing has had or could reasonably be expected to have a
Material Adverse Effect and (iii) has all requisite power (corporate or other)
and authority to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, to execute, deliver
and perform its obligations under each of the Loan Documents and each other
agreement or instrument contemplated hereby to which it is or will be a party
and, in the case of the Borrower, to borrow hereunder.
Section 4.02. Authorization. The execution, delivery and
performance by each Credit Party of this Agreement and each other Loan Document
to which it is or is required to be a party, and the consummation of the Credit
Agreement Transactions, are within such Credit Party's powers (corporate or
other), have been duly authorized by all necessary corporate or other action,
and do not (i) contravene such Credit Party's articles, charter, by-laws, or
operating or partnership agreement or other organizational documents, or any
directors' or shareholders' resolution, (ii) violate any applicable law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award of
any Governmental Authority binding upon or affecting such Credit Party, (iii)
conflict with or result in the breach of, or constitute a default under, any
agreement, contract, loan agreement, indenture, mortgage, deed of trust, lease
or other instrument binding on or affecting any Credit Party or any of the
properties of any Credit Party or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of any
Credit Party. No Credit Party is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority or in breach of any such agreement, contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument, the
violation or breach of which has had or could be reasonably expected to have a
Material Adverse Effect.
Section 4.03. Enforceability. This Agreement has been duly
executed and delivered by the Borrower and constitutes, and each other Loan
Document when executed and delivered by each Credit Party party thereto will
constitute, a legal, valid and binding obligation of such Credit Party
enforceable against such Credit Party in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally.
Section 4.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Credit Agreement
Transactions, except for such as will have been made or obtained and are in full
force and effect as of the Closing Date.
Section 4.05. Financial Statements.
(a) Financial Statements. The Borrower has heretofore
furnished to each of the Lenders the
following financial statements:
(i) the pro forma unaudited combined statements of revenues
and operating expenses and capital expenditures of the Contributed
Systems as of and for the fiscal years ended December 31, 1997 and
December 31, 1998, respectively, each of which financial statements has
been prepared under the assumption that the transactions contemplated
by the Contribution Agreement and the Exchange Agreement had been
consummated at the beginning of such respective periods; and
(ii) the pro forma unaudited combined balance sheet and
statements of revenues and operating expenses of the Contributed
Systems as of and for the six-month period ended June 30, 1999, each of
which financial statements has been prepared under the assumption that
the transactions contemplated by the Contribution Agreement and the
Exchange Agreement had been consummated at the beginning of such
period.
All such financial statements are complete and correct and fairly present in all
material respects the actual or pro forma (as the case may be) financial
condition of the respective entities as at said respective dates and the actual
or pro forma (as the case may be) results of their operations for the applicable
periods ended on said respective dates, all in accordance with GAAP applied on a
consistent basis. As of the date hereof, there are no material contingent
liabilities, material liabilities for taxes, material unusual forward or
long-term commitments or material unrealized or anticipated losses from any
unfavorable commitments of the Borrower or any of its Restricted Subsidiaries,
or any of the Contributed Systems, except as referred to or reflected or
provided for in said unaudited financial statements as at September 30, 1999.
(b) Pro forma Compliance with Financial Covenants. The
certificate delivered pursuant to Section 3.01(f)(iii) has been based on
estimates that the Borrower believes are fair, accurate and reasonable at the
time such certificate has been furnished to the Lenders.
Section 4.06. No Material Adverse Change. Since December 31,
1998, there has been no material adverse change in the consolidated financial
condition, operations, business or prospects of the Contributed Systems (taken
as a whole) from that set forth in the financial statements as at said date
referred to in Section 4.05(a)(i) and 4.05(a)(ii), and, since the Closing Date
(after giving effect to the transactions contemplated to occur hereunder on the
Closing Date), there has been no material adverse change in the consolidated
financial condition, operations, business or prospects of the Borrower and its
Restricted Subsidiaries taken as a whole.
Section 4.07. Title to Properties, Etc. Each of the Borrower
and its Restricted Subsidiaries has good title to, or valid leasehold interests
in, all properties and assets which are material to the Borrower and its
Restricted Subsidiaries, taken as a whole, except for minor defects in title
that do not materially interfere with its ability to conduct its business as
currently conducted or to utilize such properties and assets for their intended
purposes. All such material properties and assets are free and clear of Liens,
other than Liens expressly permitted by Section 6.02.
Section 4.08. Subsidiaries; Other Equity Investments. Set
forth on Schedule 4.08 is a complete and accurate list of all Subsidiaries of
each Credit Party as of the Closing Date showing as of the Closing Date (as to
each Restricted Subsidiary) the jurisdiction of its organization, the number of
shares of each class of capital stock or membership or partnership interests
authorized, and the number outstanding and the percentage of the outstanding
shares or interests of each such class owned, directly or indirectly, by such
Credit Party and the number of shares covered by all outstanding options,
warrants, rights of conversion or purchase and similar rights. All of the
outstanding capital stock or membership or partnership interests of all of such
Restricted Subsidiaries have been validly issued, are fully paid and
non-assessable and are owned by such Credit Party or one or more of its
Restricted Subsidiaries free and clear of all Liens. Each Restricted Subsidiary
(i) is a corporation (or, as the case may be, a limited liability company or
partnership) duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) is duly qualified and in good
standing as a foreign corporation or limited partnership, as the case may be, in
each other jurisdiction in which the conduct of its business requires it to so
qualify or be licensed and where, in each case, failure to so qualify and be in
good standing has had or could reasonably be expected to have a Material Adverse
Effect and (iii) has all requisite power (corporate or other) and authority to
own or lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted. On the date hereof, there are no
Unrestricted Subsidiaries.
Section 4.09. Litigation; Compliance with Laws.
(a) Litigation. There are no actions, suits or proceedings at
law or in equity or by or before any Governmental Authority now pending or, to
the knowledge of any Credit Party, threatened against or affecting the Borrower
or any Restricted Subsidiary or any business, property or rights of the Borrower
or any Restricted Subsidiary (i) that involve any Loan Document or the Credit
Agreement Transactions or (ii) as to which there is a reasonable likelihood of
an adverse determination and that, if adversely determined, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect.
(b) Compliance with Laws. Neither the Borrower nor any
Restricted Subsidiary nor the CATV Systems owned by them is in violation of, nor
will the continued operation of their properties and assets as currently
conducted, violate any law, rule or regulation (including any zoning, building,
ordinance, code or approval or any building permits), or is in default with
respect to any judgment, writ, injunction, decree or order of any Governmental
Authority, where such violation or default has had or could reasonably be
expected to have a Material Adverse Effect.
Section 4.10. Agreements.
(a) No Default Under Agreements, Etc. Neither the Borrower nor
any Restricted Subsidiary is in default in any manner under any provision of (i)
any agreement or instrument evidencing Indebtedness or relating to any
Franchise, (ii) the Management Agreement or (iii) the Partnership Agreement,
where such default has had or could reasonably be expected to have a Material
Adverse Effect.
(b) Restrictive Agreements. As of the date hereof, other than
as set forth in Schedule 4.10, neither the Borrower nor any Restricted
Subsidiary is subject to any indenture, agreement, instrument or other
arrangement of the type prohibited in Section 6.03.
Section 4.11. Federal Reserve Regulations. Neither the
Borrower nor any Restricted Subsidiary is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
buying or carrying Margin Stock. No part of the proceeds of any Advance will be
used by the Borrower or any Restricted Subsidiary, whether directly or
indirectly, and whether immediately, incidentally or ultimately, for any purpose
that violates Regulation U or X.
Section 4.12. Investment Company Act; Public Utility Holding
Company Act. Neither the Borrower nor any of its Subsidiaries is an "investment
company," as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended. Neither the Borrower nor any of its Subsidiaries is a
"holding company", as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
Section 4.13. Tax Returns. Each of the Borrower and its
Restricted Subsidiaries has filed or caused to be filed all material national,
Federal, state, provincial and other tax returns, extensions or materials
required to have been filed by it and has paid or caused to be paid all taxes
due and payable by it and all assessments received by it, except (i) taxes and
assessments that are being contested in good faith by appropriate proceedings
and for which it shall have set aside on its books adequate reserves in
accordance with GAAP and (ii) taxes and assessments the failure to pay which has
not had and could not reasonably be expected to result in a Material Adverse
Effect.
Section 4.14. No Material Misstatements. None of (x) the
Confidential Information Memorandum or (y) the information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Borrower to the Administrative Agent or any Lender in connection with the
negotiation, preparation or delivery of this Agreement and the other Loan
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole, contains any untrue statement of material fact or omits
to state any material fact necessary to make the statements herein or therein,
in light of the circumstances under which they were made, not misleading, other
than a material fact the effect of which is favorable to the Borrower; provided
that to the extent any such information, report, financial statement, exhibit or
schedule was based upon or constitutes a forecast, projection or expressions of
opinion, the Borrower represents only that it acted in good faith and utilized
reasonable assumptions and due care in the preparation of such information,
report, financial statement, exhibit or schedule. There is no fact known to the
Borrower that has had or could reasonably be expected to have a Material Adverse
Effect that has not been disclosed herein, in the other Loan Documents or in a
report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to the Administrative Agent or the Lenders for use in
connection with the transactions contemplated hereby or thereby.
Section 4.15. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Advance hereunder, no steps have
been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrower or any member of the Controlled Group of any material liability,
fine or penalty. Neither the Borrower nor any member of the Controlled Group has
any material contingent liability with respect to any post-retirement benefit
under a Welfare Plan, other than liability for continuation coverage described
in Part 6 of Title I of ERISA.
Section 4.16. Environmental Matters. Except as set forth in
Schedule 4.16, the operations and properties of each Credit Party and each of
its Subsidiaries are in compliance in all material respects with all
Environmental Laws, all necessary Environmental Permits have been obtained and
are in effect for the operations and properties of each Credit Party and its
Subsidiaries. Each Credit Party and its Subsidiaries are in compliance in all
material respects with all such Environmental Permits, no circumstances exist
that could (i) form the basis of an Environmental Claim of $5,000,000 or more
against any Credit Party or any of its Subsidiaries or (ii) cause any such
property to be subject to any restrictions on ownership, occupancy, use or
transferability under any Environmental Law that has had or could reasonably be
expected to have a Material Adverse Effect, and, to the knowledge of each Credit
Party and its Subsidiaries, no investigation (other than routine investigations)
of any such operation or property has been or is being conducted by any
Governmental Authority with respect to the enforcement of any Environmental Law
other than investigations which have not had and could not reasonably be
expected to have a Material Adverse Effect.
Section 4.17. Insurance. Schedule 4.17 sets forth a true,
complete and correct description of all material insurance maintained by the
Borrower (including insurance maintained by the Borrower for its Restricted
Subsidiaries) as of the date hereof. As of the date hereof, such insurance is in
full force and effect and all premiums which have become due and payable have
been duly paid. Each of the Borrower and its Restricted Subsidiaries maintains
insurance in such amounts and covering such risks and liabilities as are in
accordance with normal industry practice.
Section 4.18. Solvency. Immediately after the consummation of
the Credit Agreement Transactions on the Closing Date and immediately following
the making of each Advance and after giving effect to the application of the
proceeds thereof, and taking into account all rights of indemnity, subrogation
and contribution of the Credit Parties under applicable law and under Section
9.08, each Credit Party is Solvent.
Section 4.19. Intellectual Property. Each of the Borrower and
its Restricted Subsidiaries owns or has rights to use all Intellectual Property
necessary for the conduct of its business as currently conducted, except for any
failure to so own or have rights to use Intellectual Property which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect. To the knowledge of the Borrower,
neither the use of the Intellectual Property by the Borrower and its Restricted
Subsidiaries nor the conduct of their respective businesses (including the
marketing, sale, distribution and use of the products or services of the
Borrower or any Restricted Subsidiary) infringes on the rights of any Person in
any material respect and in any manner which has had or could reasonably be
expected to have a Material Adverse Effect.
Section 4.20. Year 2000. The Borrower and each other Credit
Party has reviewed the areas within its business and operations (including those
affected by suppliers and vendors) which could be adversely affected by, and
prior to the date hereof, has addressed, the "Year 2000 Problem" (that is, the
risk that computer applications used by such Persons (or suppliers and vendors)
may be unable to recognize and properly perform date-sensitive functions
involving certain dates prior to and any date after December 31, 1999). The Year
2000 Problem could not reasonably be expected to have a Material Adverse Effect.
Section 4.21. Franchises. Each Franchise of the Borrower and
each of its Restricted Subsidiaries is in full force and effect pursuant to each
agreement set forth on Schedule 4.21, was lawfully issued pursuant to the rules
and regulations of each jurisdiction set forth on Schedule 4.21 and authorizes
the Borrower and each such Restricted Subsidiary to operate such Franchise until
the dates set forth on Schedule 4.21, and no other or further approval, filing
or other action of any Governmental Authority is or will be necessary or
advisable in order to permit the Borrower's or any of its Restricted
Subsidiaries' operation of its CATV Systems in accordance with the terms
thereof. Schedule 4.21 correctly identifies each franchisee. The Borrower and
its Restricted Subsidiaries are in compliance with all material terms and
conditions of each of their respective Franchises and FCC Licenses and no event
has occurred or exists which permits or, after the giving of notice or the lapse
of time or both, would permit the revocation or termination of any such
Franchise or FCC License. No Unrestricted Subsidiary owns or has rights to any
FCC License or Franchise necessary for the ongoing operations of the Borrower
and its Restricted Subsidiaries or their respective CATV Systems.
Section 4.22. FCC Licenses, Utilities Etc. The Borrower and
each of its Restricted Subsidiaries owns, possesses and has the right to use all
licenses, permits and other rights, including all material agreements with
public utilities and microwave transmission companies, pole use access or rental
agreements (including Pole Agreements and Pole Rental Leases) and all other
utility easements, necessary to own and operate its property and its CATV
Systems and to carry on its business as presently conducted or as presently
planned to be conducted. Each of the foregoing is in full force and effect and
the Borrower and each of its Restricted Subsidiaries is in compliance in all
material respects with all the terms and conditions of each thereof, with no
known conflict with the rights of others.
Section 4.23. The CATV Systems.
(a) Compliance With Law. The Borrower and each of its
Restricted Subsidiaries, and the CATV Systems owned by each of them, are in
compliance in all material respects with all applicable federal, state and local
laws, rules and regulations, including without limitation, the Communications
Act of 1934, the Copyright Revision Act of 1976, and the rules and regulations
of the FCC and the United States Copyright Office, including, without
limitation, rules and laws governing system registration, use of aeronautical
frequencies and signal carriage, equal employment opportunity, cumulative
leakage index testing and reporting, signal leakage, and subscriber privacy,
except to the extent that the failure to so comply with any of the foregoing
could not (either individually or in the aggregate) reasonably be expected to
have a Material Adverse Effect. Without limiting the generality of the foregoing
(except to the extent that the failure to comply with any of the following could
not (either individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect and except as set forth in Schedule 4.23 hereto):
(i) the communities included in the areas covered by the
Franchises have been registered with the FCC;
(ii) all of the annual performance tests on such CATV Systems
required under the rules and regulations of the FCC have been performed
and the results of such tests demonstrate satisfactory compliance with
the applicable requirements being tested in all material respects;
(iii) to the knowledge of the Borrower, such CATV Systems
currently meet or exceed the technical standards set forth in the rules
and regulations of the FCC, including, without limitation, the leakage
limits contained in 47 C.F.R. Section 76.605(a)(11);
(iv) to the knowledge of the Borrower, such CATV Systems are
being operated in compliance with the provisions of 47 C.F.R. Sections
76.610 through 76.619 (mid-band and super-band signal carriage),
including 47 C.F.R. Section 76.611 (compliance with the cumulative
signal leakage index); and
(v) to the knowledge of the Borrower, where required,
appropriate authorizations from the FCC have been obtained for the use
of all aeronautical frequencies in use in such CATV Systems and such
CATV Systems are presently being operated in compliance with such
authorizations (and all required certificates, permits and clearances
from governmental agencies, including the Federal Aviation
Administration, with respect to all towers, earth stations, business
radios and frequencies utilized and carried by such CATV Systems have
been obtained).
(b) Copyright Filings. To the knowledge of the Borrower, all
notices, statements of account, supplements and other documents (collectively,
the "Copyright Filings") required under Section 111 of the Copyright Act of 1976
and under the rules of the Copyright Office with respect to the carriage of
broadcast station signals by the CATV Systems to be owned by the Borrower and
its Subsidiaries have been duly filed, and the proper amount of copyright fees
have been paid on a timely basis, and each such CATV System qualifies for the
compulsory license under Section 111 of the Copyright Act of 1976, except to the
extent that the failure to so file or pay could not (either individually or in
the aggregate) reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Borrower, there is no pending claim, action, demand or
litigation by any other person with respect to the Copyright Filings or related
royalty payments made by such CATV Systems that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(c) Off-Air Signals. The carriage of all off-air signals by
the CATV Systems to be owned by the Borrower and its Subsidiaries is permitted
by valid transmission consent agreements or by must-carry elections by
broadcasters, or is otherwise permitted under applicable law, except to the
extent the failure to obtain any of the foregoing could not (either individually
or in the aggregate) reasonably be expected to have a Material Adverse Effect.
(d) Operating Assets Sufficient. The assets of the CATV
Systems to be owned by the Borrower and its Subsidiaries are adequate and
sufficient in all material respects for all of the current operations of such
CATV Systems.
Section 4.24. Certain Agreements. The Borrower has heretofore
delivered to the Administrative Agent a true and complete copy of the
Contribution Agreement, the Exchange Agreement, the Management Agreement and the
Partnership Agreement (including all modifications or supplements to each
thereof) and each of the Contribution Agreement, the Exchange Agreement, the
Management Agreement and the Partnership Agreement has been duly executed and
delivered by each party thereto and is in full force and effect.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Credit Party covenants and agrees with each Lender that
so long as this Agreement shall remain in effect, and until the Term Commitments
and Revolving Credit Commitments have been terminated and the principal of and
interest on each Advance, all fees and all other expenses or amounts (other than
contingent indemnity obligations) payable under the Loan Documents shall have
been paid in full, all Letters of Credit have been canceled or have expired (or
fully collateralized with cash or one or more letters of credit acceptable to
each Issuing Bank and the Administrative Agent) and all amounts drawn thereunder
have been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing:
Section 5.01. Financial Statements, Reports, Etc. The
Borrower shall furnish to the Administrative Agent (with sufficient copies
thereof for each Lender):
(a) as soon as available and in any event within 120 days
after the end of each fiscal year commencing with the fiscal year
ending December 31, 2000, the consolidated balance sheet and related
statements of operations, partners' equity and cash flows of the
Borrower and its Restricted Subsidiaries, showing the financial
condition of the Borrower and its Restricted Subsidiaries as of the
close of such fiscal year and the results of operations of the Borrower
and its Restricted Subsidiaries during such year, all audited by the
Accountants and accompanied by an opinion of the Accountants (without
any Impermissible Qualification) to the effect that such consolidated
financial statements fairly present the financial condition and results
of operations of the Borrower and its Restricted Subsidiaries in
accordance with GAAP (it being understood, however, that such financial
statements need not set forth comparative figures to any prior fiscal
year that ends before December 31, 2000);
(b) as soon as available and in any event within 90 days after
the end of each of the first three fiscal quarters in each fiscal year,
the consolidated balance sheet and related statements of operations,
partners' equity and cash flows of the Borrower and its Restricted
Subsidiaries, showing the financial condition of the Borrower and its
Restricted Subsidiaries as of the close of such fiscal quarter and the
results of operations of the Borrower and its Restricted Subsidiaries
during such fiscal quarter and the then elapsed portion of the fiscal
year, all certified by one of the Borrower's Financial Officers as
fairly presenting the financial condition and results of operations of
the Borrower and its Restricted Subsidiaries in accordance with GAAP,
subject to normal year-end audit adjustments and lack of footnote
disclosures;
(c) (i) concurrently with any delivery of financial statements
under paragraph (a), a certificate of the Accountants (which
certificate may be limited to accounting matters and disclaim
responsibility for legal matters) opining that in making their
examination in connection with rendering their opinion with respect to
such statements, such Accountants have not obtained knowledge that an
Event of Default or Default has occurred (or, if such Accountants have
obtained knowledge that an Event of Default or Default has occurred,
specifying the nature and extent thereof), and (ii) concurrently with
any delivery of financial statements under paragraph (a) or (b) above,
a certificate of a Financial Officer of the Borrower in substantially
the form of Exhibit I (A) certifying that in making his or her
examination in connection with rendering such certificate with respect
to such statements, such Financial Officer has not obtained knowledge
that an Event of Default or Default has occurred or, if such Financial
Officer has obtained knowledge that an Event of Default or Default has
occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto, (B)
identifying any Restricted Subsidiaries that during the period covered
by such statements have been designated as Unrestricted Subsidiaries,
or vice versa, and certifying that each such designation complied with
the requirements of Section 6.04, (C) identifying the Restricted
Transactions effected during such period that avail themselves of the
exceptions set forth in Section 6.08(a) or Section 6.08(d), and
certifying that each such Restricted Transaction complied with the
requirements of Section 6.08 and (D) setting forth computations in
reasonable detail satisfactory to the Administrative Agent
demonstrating compliance with the covenants contained in Sections 6.01,
6.02, 6.05, 6.06, 6.07, 6.08, 6.10 and 6.13;
(d) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials
filed by the Borrower or any Restricted Subsidiary, or by Century, with
the U.S. Securities and Exchange Commission, or any Governmental
Authorities succeeding to any or all of the functions of said
Commission, or with any securities exchange, or distributed to its
shareholders, as the case may be; and
(e) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition of
the Borrower and its Restricted Subsidiaries, or compliance with the
terms of any Loan Document, as the Administrative Agent or any Lender
may reasonably request.
Section 5.02. Other Notices. Each of the Credit Parties will
furnish to the Administrative Agent (with sufficient copies thereof for each
Lender):
(a) as soon as possible and in any event within five Business
Days after any Responsible Officer knows or has reason to believe that
a Default or Event of Default has occurred, written notice specifying
the nature and extent thereof and the corrective action (if any) taken
or proposed to be taken with respect thereto;
(b) as soon as possible and in any event within five Business
Days after any Responsible Officer has knowledge thereof, written
notice of the filing or commencement of, or of any threat or notice of
intention of any Person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any
Governmental Authority, against the Borrower or any Restricted
Subsidiary that, if adversely determined, could reasonably be expected
to have a Material Adverse Effect;
(c) prompt written notice of the assertion of any
Environmental Claim by any Person against, or with respect to the
operations and properties of, such Credit Party or any of its
Subsidiaries, other than any Environmental Claim that, if adversely
determined, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect; and
(d) prompt written notice of any development known to any
Responsible Officer that has had or could reasonably be expected to
have a Material Adverse Effect.
Section 5.03. Existence; Businesses and Properties. Each of
the Credit Parties will, and will cause each of its Restricted Subsidiaries to:
(a) do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its legal existence, except as
otherwise expressly permitted under Section 6.07; and
(b) do or cause to be done all things necessary to obtain,
preserve, renew, extend and keep in full force and effect the rights,
Franchises, patents, copyrights, trademarks and trade names material to
the conduct of its business; comply with all applicable laws, rules,
regulations and decrees and orders of any Governmental Authority
(including Environmental Laws), whether now in effect or hereafter
enacted, except for failures to comply which, individually or in the
aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect; and at all times maintain and preserve all
property material to the conduct of such business and keep such
property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in
order that the business carried on in connection therewith may be
properly conducted at all times, except for failures to maintain and
preserve property that have not had and could not reasonably be
expected to have a Material Adverse Effect.
Section 5.04. Insurance. Each Credit Party will, and will
cause each of the Restricted Subsidiaries to, maintain insurance with
financially sound and reputable insurance companies, and with respect to
property and risks of a character usually maintained by Persons engaged in the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such corporations.
Section 5.05. Obligations and Taxes. Each of the Credit
Parties will, and will cause each of the Restricted Subsidiaries to, pay its
Indebtedness and other obligations promptly and in accordance with their terms
and pay and discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect of
its property, before the same shall become delinquent or in default, as well as
all lawful claims for labor, materials and supplies or otherwise that, if
unpaid, might give rise to a Lien upon such properties or any part thereof
prohibited by Section 6.02; provided that such payment and discharge shall not
be required with respect to any such tax, assessment, charge, levy or claim so
long as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and such Credit Party shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP and such contest
operates to suspend collection of the contested obligation, tax, assessment or
charge and enforcement of a Lien.
Section 5.06. Notice of Certain Events Relating to Pension
Plans. Immediately upon becoming aware of (i) the institution of any steps by
any Person to terminate any Pension Plan, (ii) the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give rise to a
Lien under Section 302(f) of ERISA, (iii) the taking of any action with respect
to a Pension Plan which could result in the requirement that any Obligor furnish
a bond or other security to the PBGC or such Pension Plan, or (iv) the
occurrence of any event with respect to any Pension Plan which could result in
the incurrence by any Obligor of any material liability, fine or penalty, the
Borrower will furnish or cause to be furnished to the Administrative Agent (with
sufficient copies for each Lender) notice thereof and copies of all
documentation relating thereto.
Section 5.07. Maintaining Records; Access to Properties and
Inspections. Each of the Credit Parties will, and will cause each of its
Restricted Subsidiaries to, keep proper books of record and account in
conformity with GAAP. Each Credit Party will, and will cause each of its
Restricted Subsidiaries to, permit any representatives designated by the
Administrative Agent or any Lender to visit and inspect the financial records
and the properties of the Borrower and its Restricted Subsidiaries at reasonable
times and as often as reasonably requested and to make extracts from and copies
of such financial records, and permit any representatives designated by the
Administrative Agent or any Lender to discuss the affairs, finances and
condition of the Borrower and its Restricted Subsidiaries with the officers
thereof and independent accountants therefor (it being understood that the
Borrower shall be entitled to be present at any meeting scheduled between such
independent accountants and the Administrative Agent or a Lender to discuss the
affairs, finances and condition of the Borrower and its Restricted Subsidiaries,
but the Borrower's failure to attend any such meeting of which it has received
at least three Business Days' notice shall not preclude any such meeting from
taking place).
Section 5.08. Environmental Laws. Each of the Credit Parties
will, and will cause each of its Subsidiaries to comply, and use commercially
reasonable efforts to cause all lessees and other Persons occupying its
properties to comply, in all material respects with all Environmental Laws and
Environmental Permits applicable to its operations and properties; obtain and
renew all Environmental Permits necessary for its operations and properties; and
conduct any Remedial Action in accordance with Environmental Laws, except where
such non-compliance or failure to obtain or renew Environmental Permits or to
conduct any Remedial Action has not had and could not reasonably be expected to
have a Material Adverse Effect; provided that neither the Borrower nor any
Restricted Subsidiary shall be required to undertake any Remedial Action to the
extent that any applicable obligation to do so is being contested in good faith
and by proper proceedings and appropriate reserves are being maintained with
respect to such circumstances.
Section 5.09. Guarantees and Collateral; Ownership of
Restricted Subsidiaries.
(a) Guarantees of Obligations. It is the intent of the parties
hereto that all of the obligations of the Borrower hereunder shall be
unconditionally guaranteed by all of its Restricted Subsidiaries to the maximum
extent permitted under the laws of the jurisdiction of organization of any such
Restricted Subsidiary. Accordingly, in the event that any Subsidiary shall be
formed, acquired or come into existence after the date hereof (a "New
Subsidiary") then, unless the Borrower shall designate such New Subsidiary as an
Unrestricted Subsidiary hereunder, the Credit Parties will cause such New
Subsidiary to (i) execute and deliver an Assumption Agreement in substantially
the form of Exhibit G pursuant to which such New Subsidiary will become a
"Guarantor" and a "Credit Party" hereunder and under the Credit Party Pledge
Agreement, and Guarantee the Guaranteed Obligations hereunder as provided in the
definition of such term in Section 9.01 and (ii) deliver such proof of corporate
or other action, incumbency of officers, opinions of counsel and other documents
as is consistent with those delivered by each Credit Party pursuant to Section
3.01 on the Closing Date or as the Administrative Agent shall have reasonably
requested.
(b) Additional Collateral. Without limiting the generality of
the provisions of paragraph (a) above, the Borrower will, and will cause each of
its Restricted Subsidiaries and each Minority Owner to, cause the Administrative
Agent to have at all times a first priority perfected security interest in all
of the issued and outstanding Capital Securities of the Restricted Subsidiaries
at any time owned by the Borrower or any of its Restricted Subsidiaries on or
after the Closing Date (including any such Capital Securities acquired or
created after the Closing Date, including any such Capital Securities in any
newly-acquired or formed Restricted Subsidiary or any newly-designated
Restricted Subsidiary). Without limiting the generality of the foregoing, the
Borrower will and will cause each of its Restricted Subsidiaries and each
Minority Owner to, execute and deliver the Credit Party Pledge Agreement (or a
supplement thereto, pursuant to which such Restricted Subsidiary shall become a
party thereto), or a Minority Owner Pledge Agreement, and to take such action
from time to time (including delivery of any certificates evidencing any Capital
Securities pledged pursuant to any of such Pledge Agreements), as the
Administrative Agent shall reasonably request to effect the foregoing.
Section 5.10. Franchises. Each Credit Party shall, and shall
cause each of the Restricted Subsidiaries to, continue to comply with the terms
of all Franchises to which it is subject, and shall do, and cause each of the
Restricted Subsidiaries to do, everything necessary or desirable to maintain the
Franchises in good standing, to prevent the termination or forfeiture of the
Franchises and to ensure that the Franchises are renewed upon their respective
times of expiry on at least as favourable terms as the terms on which they were
or are originally granted, except to the extent that any such failure to comply
with the terms of such Franchises, to maintain such Franchises or to prevent the
termination or forfeiture of such Franchises could not reasonable be expected to
have a Material Adverse Effect. Notwithstanding the foregoing, the obligations
of the Credit Parties and the Restricted Subsidiaries with respect to their
compliance with the terms of the Franchises disclosed in Schedule 4.21 shall be
satisfied if the Borrower and its Restricted Subsidiaries use their best efforts
to achieve compliance in all material respects with such terms as soon as
possible and continue such compliance thereafter.
Section 5.11. Use of Proceeds. The Borrower will use the
proceeds of the Advances hereunder solely as permitted by Section 2.01(d), in
each case in compliance with all applicable legal and regulatory requirements,
including, without limitation, Regulations U and X and the Securities Act of
1933 and the Securities Exchange Act of 1934 and the regulations thereunder);
provided that neither the Administrative Agent nor any Lender shall have any
responsibility as to the use of any of such proceeds.
Section 5.12. Accuracy of Information. All written information
furnished after the date hereof by the Credit Parties to the Administrative
Agent and the Lenders in connection with this Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
prepared in good faith and based on reasonable estimates and assumptions, on the
date as of which such information is stated or certified.
ARTICLE VI
NEGATIVE COVENANTS
Each Credit Party covenants and agrees with each Lender that
so long as this Agreement shall remain in effect, and until the Term Commitments
and Revolving Credit Commitments have been terminated and the principal of and
interest on each Advance, all fees and all other expenses or amounts (other than
contingent indemnity obligations) payable under the Loan Documents shall have
been paid in full, all Letters of Credit have been canceled or have expired (or
fully collateralized with cash or one or more letters of credit acceptable to
each Issuing Bank and the Administrative Agent) and all amounts drawn thereunder
have been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing:
Section 6.01. Indebtedness. None of the Credit Parties will,
nor will they cause or permit any of the Restricted Subsidiaries to, create,
incur, assume or permit to exist any Indebtedness except:
(a) Indebtedness under this Agreement and the Notes;
(b) Indebtedness of the Borrower and its Restricted
Subsidiaries (other than Existing Affiliate Indebtedness) assumed upon
the contribution to the Borrower of the Contributed Systems and set
forth on Schedule 6.01(b), excluding however, for periods after the
Closing Date, any Indebtedness that is identified on said Schedule as
Indebtedness that is to be repaid on the Closing Date, and any
refinancing of such Indebtedness that does not result in an increase in
the principal amount thereof;
(c) Indebtedness of any Restricted Subsidiary to the Borrower
or any other Restricted Subsidiary;
(d) Existing Affiliate Indebtedness, so long as (i) the
aggregate principal amount thereof does not exceed $500,000,000, (ii)
such Indebtedness is not secured and bears interest at a rate per annum
no higher than the rates applicable to the Advances hereunder and (iii)
such Indebtedness has an amortization schedule (on a percentage basis)
no shorter than the annual amortization provided herein for the Term
Facility, provided that such Indebtedness shall be paid in full from
the proceeds, and shall not be outstanding after the making, of the
Term Advances hereunder;
(e) deferred Management Fees which have been subordinated to
the obligations of the Credit Party hereunder pursuant to the
Management Fee Subordination Agreement;
(f) Capital Lease Obligations and Indebtedness secured by
Liens permitted under Section 6.02(q) in an aggregate amount up to but
not exceeding $55,000,000 at any one time outstanding;
(g) senior unsecured Indebtedness on terms satisfactory to the
Required Lenders, and subordinated Indebtedness on terms (including
terms of subordination, covenants, events of default and mandatory
redemptions) satisfactory to the Arranging Agents, provided that (i)
such Indebtedness (whether senior unsecured or subordinated) will not
have any scheduled amortization payment occurring prior to the
scheduled repayment of principal and interest of the Term Facility or
the Revolving Credit Facility, and will have a maturity date later than
the Maturity Date and (ii) 100% of the net cash proceeds of the sale,
issuance or incurrence of such Indebtedness (whether senior unsecured
or subordinated) shall be used to prepay the Advances and any Existing
Affiliate Indebtedness ratably in accordance with the respective
then-outstanding principal amounts thereof (it being understood that
such prepayment of Advances shall be effected in the manner specified
in Section 2.05(c) and that, concurrently with any prepayment of
Revolving Credit Advances pursuant to Section 2.05(c), the Revolving
Credit Commitments shall be automatically reduced in an amount equal to
the amount of such prepayment applied to the Revolving Credit
Advances); and
(h) Indebtedness of the Borrower (but not of any of its
Restricted Subsidiaries) incurred after the Closing Date to one or more
of its Affiliates in an aggregate principal amount up to but not
exceeding $125,000,000 at any one time outstanding and satisfying the
following conditions:
(i) such Indebtedness shall be unsecured and shall be
subordinated to the obligations of the Borrower hereunder upon
the terms set forth in Schedule 6.01(h); and
(ii) such Indebtedness shall not provide for any
cross default or cross acceleration to any other Indebtedness,
and all covenants agreed to by the Borrower in respect of such
Indebtedness shall be satisfactory to the Arranging Agents.
Section 6.02. Liens. None of the Credit Parties will, nor will
they cause or permit any of the Restricted Subsidiaries to create, incur, assume
or permit to exist any Lien on any property or assets (including any assets,
stock, partnership interest or other securities of any Person) now owned or
hereafter acquired by it or on any income or revenues or rights in respect of
any thereof, except:
(a) Liens securing obligations to the Lenders and the
Administrative Agent under the Pledge Agreements;
(b) Liens on property of the Borrower and its Restricted
Subsidiaries assumed upon the contribution to the Borrower of the
Contributed Systems and set forth on Schedule 6.02, excluding however,
for periods after the Closing Date, any Lien that is identified on said
Schedule as a Lien that is to be released on the Closing Date;
(c) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or thereafter payable without
penalty or that are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on
the books of the Borrower or the affected Restricted Subsidiaries, as
the case may be, in accordance with GAAP, so long as forfeiture of all
or any part of the property or assets of any Person which is subject to
such Lien, does not result from the failure to pay such taxes,
assessments or governmental charges or levies during the period of such
contest;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary
course of business that are not overdue for a period of more than 30
days or that are being contested in good faith and by appropriate
proceedings;
(e) pledges or deposits under worker's compensation,
employment insurance and other social security legislation, by reason
only of a Credit Party's deferred right to pay such amount, but which
such Credit Party is paying as such amount becomes due;
(f) cash deposits to secure the performance of bids, trade
contracts (other than for Indebtedness), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a
like nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances and encumbrances consisting of zoning restrictions,
easements, licenses, restrictions on the use of property or minor
imperfections in title thereto that, in the aggregate, are not material
in amount, and that do not in any case materially detract from the
value of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Borrower or any of its
Restricted Subsidiaries;
(h) Liens arising out of judgments or awards (other than any
judgment that is described in clause (i) of Article VII which
constitutes an Event of Default thereunder) in respect of which the
Borrower or its Restricted Subsidiaries shall in good faith be
prosecuting an appeal or proceedings for review and in respect of which
it shall have secured a subsisting stay of execution pending such
appeal or proceedings for review, provided the Borrower or, as
applicable, its respective Restricted Subsidiary, shall have set aside
on its books adequate reserves, in accordance with GAAP, with respect
to such judgment or award to the extent the same is not covered by
insurance;
(i) Liens arising from Uniform Commercial Code financing
statements and similar documents filed on a precautionary basis in
respect of operating leases intended by the parties to be true leases
(other than any such leases entered into in violation of this
Agreement);
(j) Liens in favor of the Borrower or any Credit Party;
(k) Liens to secure any extension, renewal, refinancing or
refunding (or successive extensions, renewals, refinancings or
refundings), in whole or in part, of any Indebtedness secured by Liens
referred to in the foregoing clause (a), provided that such Liens do
not extend to any other property of the Borrower or any Restricted
Subsidiary and the principal amount of the Indebtedness secured by such
Lien is not increased;
(l) any interest or title of a lessor in the property subject
to any lease giving rise to a Capital Lease Obligation permitted under
Section 6.01(f);
(m) leases or subleases granted in the ordinary course of
business to others that do not materially interfere with the business
of the Borrower and its Restricted Subsidiaries;
(n) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(o) Liens of utilities incurred in the ordinary course of
business on cables and other property affixed to transmission poles
pursuant to Pole Agreements or Pole Rental Leases;
(p) Liens upon shares of stock or other ownership interests
held by the Borrower and its
Restricted Subsidiaries in Unrestricted Subsidiaries; and
(q) additional Liens on property to secure Indebtedness so
long as the aggregate principal amount of such Indebtedness does not at
any time exceed $55,000,000.
Section 6.03. No Other Negative Pledge; Restrictive
Agreements. None of the Credit Parties will, nor will they cause or permit any
of the Restricted Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement prohibiting, restricting or
conditioning the creation or assumption of any Lien upon any of its property or
assets, or the ability of any Restricted Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or other ownership
interests or to make or repay loans or advances to the Borrower or any
Restricted Subsidiary or to Guarantee Indebtedness of the Borrower or any
Restricted Subsidiary under any of the Loan Documents, other than:
(i) in favor of the Administrative Agent, the Lenders and the
Issuing Banks;
(ii) in connection with Indebtedness that may be secured by a
Lien in compliance with Section 6.02(b), 6.02(l), 6.02(p) or 6.02(q),
provided that such prohibition or condition does not apply to any
property or assets not subject to such Lien;
(iii) in connection with any lease permitted under Section
6.05 solely to the extent that such lease prohibits a Lien on the lease
or the property subject to such lease;
(iv) pursuant to any agreement entered into by the Borrower or
any Restricted Subsidiary in connection with an Asset Sale (including
the sale of a Restricted Subsidiary) or Asset Swap for the period
beginning with the date such agreement is entered into through the date
such Asset Sale or Asset Swap is consummated, provided that (x) such
restriction shall only relate to the property being sold pursuant to
such Asset Sale or Asset Swap and (y) such Asset Sale or Asset Swap is
permitted hereunder;
(v) pursuant to customary provisions in leases and other
contracts restricting the assignment thereof;
(vi) covenants by the Borrower or its Restricted Subsidiaries
in favor of the holders of senior unsecured Indebtedness of the
Borrower or its Restricted Subsidiaries incurred in accordance with
Section 6.01(g) requiring that any Liens granted by the Borrower or any
of its Restricted Subsidiaries after the date hereof (other than Liens
described in clauses (ii) through (iv) above) secure such senior
unsecured Indebtedness equally and ratably; and
(vii) restrictions and conditions imposed by law or by any of
the Loan Documents.
Section 6.04. Unrestricted Subsidiaries. The Borrower shall
not designate any Subsidiary as an "Unrestricted Subsidiary" unless:
(a) such Subsidiary has no Indebtedness any default with
respect to which (including any rights that the holders thereof may
have to take enforcement action against an Unrestricted Subsidiary)
would permit upon notice, lapse of time or both any holder of any other
Indebtedness of the Borrower or any Restricted Subsidiary to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity;
(b) neither the Borrower nor any other Restricted Subsidiary
has any direct or indirect obligation to maintain or preserve such
Subsidiary's financial condition or to cause such Subsidiary to achieve
any specified levels of operating results, except in respect of a
Guarantee of Indebtedness that would be a permitted Restricted
Investment under Section 6.08; and
(c) at the time thereof and after giving effect thereto, no
Default or Event of Default shall have occurred or be continuing.
Any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary pursuant to this Section 6.04 shall constitute an Investment in such
Unrestricted Subsidiary in an amount equal to the aggregate amount of the
Investments (determined in accordance with the last paragraph of Section 6.06)
by the Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary
at the time of such designation.
Section 6.05. Sale and Lease-Back Transactions. Except as
described in the following sentence, none of the Credit Parties will, nor will
it cause or permit any of the Restricted Subsidiaries to, enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred if its obligations in respect
of such rent or lease gives rise to a Capital Lease Obligation. Notwithstanding
the foregoing, nothing in this Section 6.05 shall prohibit any Credit Party or
any of its Restricted Subsidiaries from entering into any such arrangement to
the extent the respective sale or transfer constitutes an Asset Sale permitted
under Section 6.07, and the respective Capital Lease Obligation constitutes
Indebtedness and Liens permitted under Section 6.01 and 6.02, respectively.
Section 6.06. Investments. None of the Credit Parties will,
nor will they cause or permit any of the Restricted Subsidiaries to, make or
permit to remain outstanding any Investment except:
(a) Permitted Investments;
(b) Investments by the Borrower and its Restricted
Subsidiaries in the Borrower and its Restricted Subsidiaries;
(c) Investments constituting Acquisitions or Asset Swaps
permitted under Section 6.07(d);
(d) Investments constituting Restricted Transactions
permitted under Section 6.08; and
(e) additional Investments in an aggregate amount up to but
not exceeding $5,000,000 at any one time outstanding.
For purposes hereof, the aggregate amount of an Investment at
any time shall be deemed to be equal to (A) the aggregate amount of cash,
together with the aggregate fair market value of property, loaned, advanced,
contributed, transferred or otherwise invested that gives rise to such
Investment minus (B) the aggregate amount of dividends, distributions or other
payments received in cash, and the fair market value of distributions of
property, in respect of such Investment; the amount of an Investment shall not
in any event be reduced by reason of any write-off of such Investment nor
increased by any increase in the amount of earnings retained in the Person in
which such Investment is made that have not been dividended, distributed or
otherwise paid out.
None of the Credit Parties will, nor will it permit any of the
Restricted Subsidiaries to, enter into any Hedging Agreement, except in the
ordinary course of its business in connection with its financial planning and
not for speculative purposes.
Section 6.07. Prohibition of Fundamental Changes.
(a) Restrictions on Mergers, Etc. None of the Credit Parties
will, nor will it permit any of the Restricted Subsidiaries to, enter into any
transaction of merger or consolidation or amalgamation, or liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution).
(b) Restrictions on Acquisitions. None of the Credit Parties
will, nor will it permit any of the Restricted Subsidiaries to, acquire any
business or property from, or capital stock of, or be a party to any Acquisition
of or Asset Swap with, any Person except for purchases of equipment, programming
rights and other property to be sold or used in the ordinary course of business,
Investments permitted under Section 6.06, and Capital Expenditures not
prohibited hereunder.
(c) Restrictions on Asset Sales and Other Dispositions. None
of the Credit Parties will, nor will it permit any of the Restricted
Subsidiaries to, effect any Asset Sale or Asset Swap, whether in one transaction
or a series of transactions, but excluding (i) any sale of obsolete or worn-out
property, tools or equipment no longer used or useful in its business so long as
the amount thereof sold in any single fiscal year by the Borrower and its
Restricted Subsidiaries shall not have a fair market value in excess of
$5,000,000 and (ii) any equipment, programming rights or other property sold or
disposed of in the ordinary course of business and on ordinary business terms.
(d) Certain Permitted Transactions. Notwithstanding the
foregoing provisions of this Section 6.07:
(i) Intercompany Mergers and Dispositions, Etc. So long as at
the time thereof and immediately after giving effect thereto no Default
or Event of Default shall have occurred and be continuing, (A) any
Restricted Subsidiary may be merged with and into the Borrower in a
transaction in which the Borrower is the continuing or surviving
entity; (B) any Restricted Subsidiary may be merged into or
consolidated with any other Restricted Subsidiary of the Borrower
(except that if any such transaction shall be between a Guarantor and a
Restricted Subsidiary that is not a Guarantor, and such Guarantor is
not the continuing or surviving entity, then the continuing or
surviving entity shall have become a Guarantor hereunder pursuant to
Section 5.09) and (C) any Restricted Subsidiary may sell, lease,
transfer or otherwise dispose of any or all of its property (upon
voluntary dissolution, liquidation or otherwise) to the Borrower or any
other Restricted Subsidiary (except that if any such sale, lease,
transfer or other disposition shall be effected by a Guarantor to a
Restricted Subsidiary that is not a Guarantor, then the acquiring
Restricted Subsidiary shall have become a Guarantor hereunder pursuant
to Section 5.09).
(ii) Dispositions of Contributed Systems. So long as at the
time thereof and immediately after giving effect thereto no Default or
Event of Default shall have occurred and be continuing, the Borrower
and its Restricted Subsidiaries may effect Asset Sales of (or, to the
extent permitted by Section 6.08, transfer to Unrestricted
Subsidiaries) one or more CATV Systems included in the Contributed
Systems, enter into Asset Swaps (including with Unrestricted
Subsidiaries) involving one or more of such CATV Systems, and may
effect Restricted Transactions with respect to one or more of such CATV
Systems permitted under Section 6.08, in each case with the consent of
the Required Lenders (which consent shall not be unreasonably
withheld), provided that
(A) no such consent shall be required to the extent
that (x) the portion of the Annualized Operating Cash Flow for
the most recent fiscal quarter for which financial statements
of the Borrower and its Restricted Subsidiaries are available
(the "most recent fiscal quarter") attributable to such CATV
Systems disposed of by the Borrower and its Restricted
Subsidiaries in any single Asset Sale, Asset Swap or Restricted
Transactions (or transferred to Unrestricted Subsidiaries) does
not represent more than 25% of Annualized Operating Cash Flow
for the most recent full fiscal quarter for which financial
statements of the Borrower and its Restricted Subsidiaries are
available, and (y) the aggregate of the amounts (each such
amount a "Prior Annualized Operating Cash Flow Amount")
determined pursuant to the foregoing clause (x) for each
disposition of such CATV Systems after the Closing Date
pursuant to this clause (ii) does not represent more than 35%
of the sum of (I) Annualized Operating Cash Flow for the most
recent fiscal quarter plus (II) all Prior Annualized Operating
Cash Flow Amounts attributable to CATV Systems previously
disposed of pursuant to this clause (ii) and not included in
the determination of Annualized Operating Cash Flow for the
most recent fiscal quarter; and
(B) after giving effect to any such Asset Sale, Asset
Swap or Restricted Transactions (or transfer to Unrestricted
Subsidiaries), the Borrower shall be in pro forma compliance
with Section 6.13 (the determination of such compliance to be
calculated on a pro forma basis, as at the end of and for the
most recent full fiscal quarter for which financial statements
of the Borrower and its Restricted Subsidiaries are available
delivered, under the assumption that such Asset Sale, Asset
Swap or Restricted Transactions (or transfer) shall have
occurred, and any Indebtedness repaid in connection therewith
shall have been reduced, at the beginning of the applicable
period, and to the extent the aggregate consideration received
in connection with such Asset Sale, Asset Swap or Restricted
Transactions (or the aggregate fair market value of the assets
transferred to an Unrestricted Subsidiary) shall exceed
$50,000,000, the Borrower shall have delivered to the
Administrative Agent a certificate of a Financial Officer
showing calculations in reasonable detail to demonstrate such
compliance.
(iii) Dispositions of Other CATV Systems. So long as at the
time thereof and immediately after giving effect thereto no Default or
Event of Default shall have occurred and be continuing, the Borrower
and its Restricted Subsidiaries may effect Asset Sales of, or Asset
Swaps involving, one or more CATV Systems (other than CATV Systems
included in the Contributed Systems) with third parties (including
Unrestricted Subsidiaries), and may make Restricted Transactions with
respect to one or more of such CATV Systems permitted under Section
6.08, provided that no such Asset Sale shall be effected except for
consideration consisting wholly of cash in an amount at least equal to
the fair market value of the CATV Systems being sold.
(iv) Acquisitions of CATV Systems. So long as at the time
thereof and immediately after giving effect thereto no Default or Event
of Default shall have occurred and be continuing, the Borrower and its
Restricted Subsidiaries may effect Acquisitions, provided that
(A) the aggregate Purchase Price of all such
Acquisitions after the date hereof shall not exceed
$150,000,000;
(B) after giving effect to any such Acquisition, the
Borrower shall be in pro forma compliance with Section 6.13
(the determination of such compliance to be calculated on a pro
forma basis, as at the end of and for the most recent fiscal
quarter, under the assumption that such Acquisition shall have
occurred, and any Indebtedness arising in connection therewith
shall have been incurred, at the beginning of the applicable
period, and under the assumption that interest for such period
had been equal to the actual weighted average interest rate in
effect for the Advances hereunder on the date of such
Acquisition) and to the extent the aggregate consideration paid
or delivered in connection with such Acquisition shall exceed
$50,000,000, the Borrower shall have delivered to the
Administrative Agent a certificate of a Financial Officer
showing calculations in reasonable detail to demonstrate such
compliance; and
(C) each such Acquisition is consummated with the
consent of the board of directors (or the equivalent entity) of
the Person being acquired.
Section 6.08. Restricted Transactions. None of the Credit
Parties will, nor will it cause or permit any of the Restricted Subsidiaries to,
make any Restricted Transaction, provided that, so long as at the time thereof,
and after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing, the Borrower or any Restricted Subsidiary may effect
the following Restricted Transactions (subject, in each case, to the applicable
conditions set forth below):
(a) the Borrower or any Restricted Subsidiary may effect
Restricted Transactions consisting of the repayment of the principal of
Existing Affiliate Indebtedness from the proceeds of Term Advances
hereunder, provided that, at the time of any such Restricted
Transaction and after giving effect thereto, the Borrower shall be in
pro forma compliance with Section 6.13 (the determination of such
compliance to be calculated on a pro forma basis, as at the end of and
for the fiscal quarter most recently ended prior to the date of such
Restricted Transaction for which financial statements of the Borrower
and its Restricted Subsidiaries are available, under the assumption
that such Restricted Transaction shall have occurred, and any
Indebtedness arising in connection therewith shall have been incurred,
at the beginning of the applicable period, and under the assumption
that interest for such period had been equal to the actual weighted
average interest rate in effect for the Advances hereunder on the date
of such transaction);
(b) the Borrower and its Restricted Subsidiaries may effect
Restricted Transactions consisting
of the payment of interest in respect of New Affiliate Indebtedness;
(c) the Borrower and its Restricted Subsidiaries may effect
Restricted Transactions of any kind if at the time thereof, and after
giving effect thereto, the Leverage Ratio is less than 4.50 to 1; and
(d) the Borrower and its Restricted Subsidiaries may, on any
date (herein a "Determination Date"), effect Restricted Transactions of
any kind in an amount not to exceed the sum of the aggregate Capital
Contributions during the period commencing on the date immediately
following the Closing Date through and including the Determination Date
(reduced by the amount of Capital Contributions made in cash during
such period to finance Capital Expenditures), provided that at the time
of any such Restricted Transaction and after giving effect thereto, the
Borrower shall be in pro forma compliance with Section 6.13 (the
determination of such compliance to be calculated on a pro forma basis,
as at the end of and for the fiscal quarter most recently ended prior
to the date of such Restricted Transaction for which financial
statements of the Borrower and its Restricted Subsidiaries are
available, under the assumption that such Restricted Transaction shall
have occurred, and any Indebtedness arising in connection therewith
shall have been incurred, at the beginning of the applicable period,
and under the assumption that interest for such period had been equal
to the actual weighted average interest rate in effect for the Advances
hereunder on the date of such transaction).
For purposes hereof, the amount of a Restricted Investment at any time shall be
determined in accordance with the last paragraph of Section 6.06 and the amount
of a Restricted Payment shall be deemed to be equal to the aggregate amount of
cash, together with the aggregate fair market value of property, dividended,
distributed or otherwise transferred that gives rise to such Restricted Payment.
Section 6.09. Transactions with Affiliates. Except as
otherwise expressly permitted hereunder, none of the Credit Parties will, nor
will they cause or permit any of the Restricted Subsidiaries to, sell or
transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except that the Borrower and any Restricted Subsidiary may engage in
any of the foregoing transactions on terms and conditions not less favorable to
the Borrower and its Restricted Subsidiaries than could be obtained on an
arm's-length basis from unrelated third parties.
Section 6.10. Management Fees. The Borrower will not, and will
not permit any of its Restricted Subsidiaries, to be obligated to pay Management
Fees to any Person other than pursuant to the Management Agreement. The Borrower
will not permit the aggregate amount of Management Fees accrued and paid during
any fiscal quarter of the Borrower to exceed 5% of the gross operating revenue
of the Borrower and its Restricted Subsidiaries for the immediately preceding
fiscal quarter, provided that in no event shall the Borrower or any of its
Restricted Subsidiaries pay any Management Fees (a) to any Person other than to
the Manager pursuant to the Management Agreement, (b) if at the time of such
payment, or after giving effect thereto, any Default or Event of Default shall
have occurred and be continuing or (c) in any circumstance where such payment is
not permitted by the Management Fee Subordination Agreement. Any Management Fees
which may not be paid as a result of the limitations set forth in the forgoing
provisions of this Section 6.10 shall be deferred and shall not be payable,
except to the extent constituting a Restricted Payment permitted under Section
6.08, until the principal of and interest on the Advances, all Letter of Credit
Liabilities, and all other amounts owing hereunder, shall have been paid in full
and the Commitments shall have terminated.
Section 6.11. Lines of Business. None of the Credit Parties
will, nor will it cause or permit any of the Restricted Subsidiaries to, engage
to any extent in any business other than the business of owning and operating
CATV Systems and business activities reasonably related thereto.
Section 6.12. Certain Restrictions Applicable to Senior
Unsecured and Subordinated Indebtedness. Neither the Borrower nor any of its
Restricted Subsidiaries will consent to any modification, supplement or waiver
of any of the provisions of any Indebtedness incurred pursuant to Section
6.01(g) without the prior written consent of the Required Lenders (in the case
of any such action affecting senior unsecured Indebtedness incurred pursuant to
Section 6.01(g)) or of the Arranging Agents (in the case of any such action
affecting subordinated Indebtedness incurred pursuant to Section 6.01(g)).
Neither the Borrower nor any of its Restricted Subsidiaries will make any
payment of interest in respect of Existing Affiliate Indebtedness if at the time
thereof, and after giving effect thereto, any Default or Event of Default shall
have occurred and be continuing. In addition, neither the Borrower nor any of
its Restricted Subsidiaries shall purchase, redeem, retire or otherwise acquire
for value, or set apart any money for a sinking, defeasance or other analogous
fund for the purchase, redemption, retirement or other acquisition of, or make
any voluntary payment or prepayment of the principal of or interest on, or any
other amount owing in respect of, any Indebtedness incurred pursuant to Section
6.01(g), except that the Borrower may make payments of principal and interest on
the regularly-scheduled payment dates with respect to the principal of and
interest on such Indebtedness in accordance with the respective instruments
pursuant to which such Indebtedness is issued.
Section 6.13. Financial Covenants. None of the Credit
Parties will, nor will they cause or permit any of its Restricted Subsidiaries
to:
(a) Fixed Charge Coverage Ratio. Permit the Fixed Charges
Ratio as at the last day of any fiscal quarter ending on or after March
31, 2001 to be less than 1.00 to 1, provided that if the Leverage Ratio
as of the end of any such fiscal quarter is below 3.50 to 1, the
requirements of this clause (a) shall not apply to such quarter.
(b) Leverage Ratio. Permit the Leverage Ratio as at the last
day of any fiscal quarter to exceed the ratio set forth below opposite
such fiscal quarter, or permit the Leverage Ratio as at any date on
which the Borrower or any of its Restricted Subsidiaries shall incur
any Indebtedness (including any Indebtedness hereunder) to exceed the
ratio set forth below opposite such date:
<TABLE>
<CAPTION>
Period Maximum Ratio
Closing Date through and including
<S> <C>
December 31, 1999 6.50 to 1
January 1, 2000 through and including
June 30, 2000 6.25 to 1
July 1, 2000 through and including
December 31, 2000 6.00 to 1
January 1, 2001 through and including
December 31, 2001 5.75 to 1
January 1, 2002 through and including
December 31, 2002 5.50 to 1
January 1, 2003 through and including
December 31, 2003 5.00 to 1
Each fiscal quarter after January 1, 2004 4.50 to 1
</TABLE>
(c) Cash Interest Coverage Ratio. Permit the Cash Interest
Coverage Ratio on the last day of any fiscal quarter set forth below to
be less than the ratio set forth below opposite such fiscal quarter:
<TABLE>
Period Minimum Ratio
<S> <C>
Closing Date through and including
December 31, 1999 1.50 to 1
January 1, 2000 through and including
June 30, 2000 1.75 to 1
Each fiscal quarter after July 1, 2000 2.00 to 1
</TABLE>
(d) Pro Forma Debt Service Coverage Ratio. Permit the Pro
Forma Debt Service Coverage Ratio as at the last day of any fiscal
quarter ending on or after March 31, 2000 to be less than 1.10 to 1,
provided that if the Leverage Ratio as of the end of any such fiscal
quarter is below 3.50 to 1, the requirements of this clause (d) shall
not apply to such quarter.
Section 6.14. Modifications to Certain Agreements, Etc.
Neither the Borrower nor any of its Restricted Subsidiaries will (i) consent to
any modification, supplement or waiver of any of the provisions of the
Management Agreement or (ii) consent to any modification, supplement or waiver
of any provisions of its articles, charter, by-laws, partnership agreement or
other organizational documents, the Contribution Agreement or the Exchange
Agreement, in each case to the extent that any such modification, supplement or
waiver under clause (i) or (ii) could reasonably be expected to have a Material
Adverse Effect, in each case without the prior written consent of the Required
Lenders.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) any representation or warranty of any Obligor made or
deemed made in or in connection with any Loan Document or the
borrowings or issuances of Letters of Credit hereunder, or any
representation, warranty, statement or information contained in any
report, certificate, financial statement or other instrument furnished
in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made,
deemed made or furnished; or
(b) the Borrower shall default in the payment of any principal
of any Advance or any reimbursement obligation with respect to any
Letter of Credit when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise; or
(c) the Borrower shall default in the payment of any interest
on any Advance or any fee or any other amount (other than an amount
referred to in paragraph (b) above) due under any Loan Document, when
and as the same shall become due and payable, and such default shall
continue unremedied for a period of three or more Business Days; or
(d) any Credit Party shall default in the due observance or
performance of any covenant, condition or agreement contained in
Section 5.09 or in Article VI (it being understood that it shall
constitute an Event of Default hereunder if, as at any date, the
Borrower shall have defaulted in the observance or performance of its
covenants under Section 6.13 as at the most recent date as of which
such covenants are required to be met as specified in Section 6.13); or
(e) any Obligor shall default in the due observance or
performance of any covenant, condition or agreement contained in any
Loan Document (other than those specified in clauses (b), (c) and (d)
above) and such default shall continue unremedied for a period of 30
days after notice thereof from the Administrative Agent or any Lender
to the Borrower; or
(f) a default shall occur in the payment when due (subject to
any applicable grace period), whether by acceleration or otherwise, of
any Indebtedness (other than Indebtedness hereunder) of the Borrower or
any other Obligor having a principal amount, individually or in the
aggregate, in excess of $10,000,000 (in the case of the Borrower and
its Restricted Subsidiaries) or $25,000,000 (in the case of other
Obligors), or a default shall occur in the performance or observance of
any obligation or condition with respect to such Indebtedness if the
effect of such default is to accelerate the maturity of any such
Indebtedness or to cause or declare such Indebtedness to become due and
payable or to require such Indebtedness to be prepaid, redeemed,
purchased or defeased, or require an offer to purchase or defease such
Indebtedness to be made, prior to its expressed maturity, or (only in
the case of the Borrower or any Restricted Subsidiary) such default
shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or
agent for such holders, to take the foregoing actions; or
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of any Credit Party, or of a
substantial part of the property or assets of any Credit Party, under
the Bankruptcy Code or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for any Credit Party or for a substantial part of the property
or assets of any Credit Party or (iii) the winding-up or liquidation of
any Credit Party; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any
of the foregoing shall be entered; or
(h) any Credit Party shall (i) voluntarily commence any
proceeding or file any petition seeking relief under the Bankruptcy
Code or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in clause (g) above, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for any Credit Party or
for a substantial part of the property or assets of any Credit Party,
(iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its Indebtedness as it becomes due
or (vii) take any action for the purpose of effecting any of the
foregoing; or
(i) one or more judgments for the payment of money in an
aggregate amount in excess of $10,000,000 (exclusive of any amounts
fully covered by insurance, less any applicable deductible, and as to
which the insurer has acknowledged its responsibility to cover such
judgment or order) shall be rendered against any Credit Party (or any
combination of Credit Parties) and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of the Borrower or any of
its Restricted Subsidiaries to enforce any such judgment; or
(j) a Change of Control shall occur; or
(k) either (x) any of the Borrower, any member of its
Controlled Group or any other Person shall institute any steps to
terminate a Pension Plan if, as a result of such termination, the
Borrower or any such member could be required to make a contribution to
such Pension Plan, or could reasonably expect to incur a liability or
obligation to such Pension Plan, in excess of $1,000,000; or (y) a
contribution failure shall occur with respect to any Pension Plan which
failure is sufficient to give rise to a Lien under section 302(f) of
ERISA; or
(l) one or more Franchises relating to the CATV Systems of the
Borrower or any of its Restricted Subsidiaries shall be terminated or
revoked such that the Borrower or such Restricted Subsidiary is no
longer able to operate such Franchises and retain the revenue received
therefrom or the Borrower or such Restricted Subsidiary or the grantors
of such Franchises shall fail to renew such Franchises at the stated
expiration thereof such that the Borrower or such Restricted Subsidiary
is no longer able to operate such Franchises and retain the revenue
received therefrom, and the effect of the foregoing, individually or in
the aggregate, could reasonably be expected to result in a Material
Adverse Effect; or
(m) the Partnership Agreement of the Borrower shall be
modified in any manner that would adversely affect the obligations of
the Borrower, or the rights of the Lenders or the Administrative Agent,
hereunder or under any of the other Loan Documents;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Lender to make Advances and of each Issuing Bank
to issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the Advances and the Notes,
all interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Advances and
the Notes, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower; provided that in
the case of the occurrence of an Event of Default referred to in clause (g) or
(h) of this Article VII with respect to any Credit Party, (x) the obligation of
each Lender to make Advances and of each Issuing Bank to issue Letters of Credit
shall automatically be terminated and (y) the Advances and the Notes, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
Section 7.02. Actions in Respect of the Letters of Credit Upon
Default. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, irrespective of whether it is taking any of the
actions described in Section 7.01 or otherwise, make demand upon the Borrower
to, and forthwith upon such demand the Borrower will, pay to the Administrative
Agent on behalf of the Lenders in same day funds at the Administrative Agent's
Account, for deposit in a segregated account held by the Administrative Agent,
an amount equal to the aggregate Available Amount of all Letters of Credit then
outstanding, which funds shall be retained by the Administrative Agent as
collateral security for the Letter of Credit Liabilities until such time as the
Letters of Credit shall have been terminated and all of such Letter of Credit
Liabilities paid in full.
If at any time the Administrative Agent determines that any
funds so segregated and held are subject to any right or claim of any Person
other than the Administrative Agent and the Lenders or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in such
segregated account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then segregated and
held that the Administrative Agent determines to be free and clear of any such
right and claim.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Section 8.01. Authorization and Action. Each Lender and each
Issuing Bank hereby appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under this Agreement and the other Loan Documents, to which it is a party, as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of the Notes), the Administrative
Agent shall not be required to exercise any discretion or take any action, and
shall not be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) except upon the instructions
of the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of the Notes; provided that the Administrative Agent shall not
be required to take any action that exposes it to personal liability or that is
contrary to any of the Loan Documents or applicable law. The Administrative
Agent agrees to give to the Issuing Banks and the Lenders prompt notice of each
notice given to it by any Obligor pursuant to the terms of this Agreement or any
other Loan Document.
Section 8.02. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent (i) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an assignee, as provided in Section 10.07; (ii) may consult with
legal counsel (including counsel for any Obligor), 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; (iii) makes no warranty or
representation to the Issuing Banks or the Lenders and shall not be responsible
to any of them for any statements, warranties or representations made in or in
connection with the Loan Documents; (iv) 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 any Loan Document on the part of any Obligor or to inspect the
property (including the books and records) of any Obligor; (v) shall not be
responsible to the Issuing Banks or the Lenders for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan Document
or any other instrument or document furnished pursuant hereto; and (vi) shall
incur no liability under or in respect of any Loan Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
Section 8.03. Citibank and Affiliates. With respect to its
Commitments and the Advances made by it, Citibank shall have the same rights and
powers under the Loan Documents as any other Lender and may exercise the same as
though it were not the Administrative Agent; and the term "Lender" or "Lenders"
shall, unless otherwise expressly indicated, include Citibank in its individual
capacity. Citibank and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures for, accept investment banking engagements from
and generally engage in any kind of business with, any Obligor, any of its
Subsidiaries, any of its Affiliates and any Person who may do business with or
own securities of any Obligor or any such Subsidiary or Affiliate, all as if
Citibank were not the Administrative Agent and without any duty to account
therefor to the Lenders.
Section 8.04. Lender Credit Decision. Each Lender and each
Issuing Bank acknowledges that it has, independently and without reliance upon
the Administrative Agent, or any other Lender and based on the financial
statements referred to in Section 4.05 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 and each Issuing Bank also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
Section 8.05. Indemnification. The Lenders agree to indemnify
the Administrative Agent (to the extent not promptly reimbursed by the
Borrower), ratably according to the principal amounts of the Notes then held by
them, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against any of them in any way relating to or arising out of the Loan Documents
or any action taken or omitted by any of them under the Loan Documents; provided
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 gross negligence or willful misconduct of the
Administrative Agent. Without limitation of the foregoing, each Lender agrees to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any costs and expenses payable by the Borrower under Section 10.04 of this
Agreement to the extent that the Administrative Agent is not promptly reimbursed
for such costs and expenses by the Borrower.
Section 8.06. Right to Request Further Indemnification. Except
for action expressly required of the Administrative Agent hereunder and under
the other Loan Documents, the Administrative Agent shall in all cases be fully
justified in refusing to act hereunder and thereunder unless it shall be further
indemnified to its satisfaction by the Lenders proportionately in accordance
with the obligations then due and payable to each of them against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
Section 8.07. Successor Administrative Agent. The
Administrative Agent may resign at any time by giving written notice thereof to
the Issuing Banks, the Lenders and the Borrower and may be removed at any time
with or without cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's giving of notice of
resignation or the Required Lenders' removal of the Administrative Agent, then
the retiring Administrative Agent may, on behalf of the Issuing Banks and the
Lenders, appoint a successor Administrative Agent, which shall be an Initial
Lender or a commercial bank organized under the laws of the United States 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 Administrative Agent
hereunder by a successor Administrative Agent such successor Administrative
Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Administrative Agent and such
retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring Administrative Agent's
resignation or removal hereunder as Administrative Agent, the provisions of this
Article VIII shall inure to the benefit of the Administrative Agent as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement.
Section 8.08. Co-Syndication Agents and other Titles. The
Co-Syndication Agents named on the cover page of this Agreement, and the Lead
Arranger and Sole Book Manager and Documentation Agent identified on the
signature pages hereof, shall have no duties or liabilities to any Person
hereunder or under the other Loan Documents except in their respective separate
capacities as Lenders or Issuing Banks hereunder.
ARTICLE IX
THE GUARANTEE
Section 9.01. The Guarantee. Each of the Guarantors hereby,
jointly and severally, guarantees to each Lender, each Issuing Bank and the
Administrative Agent and their respective successors and assigns the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the principal of and interest on the Advances made by the Lenders
to, and the Notes held by each Lender of, the Borrower, and all other amounts
from time to time owing to the Lenders, the Issuing Banks and the Administrative
Agent by (and to each affiliate thereof that is a party to any Hedging Agreement
entered into with) the Borrower under this Agreement, any Hedging Agreement and
the Notes strictly in accordance with the terms thereof (such obligations being
herein collectively called the "Guaranteed Obligations"). The Guarantors hereby
further jointly and severally agree that if the Borrower shall fail to pay in
full when due (whether at stated maturity, by acceleration or otherwise) any of
the Guaranteed Obligations, the Guarantors will promptly pay the same, without
any demand or notice whatsoever, and that in the case of any extension of time
of payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration or
otherwise) in accordance with the terms of such extension or renewal.
For purposes hereof, it is understood any Guaranteed
Obligations to any Person arising under an agreement entered into at the time
such Person (or an affiliate thereof) is a "Lender" party to this Agreement
shall nevertheless continue to constitute Guaranteed Obligations for purposes
hereof, notwithstanding that such Person (or its affiliate) may have assigned
all of its Advances, its obligations in respect of Letters of Credit and other
interests in this Agreement and, therefor, at the time a claim is to be made in
respect of such Guaranteed Obligations, such Person (or its affiliate) is no
longer a "Lender" party hereto.
Section 9.02. Obligations Unconditional, Etc. The obligations
of the Guarantors under Section 9.01 are absolute and unconditional, joint and
several, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Borrower under this Agreement or any
other agreement or instrument referred to herein, or any substitution, release
or exchange of any other guarantee of or security for any of the Guaranteed
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being the intent of this Section 9.02 that the obligations of the Guarantors
hereunder shall be absolute and unconditional, joint and several, under any and
all circumstances. In full recognition and in furtherance of the foregoing, each
Guarantor agrees that:
(a) Without affecting the enforceability or effectiveness of
Section 9.01 in accordance with its terms and without affecting,
limiting, reducing, discharging or terminating the liability of such
Guarantor, or the rights, remedies, powers and privileges of the
Administrative Agent and the Lenders under this Agreement or any other
agreement or instrument referred to herein or therein, the
Administrative Agent and the Lenders may, at any time and from time to
time and without notice or demand of any kind or nature whatsoever:
(i) amend, supplement, modify, extend, renew, waive,
accelerate or otherwise change the time for payment or
performance of, or the terms of, all or any part of the
Guaranteed Obligations (including any increase or decrease in
the rate or rates of interest on all or any part of the
Guaranteed Obligations);
(ii) amend, supplement, modify, extend, renew, waive
or otherwise change, or enter into or give, any Loan Document
or any agreement, security document, guarantee, approval,
consent or other instrument with respect to all or any part of
the Guaranteed Obligations, any Loan Document or any such
other instrument or any term or provision of the foregoing (it
being understood that this clause (ii) shall not be deemed to
constitute a consent by any Guarantor to any such amendment
with respect to any Loan Document to which it is a party);
(iii) accept or enter into new or additional
agreements, security documents, guarantees (including letters
of credit) or other instruments in addition to, in exchange
for or relative to any Loan Document, all or any part of the
Guaranteed Obligations or any collateral now or in the future
serving as security for the Guaranteed Obligations;
(iv) accept or receive (including from any other
Guarantor) partial payments or performance on the Guaranteed
Obligations (whether as a result of the exercise of any right,
remedy, power or privilege or otherwise);
(v) accept, receive and hold any additional
collateral for all or any part of the
Guaranteed Obligations (including from any other Guarantor);
(vi) release, reconvey, terminate, waive, abandon,
allow to lapse or expire, fail to perfect, subordinate,
exchange, substitute, transfer, foreclose upon or enforce any
collateral, security documents or guarantees (including
letters of credit or the obligations of any other Guarantor)
for or relative to all or any part of the Guaranteed
Obligations;
(vii) apply any collateral or the proceeds of any
collateral or guarantee (including any letter of credit or the
obligations of any other Guarantor) to all or any part of the
Guaranteed Obligations in such manner and extent as the
Administrative Agent or any Lender may in its discretion
determine;
(viii) release any Person (including any other
Guarantor) from any personal liability with respect to all or
any part of the Guaranteed Obligations;
(ix) settle, compromise, release, liquidate or
enforce upon such terms and in such manner as the
Administrative Agent or the Lenders may determine or as
applicable law may dictate all or any part of the Guaranteed
Obligations or any collateral on or guarantee (including any
letter of credit issued with respect to) of all or any part of
the Guaranteed Obligations;
(x) consent to the merger or consolidation of, the
sale of substantial assets by, or other restructuring or
termination of the corporate existence of the Borrower or any
other Person (including any other Guarantor);
(xi) proceed against the Borrower, such or any other
Guarantor or any other guarantor of (including any issuer of
any letter of credit issued with respect to) all or any part
of the Guaranteed Obligations or any collateral provided by
any Person and exercise the right, remedies, powers and
privileges of the Administrative Agent and the Lenders under
this Agreement or any other agreement or instrument referred
to herein, or otherwise in such order and such manner as the
Administrative Agent or any Lender may, in its discretion,
determine, without any necessity to proceed upon or against or
exhaust any collateral, right, remedy, power or privilege
before proceeding to call upon or otherwise enforce Section
9.01 as to any Guarantor;
(xii) foreclose upon any deed of trust, mortgage or
other instrument creating or granting liens on any interest in
real Property by judicial or nonjudicial sale or by deed in
lieu of foreclosure, bid any amount or make no bid in any
foreclosure sale or make any other election of remedies with
respect to such liens or exercise any right of set-off;
(xiii) obtain the appointment of a receiver with
respect to any collateral for all or any part of the
Guaranteed Obligations and apply the proceeds of such
receivership as the Administrative Agent or any Lender may in
its discretion determine (it being agreed that nothing in this
clause (xiii) shall be deemed to make the Administrative Agent
or any Lender a party in possession in contemplation of law,
except at its option);
(xiv) enter into such other transactions or business
dealings with any other Guarantor, the Borrower, any
Subsidiary or Affiliate of the Borrower or any other guarantor
of all or any part of the Guaranteed Obligations as the
Administrative Agent or any Lender may desire;
(xv) bring and prosecute a separate action or actions
against any Guarantor whether or not any other Guarantor, the
Borrower, any other guarantor, the issuer of any letter of
credit or any other Person is joined in any such action or a
separate action is or separate actions are brought against any
other Guarantor, the Borrower, any other guarantor, the issuer
of any letter of credit or any other Person or any collateral
for all or any part of the Guaranteed Obligations; and
(xvi) do all or any combination of the actions set
forth in this Section 9.02.
(b) The enforceability and effectiveness of this Article IX
and the liability of the Guarantors, and the rights remedies, powers
and privileges of the Administrative Agent and the Lenders, under this
Agreement or any other agreement or instrument referred to herein or
therein, shall not be affected, limited, reduced, discharged or
terminated, and each Guarantor hereby expressly waives any defense now
or in the future arising, by reason of:
(i) the illegality, invalidity, irregularity,
authenticity, or unenforceability of all or any part of the
Guaranteed Obligations, this Agreement or any other agreement
or instrument referred to herein or therein, or any agreement,
security document, guarantee or other instrument relative to
all or any part of the Guaranteed Obligations;
(ii) any disability or other defense of the Borrower
or any other Guarantor with respect to all or any part of the
Guaranteed Obligations or any other guarantor of all or any
part of the Guaranteed Obligations (including any issuer of
any letters of credit), including the effect of any statute of
limitations that may bar the enforcement of all or any part of
the Guaranteed Obligations or the obligations of any such
other guarantor;
(iii) the illegality, invalidity, irregularity,
authenticity or unenforceability of any security or guarantee
(including any letter of credit) for all or any part of the
Guaranteed Obligations or the lack of perfection or continuing
perfection or failure of the priority of any lien on any
collateral for all or any part of the Guaranteed Obligations;
(iv) the cessation, for any cause whatsoever, of the
liability of the Borrower or any other Guarantor (other than
subject to Section 9.03, by reason of the full payment and
performance of all Guaranteed Obligations);
(v) any failure of the Administrative Agent or any
Lender to marshal assets in favor of the Borrower or any other
Person (including any other Guarantor), to exhaust any
collateral for all or any part of the Guaranteed Obligations,
to pursue or exhaust any right, remedy, power or privilege it
may have against any other Guarantor, the Borrower, any other
guarantor, all or any part of the Guaranteed Obligations
(including the Issuing Banks in respect of Letters of Credit)
or any other Person or to take any action whatsoever to
mitigate or reduce such or any other Guarantor's liability
under this Article IX, neither the Administrative Agent nor
any Lender being under any obligation to take any such action
notwithstanding the fact that all or any part of the
Guaranteed Obligations may be due and payable and that the
Borrower may be in default of its obligations under this
Agreement or any other agreement or instrument referred to
herein or therein;
(vi) any failure of the Administrative Agent or any
Lender to give notice after any Default of sale or other
disposition of any collateral (including any notice of any
judicial or nonjudicial foreclosure or sale of any interest in
real Property serving as collateral for all or any part of the
Guaranteed Obligations) for all or any part of the Guaranteed
Obligations to the Borrower, any Guarantor or any other Person
or any defect in, or any failure by any Guarantor or any other
Person to receive, any notice that may be given in connection
with any sale or disposition of any collateral;
(vii) any failure of the Administrative Agent or any
Lender to comply with applicable laws in connection with the
sale or other disposition of any collateral for all or any
part of the Guaranteed Obligations, including any failure to
conduct a commercially reasonable sale or other disposition of
any collateral for all or any part of the Guaranteed
Obligations;
(viii) any judicial or nonjudicial foreclosure or
sale of, or other election of remedies with respect to, any
interest in real Property or other collateral serving as
security for all or any part of the Guaranteed Obligations,
even though such foreclosure, sale or election of remedies may
impair the subrogation rights of any Guarantor or may preclude
any Guarantor from obtaining reimbursement, contribution,
indemnification or other recovery from any other Guarantor,
the Borrower any other guarantor or any other Person and even
though the Borrower may not, as a result of such foreclosure,
sale or election of remedies, be liable for any deficiency;
(ix) any benefits the Borrower, any Guarantor or any
other guarantor may otherwise derive from Sections 580(a),
580(b), 580(d) or 726 of the California Code of Civil
Procedure or any comparable provisions of the laws of any
other jurisdiction;
(x) any act or omission of the Administrative Agent,
any Lender or any other person that directly or indirectly
results in or aids the discharge or release of the Borrower or
any other Guarantor, of all or any part of the Guaranteed
Obligations or any security or guarantee (including any letter
of credit) for all or any part of the Guaranteed Obligations
by operation of law or otherwise;
(xi) any law which provides that the obligation of a
surety or guarantor must neither be larger in amount nor in
other respects more burdensome than that of the principal or
which reduces a surety's principal obligation;
(xii) the possibility that the obligations of the
Borrower to the Administrative Agent and the Lenders may at
any time and from time to time exceed the aggregate liability
of the Guarantors under this Article IX;
(xiii) any counterclaim, set-off or other claim which
the Borrower or any other Guarantor has or alleges to have
with respect to all or any part of the Guaranteed Obligations;
(xiv) any failure of the Administrative Agent or any
Lender to file or enforce a claim in any bankruptcy or other
proceeding with respect to any Person;
(xv) the election by the Administrative Agent or any
Lender, in a bankruptcy proceeding of any Person, of the
application or nonapplication of Section 1111(b)(2) of the
United States Bankruptcy Code;
(xvi) any extension of credit or the grant of any
lien under Section 364 of the United States Bankruptcy Code;
(xvii) any use of cash collateral under Section 363
of the United States Bankruptcy Code;
(xviii) any agreement or stipulation with respect to
the provision of adequate
protection in any bankruptcy proceeding of any Person;
(xix) the avoidance of any lien in favor of the
Administrative Agent or any Lender for any reason;
(xx) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against any Person, including any
discharge of, or bar or stay against collecting, all or any
part of the Guaranteed Obligations (or any interest on all or
any part of the Guaranteed Obligations) in or as a result of
any such proceeding;
(xxi) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense
of a surety or guarantor, including by reason of Sections
2809, 2810, 2819, 2839, 2845, 2850, 2899, 3275 and 3433 of the
California Civil Code, and any future judicial decisions or
legislation or of any comparable provisions of the laws of any
other jurisdiction; or
(xxiii) diligence, presentment, demand of payment,
protest and all notices whatsoever.
(c) Each Guarantor represents and warrants to the
Administrative Agent that it has established adequate means of
obtaining financial and other information pertaining to the business,
operations and condition (financial and otherwise) of the Borrower and
its properties on a continuing basis and that such Guarantor is now and
will in the future remain fully familiar with the business, operations
and condition (financial and otherwise) of the Borrower and its
properties. Each Guarantor further represents and warrants that it has
reviewed and approved this Agreement and the related Loan Documents and
is fully familiar with the transactions contemplated by such Loan
Documents and that it will in the future remain fully familiar with
such transaction and with any new Loan Documents and the transaction
contemplated by such Loan Documents. Each Guarantor hereby expressly
waives and relinquishes any duty on the part of the Administrative
Agent or the Lenders (should any such duty exist) to disclose to such
or any other Guarantor any matter of fact or other information related
to the business, operations or condition (financial or otherwise) of
the Borrower or its properties or to any Loan Documents or the
transactions undertaken pursuant to, or contemplated by, such Loan
Documents, whether now or in the future known by the Administrative
Agent or any Lender.
Section 9.03. Reinstatement. The obligations of the Guarantors
under this Article IX shall be automatically reinstated if and to the extent
that for any reason any payment by or on behalf of the Borrower in respect of
the relevant Guaranteed Obligations is rescinded or must be otherwise restored
by any holder of any of the relevant Guaranteed Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, and the
Guarantors jointly and severally agree that they will indemnify the
Administrative Agent, each Issuing Bank and each Lender on demand for all
reasonable costs and expenses (including, without limitation, fees of counsel)
incurred by the Administrative Agent, such Issuing Bank or such Lender in
connection with such rescission or restoration, including any such costs and
expenses incurred in defending against any claim alleging that such payment
constituted a preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
Section 9.04. Subrogation. Until the payment in full to each
Lender, each Issuing Bank and the Administrative Agent of the Guaranteed
Obligations, except as otherwise provided in Section 9.08, each Guarantor hereby
waives all rights of subrogation or contribution, whether arising by contract or
operation of law (including any such right arising under the Bankruptcy Code) or
otherwise by reason of any payment by it pursuant to the provisions of this
Article. Each Subsidiary Guarantor understands that, by reason of the foregoing
provisions of this Section 9.04, the exercise by the Administrative Agent or any
Lender of the rights, remedies, powers and privileges that it has under this
Article IX and under the other Loan Documents will result in nonreimbursable
liabilities under this Agreement. Nevertheless, each Guarantor hereby authorizes
and empowers the Administrative Agent and the Lenders to exercise, in its or
their sole discretion, any combination of such rights, remedies, powers and
privileges as they, in their sole discretion, shall deem appropriate.
Section 9.05. Remedies. The Guarantors jointly and severally
agree that, as between the Guarantors and the Lenders and Issuing Banks, the
obligations of the Borrower under this Agreement and the Notes may be declared
to be forthwith due and payable as provided in Article VII (and shall be deemed
to have become automatically due and payable in the circumstances provided in
said Article VII) for purposes of Section 9.01 notwithstanding any stay,
injunction or other prohibition preventing such declaration (or such obligations
from becoming automatically due and payable) as against the Borrower and that,
in the event of such declaration (or such obligations being deemed to have
become automatically due and payable), such obligations (whether or not due and
payable by the Borrower) shall forthwith become due and payable by the
Guarantors for purposes of said Section 9.01.
Section 9.06. Instrument for the Payment of Money. Each
Guarantor hereby acknowledges that the guarantee in this Article IX constitutes
an instrument for the payment of money, and consents and agrees that any Lender,
any Issuing Bank or the Administrative Agent, at its sole option, in the event
of a dispute by such Guarantor in the payment of any moneys due hereunder, shall
have the right to bring motion-action under New York CPLR Section 3213.
Section 9.07. Continuing Guarantee. The guarantee in this
Article IX is a continuing guarantee, and shall apply to all Guaranteed
Obligations whenever arising.
Section 9.08. Rights of Contribution. The Guarantors hereby
agree, as among themselves, that if any Guarantor shall become an Excess Funding
Guarantor (as defined below) by reason of the payment by such Guarantor of any
Guaranteed 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 equal to such Guarantor's Pro Rata Portion (as defined below
and determined, for this purpose, without reference to the properties,
Indebtedness and liabilities of such Excess Funding Guarantor) of the Excess
Payment (as defined below) in respect of such Guaranteed Obligations. The
payment obligation of a Guarantor to any Excess Funding Guarantor under this
Section 9.08 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 IX 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 of such obligations.
For purposes of this Section 9.08, (i) "Excess Funding
Guarantor" means, in respect of any Guaranteed Obligations, a Guarantor that has
paid an amount in excess of its Pro Rata Portion of such Guaranteed Obligations,
(ii) "Excess Payment" means, in respect of any Guaranteed Obligations, the
amount paid by an Excess Funding Guarantor in excess of its Pro Rata Portion of
such Guaranteed Obligations and (iii) "Pro Rata Portion" means, for any
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the
aggregate present fair saleable value of all assets of such Guarantor (excluding
any shares of stock of any other Guarantor) exceeds the amount of all the
Indebtedness 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 assets of the Borrower and all of
the Guarantors exceeds the amount of all the Indebtedness 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 Closing Date. If any
Subsidiary becomes a Guarantor hereunder subsequent to the Closing Date, then
for purposes of this Section 9.08 such subsequent Guarantor shall be deemed to
have been a Guarantor as of the Closing Date and the aggregate present fair
saleable value of the assets, and the amount of the Indebtedness and
liabilities, of such Guarantor as of the Closing Date shall be deemed to be
equal to such value and amount on the date such Guarantor becomes a Guarantor
hereunder.
Section 9.09. General Limitation on Guarantee Obligations. In
any action or proceeding involving any state corporate law, or any state or
Federal bankruptcy, insolvency, reorganization, fraudulent transfer or other law
affecting the rights of creditors generally, if the obligations of any Guarantor
under Section 9.01 would otherwise, taking into account the provisions of
Section 9.08, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under said Section 9.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Guarantor, any Lender, any Issuing Bank, the Administrative Agent
or any other Person, be automatically limited and reduced to the highest amount
that is valid and enforceable and not subordinated to the claims of other
creditors as determined in such action or proceeding.
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Consents, Etc. No amendment or
waiver of any provision of this Agreement or the other Loan Documents, nor any
consent to any departure by any Obligor from any provision of this Agreement or
the other Loan Documents, shall in any event be effective unless the same shall
be in writing and signed by the Borrower and the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided that:
(i) no amendment, waiver or consent shall, unless in writing
and signed by the Required Lenders and each Lender that would be
adversely affected by such amendment, waiver or consent:
(1) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Advances, or the
number or percentage of Lenders, that shall be required for
the Lenders or any of them to take any action hereunder;
(2) reduce the principal of, or interest on, the
Notes or any fees or other amounts payable hereunder;
(3) postpone any date fixed for any Commitment
reduction or payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder or waive
any event of default under Section 7.01(b) or 7.01(c); or
(4) increase the Commitment of such Lender or
subject such Lender to any additional obligations;
(ii) no amendment, waiver or consent shall, unless in writing
and signed by each Lender:
(1) amend Section 2.12 or this Section 10.01; or
(2) release all or substantially all of the
Guarantors from their respective obligations under Article IX
(except in connection with a sale, transfer or other
disposition of such Guarantor in a transaction permitted
hereunder); or
(iii) no amendment, waiver or consent shall, unless in writing
and signed by the Required Revolving Credit Lenders and the Required
Term Lenders, change the order of application of any prepayment set
forth in Section 2.05; and
(iv) no amendment, waiver or consent shall, unless in writing
and (x) signed by the Administrative Agent in addition to the Lenders
required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document,
and (y) signed by the Issuing Banks in addition to the Lenders required
to take such action, amend Section 2.07, 2.13 or 3.03, increase the
Letter of Credit Sublimit or otherwise affect the rights or obligations
of any Issuing Bank under this Agreement.
Anything herein to the contrary notwithstanding, the
Administrative Agent shall be authorized, without the consent of any Lender, to
release any Lien covering property that is the subject of either a disposition
of property permitted hereunder or a disposition to which the Required Lenders
have consented, and to release any Guarantor from any of its obligations
hereunder to the extent that such Guarantor is the subject of either a
disposition permitted hereunder or a disposition to which the Required Lenders
have consented, or such Guarantor is to be designated as an "Unrestricted
Subsidiary" hereunder in accordance with Section 6.04.
Section 10.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered:
(a) if to any of the Credit Parties, care of Adelphia
Communications Corporation, One North Main Street, Coudersport,
Pennsylvania, 16915, attention Mr. James R. Brown, Vice
President/Finance, telephone number (814) 274-6250, telecopier number
(814) 274-6568;
(b) if to any Initial Lender, at the Domestic Lending Office
specified in its Administrative Questionnaire;
(c) if to any other Lender, at its Domestic Lending Office
specified in the Assignment and Acceptance pursuant to which it became
a Lender;
(d) if to any Issuing Bank, at its address as specified in
its Administrative Questionnaire; and
(e) if to the Administrative Agent, at its address at Two
Penns Way, Suite 200, New Castle, Delaware, 19720, Attention: Tim
Cassidy (or his successor), telephone number (302)894-6032, telecopier
number (302) 894-6120;
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall, when mailed or telecopied, be effective when deposited in the mails or
transmitted by telecopier, respectively, except that notices and communications
to the Administrative Agent pursuant to Article II, III, VII or VIII shall not
be effective until received by the Administrative Agent.
Section 10.03. No Waiver; Remedies. No failure on the part of
any Lender, any Issuing Bank or the Administrative Agent to exercise, and no
delay in exercising, any right hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Each Credit Party irrevocably waives, to the fullest extent
permitted by applicable law, any claim that any action or proceeding commenced
by the Administrative Agent, any Issuing Bank or any Lender relating in any way
to this Agreement should be dismissed or stayed by reason, or pending the
resolution, of any action or proceeding commenced by any Credit Party relating
in any way to this Agreement whether or not commenced earlier. To the fullest
extent permitted by applicable law, the Credit Parties shall take all measures
necessary for any such action or proceeding commenced by the Administrative
Agent, any Issuing Bank or any Lender to proceed to judgment prior to the entry
of judgment in any such action or proceeding commenced by any Credit Party.
Section 10.04. Costs, Expenses and Indemnification.
-----------------------------------
(a) Costs and Expenses. The Borrower agrees to pay on demand
(i) all costs and expenses of the Administrative Agent, the Issuing Banks and
the Lenders in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents including,
without limitation, (A) all due diligence, syndication (including printing,
distribution and bank meetings), transportation, computer, duplication,
appraisal, insurance, consultant, search, filing and recording fees and
expenses, ongoing audit expenses and all other reasonable out-of-pocket expenses
incurred by the Administrative Agent (including the reasonable fees and expenses
of Milbank, Tweed, Hadley & McCloy LLP, special counsel to Citibank, and of any
special FCC counsel with which such special counsel may consult) whether or not
any of the transactions contemplated by this Agreement are consummated, (B) the
reasonable fees and expenses of counsel for the Administrative Agent with
respect thereto, with respect to advising the Administrative Agent as to its
rights and responsibilities, or the perfection, protection or preservation of
rights or interests, under the Loan Documents, and (C) with respect to
negotiations with any Credit Party or with other creditors of any Credit Party
or any of its Subsidiaries arising out of any Default or Event of Default or any
events or circumstances that may reasonably be expected to give rise to a
Default or Event of Default and with respect to presenting claims in or
otherwise participating in or monitoring any bankruptcy, insolvency or other
similar proceeding involving creditors' rights generally (and any proceeding
ancillary thereto) and (ii) all costs and expenses of the Administrative Agent,
the Issuing Banks and the Lenders in connection with the enforcement of the Loan
Documents, whether in any action, suit or litigation, any bankruptcy, insolvency
or other similar proceeding affecting creditors' rights generally or otherwise
(including, without limitation, the fees and expenses of counsel for the
Administrative Agent, each Issuing Bank and each Lender with respect thereto).
(b) Indemnification. The Borrower agrees to indemnify and hold
harmless each Indemnified Party from and against any and all claims, damages,
losses, liabilities and expenses (including, without limitation, fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with the Credit Agreement Transactions or the actual or alleged
presence of Hazardous Materials on any property owned by a Credit Party or any
Environmental Claim relating in any way to any Credit Party or any of its
Subsidiaries, in each case whether or not such investigation, litigation or
proceeding is brought by any Credit Party, its directors, shareholders or
creditors or an Indemnified Party or any Indemnified Party is otherwise a party
thereto and whether or not the Credit Agreement Transactions or the other
transactions contemplated hereby are consummated, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct.
(c) Breakfunding. If any payment of principal of, or
Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the
account of a relevant Lender other than on the last day of the Interest Period
for such Advance, as a result of a payment or Conversion pursuant to Section
2.03, 2.05, 2.08(b)(i) or 2.09(d) or as the result of acceleration of the
maturity of the Notes pursuant to Section 7.01 or for any other reason, or in
the event the Borrower shall fail (for any reason, including by reason of the
failure of any conditions precedent in Article III to be satisfied) to borrow a
Eurodollar Rate Advance from any Lender on the date specified therefor in a
Notice of Borrowing, the Borrower shall, upon demand by such Lender (with a copy
of such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses that it may reasonably incur as a
result of such payment or failure to borrow, including, without limitation, any
loss (excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.
(d) Discretionary Payments by Administrative Agent. If any
Credit Party fails to pay when due any costs, expenses or other amounts payable
by it under any Loan Document, including, without limitation, reasonable fees
and expenses of counsel and indemnities, such amount may be paid on behalf of
such Credit Party by the Administrative Agent or any Lender, in its sole
discretion.
Section 10.05. Right of Setoff. Each Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and otherwise apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other Indebtedness at
any time owing by such Lender to or for the credit or the account of the
Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement and the Note held by such Lender, irrespective of
whether such Lender shall have made any demand under this Agreement or such Note
and although such obligations may be unmatured. Each Lender agrees promptly to
notify the Borrower after any such setoff and application; provided that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) that such Lender may have.
Section 10.06. Governing Law; Submission to Jurisdiction. This
Agreement and the Notes shall be governed by, and construed in accordance with,
the law of the State of New York. Each Credit Party hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. Each Credit Party irrevocably
waives, to the fullest extent permitted by applicable law, any objection that it
may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
Section 10.07. Assignments and Participations.
------------------------------
(a) Assignments. Each Lender may assign to one or more banks
or other entities all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments,
the Advances owing to it and the Note or Notes held by it); provided that:
(i) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an affiliate of a
Lender or an assignment of all of a Lender's rights and obligations
under this Agreement, the amount of the Commitments of the assigning
Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than the lesser of (x) such
Lender's Commitments hereunder and (y) $5,000,000 (except as otherwise
agreed by the Borrower and the Administrative Agent);
(ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an affiliate of a
Lender, each such assignment (so long as no Event of Default shall have
occurred and be continuing) shall be made only upon the prior written
approval of the Borrower, the Administrative Agent and, with respect to
Revolving Credit Commitments only, each Issuing Bank, such approval in
each case not to be unreasonably withheld;
(iii) each such assignment by a Lender of its Advances,
Commitment or Note under either Facility shall be made in such manner
so that the same portion of its Advances, Commitment and Note under
such Facility is assigned to the respective assignee; and
(iv) to the extent the consent of the Borrower and the
Administrative Agent was not required pursuant to Section 10.07(a)(ii),
the Borrower and the Administrative Agent shall have received notice of
such assignment, and
(v) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and a processing and recordation
fee of $3,500.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and 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 Lender shall cease to be a party hereto).
Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose vehicle (an "SPC")
of such Granting Lender, identified as such in writing from time to time by the
Granting Lender to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Advance that such Granting Lender
would otherwise be obligated to make to the Borrower pursuant to Section 2.01,
provided that (i) nothing herein shall constitute a commitment by any SPC to
make any Advance, (ii) if an SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Advance, the Granting Lender shall be
obligated to make such Advance pursuant to the terms hereof and (iii) the
Borrower may bring any proceeding against either the Granting Lender or the SPC
in order to enforce any rights of the Borrower under any of the Loan Documents.
The making of an Advance by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Advance were made by the
Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for
any payment under this Agreement for which a Lender would otherwise be liable,
for so long as, and to the extent, the related Granting Lender makes such
payment. In furtherance of the foregoing, each party hereto hereby agrees (which
agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceedings under the laws of the United States or any State thereof
arising out of any claim against such SPC under this Agreement. In addition,
notwithstanding anything to the contrary contained in this Section 10.07, any
SPC may with notice to, but without the prior written consent of, the Borrower
or the Administrative Agent and without paying any processing fee therefor,
assign all or a portion of its interests in any Advances to its Granting Lender
or to any financial institutions (consented to by the Borrower and the
Administrative Agent) providing liquidity and/or credit support (if any) with
respect to commercial paper issued by such SPC to fund such Advances and such
SPC may disclose on a confidential basis, confidential information with respect
to the Borrower and its Subsidiaries to any rating agency, commercial paper
dealer or provider of a surety, guarantee or credit liquidity enhancement to
such SPC. This paragraph may not be amended without the consent of any SPC at
the time holding Advances under this Agreement.
(b) Assignment and Acceptance. By executing and delivering an
Assignment and Acceptance, the Lender assignor thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Credit Party or the performance or
observance by the Credit Parties of any of their respective obligations under
this Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 4.05 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the
Administrative Agent, any Issuing Banks, such assigning 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; (v) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; (vi) such assignee agrees that
it will perform in accordance with their terms all of the obligations that by
the terms of this Agreement are required to be performed by it as a Lender; and
(vii) such assignee has provided the Borrower and the Administrative Agent with
the forms and documents with respect to such assignee referred to in Section
2.11(e).
(c) The Register. The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at its address referred to
in Section 10.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Lenders and the Commitments of, and principal amount of the Advances owing
under each Facility to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Administrative Agent and the Lenders shall
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. No assignment shall be effective until it is
recorded in the Register pursuant to this Section 10.07(c). 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.
(d) Effectiveness of Assignments. Upon its receipt of an
Assignment and Acceptance executed by an assigning Lender and an assignee,
together with any Note or Notes subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit E hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Borrower. Within five Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such assignee in an amount
equal to the portion of the Facilities assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a portion of such
Facilities, a new Note or Notes to the order of the assigning Lender in an
amount equal to the portion so retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A-1 and A-2, as the case may be.
(e) Participations. Each Lender may sell participations in or
to all or a portion of its rights and/or obligations under this Agreement
(including, without limitation, all or a portion of its Commitments or the
Advances owing to it and the Note or Notes held by it) to any Person (herein, a
"Participant"); provided that (i) such Lender's obligations under this Agreement
(including, without limitation, its Commitments) 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
any such Note for all purposes of this Agreement, (iv) the Credit Parties, the
Administrative Agent, the Issuing Banks and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and (v) no Participant under any
such participation shall have any right to approve any amendment or waiver of
any provision of any Loan Document, or any consent to any departure by any
Credit Party therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Notes or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Guarantors from their respective obligations under
Article IX (unless such release is permitted pursuant to the terms of the Loan
Documents). Subject to paragraph (f) of this Section, the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.09, 2.11 and
10.04(c) to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section.
(f) Limitations on Rights of Participants. A Participant shall
not be entitled to receive any greater payment under Section 2.09 or 2.11 than
the applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower's prior written consent. A
Participant shall not be entitled to the benefits of Section 2.11 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.11(e) as though it were a Lender.
(g) Assignments by Issuing Banks. Any Issuing Bank, may
(subject to the prior written consent of the Borrower, such consent not to be
unreasonably withheld) assign all or any portion of its rights and obligations
under this Agreement to a successor Issuing Bank that is 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 and, upon the acceptance of such
assignment, the successor Issuing Bank shall succeed to such portion of such
rights and obligations and such assigning Issuing Bank shall be discharged from
its duties and obligations under this Agreement to such extent.
(h) Disclosure of Information. Any Issuing Bank and any Lender
may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 10.07, disclose to the assignee or
participant or proposed assignee or participant, any information relating to the
Borrower furnished to such Lender by or on behalf of the Borrower; provided
that, prior to any such disclosure, the assignee or participant or proposed
assignee or participant shall agree in writing to preserve the confidentiality
of any Confidential Information received by it from the Issuing Banks or the
Lenders.
(i) Pledges. Notwithstanding any other provision set forth in
this Agreement, any Lender may at any time (i) 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 and (ii) pledge all or any part of its
right, title and interest in, to and under the Advances and Notes held by it to
any trustee for the benefit of the holders of such Lender's securities.
(j) Assignments to Borrower and Affiliates. Anything in this
Section 10.07 to the contrary notwithstanding, neither the Borrower nor any of
its Subsidiaries or Affiliates may acquire (whether by assignment, participation
or otherwise), and neither any Lender nor any Issuing Bank shall assign or
participate to the Borrower or any of its Subsidiaries or Affiliates, any
interest in any Commitment, Advance or other amount owing hereunder without the
prior consent of each Lender.
Section 10.08. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
Section 10.09. No Liability of Any Issuing Bank. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. No
Issuing Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use that may be made of any Letter of Credit issued by such Issuing
Bank or any acts or omissions of any beneficiary or transferee in connection
therewith; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (c) payment by such
Issuing Bank against presentation of documents that do not comply with the terms
of a Letter of Credit issued by it, including failure of any documents to bear
any reference or adequate reference to such Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under any Letter
of Credit issued by such Issuing Bank, except that the Borrower shall have a
claim against such Issuing Bank, and such Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) such Issuing Bank's
willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit issued by it comply with the terms of such
Letter of Credit or (ii) such Issuing Bank's willful failure to make lawful
payment under a Letter of Credit issued by it after the presentation to it of a
draft and certificates strictly complying with the terms and conditions of such
Letter of Credit. In furtherance and not in limitation of the foregoing, any
Issuing Bank 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.
Section 10.10. Confidentiality. Neither the Administrative
Agent nor any Issuing Bank or Lender shall disclose any Confidential Information
to any Person without the prior consent of the Borrower, other than (a) to the
Administrative Agent's, such Issuing Bank's or such Lender's Affiliates and
their officers, partners, directors, employees, agents and advisors (including
independent auditors and counsel) and to actual or prospective assignees and
participants, and then only on a confidential basis, (b) as required by any law,
rule or regulation or judicial process and (c) as requested or required by any
state, Federal or foreign authority or examiner regulating or having authority
over Lenders or the Lenders' respective activities.
Section 10.11. Waiver Of Jury Trial. EACH OF THE CREDIT
PARTIES, THE ADMINISTRATIVE AGENT, THE LENDERS AND THE ISSUING BANKS HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES, THE LETTERS OF CREDIT OR
THE ACTIONS OF THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Section 10.12. Survival. The obligations of the Borrower under
Sections 2.09, 2.11, 2.13(d) and 10.04, the obligations of each Guarantor under
Section 9.03, the obligations of the Lenders under Section 8.05 and the
obligations of the Lenders, the Issuing Banks and the Administrative Agent under
Section 10.10, shall survive the repayment of the Advances and the termination
of the Commitments. In addition, each representation and warranty made, or
deemed to be made by a notice of any extension of credit (whether by means of an
Advance or a Letter of Credit), herein or pursuant hereto shall survive the
making of such representation and warranty, and no Lender or Issuing Bank shall
be deemed to have waived, by reason of making any extension of credit hereunder
(whether by means of an Advance or a Letter of Credit), any Default or Event of
Default that may arise by reason of such representation or warranty proving to
have been false or misleading, notwithstanding that such Lender, such Issuing
Bank or the Administrative Agent may have had notice or knowledge or reason to
believe that such representation or warranty was false or misleading at the time
such extension of credit was made.
Section 10.13. Captions. The table of contents and captions
and section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
Section 10.14. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, provided that no Credit Party may assign any
of its rights or obligations hereunder or under the other Loan Documents without
the prior consent of all of the Lenders, the Issuing Banks and the
Administrative Agent.
Section 10.15. Limited Recourse. Notwithstanding any contrary
provision of this Agreement or any other Loan Document, no recourse shall be had
for the payment of the principal of or interest on the Advances or any other
amounts payable hereunder (collectively, the "Obligations"), or for any claim
based thereon, against (i) any Partner or any of their respective legal
representatives, heirs, estates, permitted successors or assigns or (ii) any
corporation, partnership (or any general or limited partner thereof) or
individual to which the collateral securing the payment of the Obligations shall
have been transferred with the prior written consent of each Lender, except to
the extent such consent is not required pursuant to this Agreement or any other
Loan Document. It is understood that none of the Obligations may be enforced
against any of the Persons described in clauses (i) or (ii) of the preceding
sentence, provided that this Section 10.15 shall not (A) prevent or restrict
recourse to the collateral securing the payment of the Obligations or constitute
a waiver, release or discharge of the Obligations, but the Obligations shall
remain outstanding until paid or discharged; (B) limit any rights, claims for
damages or recourse of the Administrative Agent, the Lenders or the Issuing
Banks or their respective transferees or assigns as a result of (x) any knowing
or willful breach by such Person of any representation or warranty of such
Person made under or pursuant to this Agreement or any other Loan Document or
(y) any knowing or willful breach of covenant or other obligation by such Person
under this Agreement or any other Loan Document; or (C) limit the right of any
Person to name the Borrower, any Obligor or any transferee of any interest in
the collateral securing the payment of the Obligations as a party defendant in
any action or suit for a judicial sale or in the exercise of any other remedy
under this Agreement or any other Loan Document, so long as no judgment in the
nature of a deficiency judgment shall be asked for, taken or enforced against
any Person referred to in said clauses (i) or (ii). Notwithstanding the
foregoing, nothing herein shall be construed to constitute a waiver by the
Administrative Agent, the Lenders or the Issuing Banks of any rights to damages,
other monetary relief, injunctive relief or any other remedy at law or equity
against the Borrower, any Obligor or any Partner by reason of fraud, knowing or
willful breach of representations and warranties, willful tortious acts or
omissions, gross negligence or criminal acts. This Section 10.15 is not intended
to and shall not impair or limit the Administrative Agent's, any Lender's or
Issuing Bank's ability to realize on the collateral securing the payment of such
obligations or on any other assets of the Borrower or any Obligor.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
CENTURY-TCI CALIFORNIA, L.P.
By: Century-TCI California Communications, L.P., its
General Partner
By: Century Exchange LLC, its General Partner
By: Century Southwest Cable Television, Inc., its Manager
By:/s/ James Brown
Title: Vice President
GUARANTORS
None
THE ADMINISTRATIVE AGENT
CITIBANK, N.A.
By:/s/ Mary E. Thomas
Title: Attorney-in-Fact
THE LENDERS
CITIBANK, N.A.
By:/s/Mary E. Thomas
Title: Attorney-in-Fact
SOCIETE GENERALE, MELLON BANK, N.A.
NEW YORK BRANCH
By:/s/Elaine Khalil By:/s/Nancy E. Gale
---------------- ----------------
Name: Elaine Khalil Name: Nancy E. Gale
Title: Title: Assistant Vice President
DEUTSCHE BANK AG BANK OF AMERICA, N.A.
NEW YORK BRANCH
A/O CAYMAN ISLANDS BRANCH
By:/s/Jon D. Storck By:/s/Pamela S. Kurtzman
---------------- ---------------------
Name: Jon D. Storck Name: Pamela S. Kurtzman
Title: Vice President Title: Vice President
By:/s/Alexander Richarz
Name: Alexander Richarz
Title: Associate
THE BANK OF NEW YORK THE BANK OF NOVA SCOTIA
By:/s/Debra M. Ritchie By:/s/Vincent J. Fitzgerald, Jr.
------------------- -----------------------------
Name: Debra M. Ritchie Name: Vincent J. Fitzgerald, Jr.
Title: Assistant Vice President Title: Authorized Signatory
BANK OF TOKYO-MITSUBISHI BANK ONE, NA
TRUST COMPANY
By:/s/Glenn B. Eckert By:/s/Michael R. Phelan
------------------ --------------------
Name: Glenn B. Eckert Name: Michael R. Phelan
Title: Vice President and Manager Title: Authorized Agent
THE CHASE MANHATTAN BANK CIBC INC.
By:/s/John J. Huber III By:/s/Tefta Ghilaga
-------------------- ----------------
Name: John J. Huber III Name: Tefta Ghilaga
Title: Managing Director Title: Executive Director
CREDIT LYONNAIS CREDIT SUISSE FIRST BOSTON
NEW YORK BRANCH
By:/s/John P. Judge By:/s/Joel Glodowski
---------------- -----------------
Name: John P. Judge Name: Joel Glodowski
Title: Vice President Title: Managing Director
By By:/s/Robert Hetu
Name: Name: Robert Hetu
Title: Title: Vice President
THE DAI-ICHI KANGYO BANK, LIMITED THE MITSUBISHI TRUST AND
BANKING CORPORATION
By:/s/Thomas Cha
Name: Thomas Cha By:/s/Toshihiro Hayashi
Title: Account Officer Name: Toshihiro Hayashi
Title: Senior Vice President
TORONTO DOMINION (TEXAS), INC. BANK OF MONTREAL
By:/s/Debbie A. Greene By:/s/Sarah Kim
------------------- ------------
Name: Debbie A. Greene Name: Sarah Kim
Title: Vice President Title: Director
BARCLAYS BANK PLC CREDIT LOCAL DE FRANCE -
NEW YORK AGENCY
By:/s/Daniele Iacovone By:/James R. Miller & Philippe Ducos
------------------- ---------------------------------
Name: Daniel Iacovone Name: James R. Miller & Philippe Ducos
Title: Associate Director Title:General Mgr. and Deputy Gen. Mgr.
FIRST UNION NATIONAL BANK THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:/s/Chris Kaumbach By:/s/William Kennedy
Name: Chris Kaumbach Name: William Kennedy
Title: Vice President Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION WEBSTER BANK
By:/s/Jeffrey E. Hauser
Name: Jeffrey E. Hauser By:/s/Barbara E. Hillmeyer
-----------------------
Title: Vice President Name: Barbara E. Hillmeyer
Title: Vice President
<PAGE>
- 101 -
SCHEDULE 4.21 TO CREDIT AGREEMENT
<TABLE>
<CAPTION>
SCHEDULE 2.01 TO CREDIT AGREEMENT
Schedule 2.01
List of Commitments
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Revolving
- -------------------------------------------- Credit Term
Name of Lender Commitment Commitment Total Commitment
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Citibank, N.A. $ 50,000,000.00 $ 50,000,000.00 $ 100,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Societe Generale, New York Branch 50,000,000.00 50,000,000.00 100,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Mellon Bank, N.A. 50,000,000.00 50,000,000.00 100,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Deutsche Bank AG
New York Branch
A/O Cayman Islands Branch 50,000,000.00 50,000,000.00 100,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Bank of America, N.A. 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
The Bank of New York 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
The Bank of Nova Scotia 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Bank of Tokyo-Mitsubishi
Trust Company 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Bank One, N.A. 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
The Chase Manhattan Bank 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
CIBC Inc. 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Credit Lyonnais
New York Branch 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Credit Suisse First Boston 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
The Dai-Ichi Kangyo Bank, Limited 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
The Mitsubishi Trust and
Banking Corporation 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Toronto Dominion (Texas), Inc. 18,333,333.50 18,333,333.50 36,666,667.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Bank of Montreal 12,500,000.00 12,500,000.00 25,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Barclays Bank PLC 12,500,000.00 12,500,000.00 25,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Credit Local de France -
New York Agency 12,500,000.00 12,500,000.00 25,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
First Union National Bank 12,500,000.00 12,500,000.00 25,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
The Industrial Bank of Japan, Limited 12,500,000.00 12,500,000.00 25,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
PNC Bank, National Association 12,500,000.00 12,500,000.00 25,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Webster Bank 5,000,000.00 5,000,000.00 10,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
- --------------------------------------------- ---------------------- ---------------------- ----------------------
Total $500,000,000.00 $500,000,000.00 $1,000,000,000.00
- --------------------------------------------- ---------------------- ---------------------- ----------------------
</TABLE>
<PAGE>
SCHEDULE 4.08 TO CREDIT AGREEMENT
Schedule 4.08
Subsidiaries; other Equity Investments
None
<PAGE>
SCHEDULE 4.10 TO CREDIT AGREEMENT
Schedule 4.10
Restrictive Agreements
None
<PAGE>
SCHEDULE 4.16 TO CREDIT AGREEMENT
Schedule 4.16
Environmental Matters
None
<PAGE>
SCHEDULE 4.17 TO CREDIT AGREEMENT
Schedule 4.17
Insurance
Acord Policies:
- --------------
Commercial General Liability (occurrence basis) Policy No. PTS444636
$2,000,000 General Aggregate
$1,000,000 Each Occurrence
Automotive (any auto, hired and non-owned) Policy No. PTS444635
$1,000,000 Combined Single Limit
Excess Liability (umbrella form) Policy No. 79702671
$50,000,000 Each Occurrence
$50,000,000 Aggregate
Property Special Form (includes theft) Policy No. RHT313277
$100,000,000 Blanket Limit
<PAGE>
- 3 -
<TABLE>
<CAPTION>
SCHEDULE 4.21 TO CREDIT AGREEMENT
Schedule 4.21
Franchises
FRANCHISE AGREEMENTS OF BORROWER
Issuing Authority Expiration Date
<S> <C>
City of Ventura, CA 01/31/2011
Ventura Co. (E Ventura) CA 12/31/1999
City of Moorpark, CA 12/20/2000
Marine Corps Base, CA 12/02/2001
County of San Bernardino, CA 11/27/2007
Town of Yucca Valley, CA 01/01/2095
City of 29 Palms, CA 01/01/2095
City of Brea, CA 11/05/2005
County of Orange, CA 08/01/2011
County of L.A. (LaHabra), CA 08/08/2001
City of LaHabra, CA 07/18/2007
City of LaHabra Hts, CA 07/14/2009
City of Redondo Beach, CA 05/25/2004
City of L.A. (Eagle Rock) H, CA 08/01/2002
City of West Hollywood, CA 01/19/2000
City of Beverly Hills, CA 06/15/2002
City of L.A. (Valley) G, CA 08/01/2002
Ventura Co (Bell Canyon), CA 11/27/2004
City of Santa Monica, CA 12/13/1987
County of L.A. (Marina), CA 07/19/2000
City of L.A. (West L.A.) F, CA 08/01/2002
City of Villa Park, CA 02/20/1999
City of Anaheim, CA 12/01/2002
Orange County, CA 12/12/2010
City of Hermosa Beach, CA 09/27/2004
City of Manhattan Beach, CA 06/03/2008
City of Pomona, CA no written franchise agreement
City of Chino Hills, CA 03/09/2001
City of Chino, CA 11/10/2002
County of San Bernardino, CA 11/27/2007
City of Bradbury, CA 06/30/2004
County of Los Angeles, CA 12/31/2005
City of Glendora, CA 07/28/2007
City of Monrovia, CA 03/01/2008
City of San Dimas, CA 10/26/2008
City of Laverne, CA 12/01/2008
City of Diamond Bar, CA 06/06/2007
County of L.A. (Rowland Hts.) 10/03/2007
Orange County, CA 06/18/2001
City of Yorba Linda, CA 08/01/2001
City of La Puente, CA 11/27/1999
City of Pico Rivera, CA 12/17/1999
City of Sierra Madre, CA 12/31/1999
LA County (South Whittier) 12/31/2000
LA County (Hacienda Heights) 12/31/2000
City of Baldwin Park, CA 07/31/2001
City of Arcadia, CA 06/08/2005
Riverside County (Act V) 15 years from Closing Date
City of Moreno Valley, CA 05/07/1999
Riverside County (Calimesa) 06/24/2000
City of Perris, CA 12/31/2000
City of Moreno Valley (Act V) 02/01/2001
City of Colton, CA 04/17/2001
City of Yucaipa, CA 3 years from Closing Date
March Air Force Base, CA 03/31/2002
City of Rialto, CA 11/24/2008
City of Beaumont, CA 04/11/2012
City of Redlands, CA 08/04/2012
City of San Bernardino, CA 02/25/2007
County of San Bernardino 06/03/2014
City of San Jacinto, CA 07/31/2000
City of Hemet, CA 07/31/2000
City of Temecula, CA 01/09/2004
Riverside County (Winchester) 01/09/2004
Riverside County (Rancho/Tem) 01/09/2004
City of Murrieta, CA 01/09/2004
Ventura Co. (Ojai) 05/25/2099
City of Ojai, CA 05/25/2099
City of Santa Paula, CA 03/05/2000
City of Fillmore, CA 03/12/2000
City of Moorpark, CA 11/20/2000
Ventura Co. (Fillmore) 03/24/2001
City of Westlake Village, CA 01/07/2002
City of Camarillo (East & West) 12/31/2003
Ventura Co. (Televants) 03/13/2004
City of Agoura Hills, CA 04/22/2004
Ventura Co. (Santa Paula) 05/29/2004
City of Thousand Oaks, CA 09/25/2005
LA County (Calabasas) 10/28/2005
City of Calabasas, CA 10/28/2005
Ventura Co. (Oak Park) open-ended extension
Ventura Co. (Camarillo/Rancho) open-ended extension
Ventura Co. (Thousand Oaks) open-ended extension
City of Los Angeles - Area C 08/07/2002
Note:
Borrower is in negotiations with the communities in which franchises have
expired or are about to expire.
</TABLE>
<PAGE>
SCHEDULE 4.23 TO CREDIT AGREEMENT
Schedule 4.23
Certain Matters Relating to Systems
None
<PAGE>
SCHEDULE 6.01(b) TO CREDIT AGREEMENT
Schedule 6.01(b)
Certain Existing Indebtedness
Indebtedness related to the leased equipment UCC filings listed on Schedule
6.02.
<PAGE>
- 4 -
SCHEDULE 6.01(h) TO CREDIT AGREEMENT
Schedule 6.01(h)
Terms of Subordination Applicable to New Affiliate Indebtedness
Section 1. Definitions. Terms used in the Credit
Agreement are used herein as defined therein. In addition, as used herein:
"Senior Debt" means, collectively, the following indebtedness
and obligations:
(a) all indebtedness or other obligations of the Borrower
including in Total Debt under and as defined in the Credit Agreement
(including, without limitation, all obligations of the Borrower under
the Credit Agreement and the other Loan Documents), including all
interest, expenses, indemnities and penalties and all commitment and
agency fees payable from time to time in respect of any such
obligations;
(b) all obligations of the Borrower to the Lenders or any of
their affiliates in respect of Hedging Agreements; and
(c) any deferrals, renewals, extensions or refinancings of
any of the foregoing.
The term "Senior Debt" shall include any interest and expenses (including, in
the case of the Credit Agreement, any expenses of the type described in Section
2.09 of the Credit Agreement, or in comparable provisions of any other Loan
Document), accruing or arising after the date of any filing by the Borrower of
any petition in bankruptcy or the commencing of any bankruptcy, insolvency or
similar proceedings with respect to the Borrower, whether or not such interest
or expenses are allowable as a claim in any such proceeding.
"Subordinated Debt" means all obligations of the Borrower with
respect to any New Affiliate Indebtedness.
Section 2. Subordination.
--------------
2.01 Subordination of Subordinated Debt. Each holder of
Subordinated Debt, on its own behalf and on behalf of each subsequent holder of
Subordinated Debt, covenants and agrees, that, to the extent and in the manner
set forth in this Schedule 6.01(h), the Subordinated Debt, and the payment
thereof from whatever source, are hereby expressly made subordinate and subject
in right of payment to the prior payment in full in cash of all Senior Debt and
in that connection hereby agrees that, except and to the extent permitted under
Section 2.03 hereof, (a) no payment on account of the Subordinated Debt or any
judgment with respect thereto shall be made by or on behalf of the Borrower and
(b) such holder shall not (i) ask, demand, sue for, take or receive from the
Borrower, by set-off or in any other manner, or (ii) seek any other remedy
allowed at law or in equity against the Borrower for breach of the Borrower's
obligations under the instruments representing such Subordinated Debt.
In the event that, notwithstanding the foregoing provisions of
this Section 2.01, any holder of Subordinated Debt shall have received any
payment not permitted by the provisions of Section 2.03 hereof, including,
without limitation, any such payment arising out of the exercise by any holder
of Subordinated Debt of a right of set-off or counterclaim and any such payment
received by reason of other Indebtedness of the Borrower being subordinated to
the Subordinated Debt, then, and in any such event, such payment shall be held
in trust for the benefit of, and shall be immediately paid over or delivered to,
the Administrative Agent, to be paid to the Lenders, ratably according to the
aggregate amounts remaining unpaid on account of the principal of, and interest
and premium (if any) on, the Senior Debt held or represented by each Lender, for
application to such Senior Debt remaining unpaid, whether or not then due and
payable.
2.02 Payment of Proceeds Upon Dissolution. Without limiting
the generality of the provisions of Section 2.01 of this Schedule 6.01(h), in
the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Borrower or to its creditors, as such, or
to its assets, or (b) any liquidation, dissolution or other winding up of the
Borrower, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Borrower, then and in any
such event:
(a) the Lenders shall be entitled to receive payment in full
in cash of all amounts due or to become due on or in respect of all
Senior Debt, or provision shall be made for such payment, before any
holder of Subordinated Debt shall be entitled to receive any payment on
account of the Subordinated Debt;
(b) any payment or distribution of assets of the Borrower of
any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which any holder of Subordinated Debt would be
entitled but for the provisions of this Schedule 6.01(h), including any
such payment or distribution that may be payable or deliverable by
reason of the payment of any other Indebtedness of the Borrower being
subordinated to the payment of the Subordinated Debt, shall be paid by
the liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the Administrative Agent,
to be paid to the Lenders, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and interest and
premium (if any) on, the Senior Debt held or represented by each
Lender, to the extent necessary to make payment in full in cash of all
Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the Lenders;
(c) in the event that, notwithstanding the foregoing
provisions of this Section 2.02, any holder of Subordinated Debt shall
have received, before all Senior Debt is paid in full in cash or
payment thereof provided for, any such payment or distribution of
assets of the Borrower of any kind or character, whether in cash,
property or securities, including any such payment or distribution
arising out of the exercise by such holder of a right of set-off or
counterclaim and any such payment or distribution received by reason of
any other Indebtedness of the Borrower being subordinated to the
Subordinated Debt, then, and in such event, such payment or
distribution shall be held in trust for the benefit of, and shall be
immediately paid over or delivered to, the Administrative Agent, to be
paid to the Lenders, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and interest and
premium (if any) on, the Senior Debt held or represented by each
Lender, to the extent necessary to make payment in full in cash of all
Senior Debt remaining unpaid, after giving effect to any concurrent
payment or distribution to the Lenders; and
(d) if any holder of Subordinated Debt shall have failed to
file claims or proofs of claim with respect to the Subordinated Debt
earlier than 30 days prior to the deadline for any such filing, such
holder shall execute and deliver to the Administrative Agent such
powers of attorney, assignments or other instruments as the
Administrative Agent may reasonably request to file such claims or
proofs of claim.
2.03 Certain Payments Permitted. Notwithstanding the
foregoing, each holder of Subordinated Debt shall be entitled to receive and
retain any payment on account of Subordinated Debt (i) permitted under Section
6.08 of the Credit Agreement, or (ii) made after all Senior Debt shall have been
paid in full and the Commitments of the Lenders under the Credit Agreement shall
have expired or been terminated.
2.04 Subrogation. Subject to the payment in full in cash of
all Senior Debt, each holder of Subordinated Debt shall be subrogated (equally
and ratably with the holders of all Indebtedness of the Borrower that by its
express terms is subordinated to Senior Debt to the same extent as the
Subordinated Debt is subordinated and that is entitled to like rights of
subrogation) to the rights of the Lenders to receive payments and distributions
of cash, property and securities applicable to the Senior Debt until the
Subordinated Debt shall be paid in full in cash. For purposes of such
subrogation, no payments or distributions to the Lenders of any cash, property
or securities to which any holder of Subordinated Debt would be entitled except
for the provisions of this Schedule 6.01(h), and no payments over pursuant to
the provisions of this Schedule 6.01(h), to the Lenders by any such holder,
shall, as between the Borrower, its creditors other than the Lenders, and such
holder, be deemed to be a payment or distribution by the Borrower to or on
account of the Senior Debt.
2.05 Provisions Solely to Define Relative Rights. The
provisions of this Schedule 6.01(h) are and are intended solely for the purpose
of defining the relative rights of each holder of Subordinated Debt on the one
hand and the Lenders on the other hand. Except as herein expressly provided,
nothing contained in this Schedule 6.01(h) is intended to or shall:
(a) impair, as among the Borrower, its creditors other than
the Lenders and any holder of Subordinated Debt, the obligation of the
Borrower to pay to such holder the Subordinated Debt as and when the
same shall become due and payable in accordance with its terms; or
(b) affect the relative rights against the Borrower of any
holder of Subordinated Debt and creditors of the Borrower other than
the Lenders.
2.06 No Waiver of Subordination Provisions. No right of the
Administrative Agent or any Lender to enforce subordination as herein provided
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 by any act or failure to act, in good faith,
by the Administrative Agent or any Lender, or by any non-compliance by the
Borrower with the terms, provisions and covenants of this Schedule 6.01(h),
regardless of any knowledge thereof the Administrative Agent or any Lender may
have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the Lenders may, at any time and from time to time, without the
consent of or notice to any holder of Subordinated Debt, without incurring
responsibility to any such holder and without impairing or releasing the
subordination provided in this Schedule 6.01(h) or the obligations in respect
thereof of each such holder to the holders of Senior Debt, do any one or more of
the following: (a) change the time, manner or place of payment of Senior Debt,
or otherwise modify or supplement in any respect any of the provisions of the
Credit Agreement or any other instrument evidencing or relating to any of the
Senior Debt; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Debt; (c) release any Person
liable in any manner for the collection of Senior Debt; and (d) exercise or
refrain from exercising any rights against the Borrower and any other Person.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 6.02 TO CREDIT AGREEMENT
Schedule 6.02
Certain Existing Liens
Debtor/Defendant Filing Date File Number Secured Collateral/
Party/Plaintiff Lien
Jurisdiction: California Secretary of State
<S> <C> <C> <C> <C>
Century Communications Corp. 7/10/95 9519560747 Xerox Corp. Leased
d/b/a Century Southwest copiers
Cable Television
Century Southwest Cable 8/9/95 9522260909 Xerox Corp. Leased
Television, Inc. Xerox
copiers
TCI Cablevision of California 6/14/95 9516661022 GTE Leasing Leased
Corporation telephone
system
TCI of East San Fernando 7/12/96 9619860626 Security of Los Leased
Valley, L.P. Angeles security
equipment
TCI of Los Angeles County 10/24/96 9629960244 Oce' - USA, Inc. Leased Oce'
2465 copier
TCI Media Services 2/4/97 9703660254 Oce' - USA, Inc. Leased Oce'
3045 copier
</TABLE>
EXHIBIT 10.117
AGREEMENT AND PLAN OF REORGANIZATION
AS OF DECEMBER 8, 1999
BY AND AMONG
CABLEVISION OF THE MIDWEST, INC.
CABLEVISION OF THE MIDWEST HOLDING CO., INC.
ADELPHIA GENERAL HOLDINGS II, INC.
AND
ADELPHIA COMMUNICATIONS CORPORATION
-i-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Section 1. Definitions............................................................................1
1.01 Certain Definitions...........................................................1
1.02 Other Definitional Provisions.................................................9
Section 2. The Merger.............................................................................9
2.01 The Merger....................................................................9
2.02 Common Stock Consideration....................................................9
2.03 Adjustments to Prevent Dilution...............................................9
2.04 Directors of Midwest.........................................................10
2.05 Officers of Midwest..........................................................10
2.06 Surrender and Payment........................................................10
2.07 New Name.....................................................................10
2.08 Charter of Midwest...........................................................10
2.09 By-laws of Midwest...........................................................10
2.10 Adjustments..................................................................10
2.11 Sales and Transfer Taxes.....................................................12
Section 3. Representations and Warranties of Holdings............................................12
3.01 Organization and Authority...................................................13
3.02 Legal Capacity; Approvals and Consents.......................................13
3.03 Financial Statements.........................................................13
3.04 Changes in Operation.........................................................14
3.05 Tax Returns..................................................................14
3.06 Assets of Midwest............................................................14
3.07 The CATV Business............................................................15
3.08 Labor Contracts and Actions..................................................16
3.09 Employee Benefit Plans.......................................................17
3.10 Contracts....................................................................17
3.11 Legal and Governmental Proceedings and Judgments.............................18
3.12 Finders and Brokers..........................................................18
3.13 Year 2000....................................................................18
3.14 Restoration..................................................................18
3.15 Pole Attachment Agreements...................................................18
3.16 Right of First Refusal.......................................................19
3.17 Insurance....................................................................19
3.18 Title to Capital Stock.......................................................19
3.19 Securities Law Matters.......................................................19
3.20 Internet Service Agreements..................................................20
Section 4. Representations and Warranties of Buyer...............................................20
4.01 Organization and Authority of Buyer..........................................20
4.02 Legal Capacity: Approvals and Consents.......................................21
4.03 Legal and Governmental Proceedings and Judgments.............................22
-i-
<PAGE>
4.04 Finders and Brokers..........................................................22
4.05 Buyer Consents...............................................................22
4.06 Acquisition of Rights........................................................22
4.07 Capitalization...............................................................22
4.08 Subsidiaries.................................................................23
4.09 SEC Filings..................................................................23
4.10 Financial Statements.........................................................24
4.11 Absence of Certain Changes...................................................24
4.12 Compliance with Laws and Court Orders........................................24
4.13 Litigation...................................................................25
4.14 Private Offering.............................................................25
4.15 Existing Registration Rights Agreements......................................25
4.16 Ownership of Merger Sub; No Prior Activities.................................25
4.17 Tax Matters..................................................................25
Section 5. Covenants Pending Closing.............................................................25
5.01 Business of Midwest..........................................................25
5.02 Access to Information........................................................26
5.03 Covenants of Buyer...........................................................27
5.04 Listing of Common Stock Consideration......................................27
5.05 Covenant to File Certificate of Merger.......................................27
5.06 Change in Channel Lineup.....................................................28
5.07 Excluded Liabilities.........................................................28
5.08 Required Consents............................................................28
5.09 Lien Searches................................................................28
5.10 Trading in Adelphia Common Stock.............................................28
Section 6. Deliveries at Closing.................................................................28
6.01 Deliveries to Buyer..........................................................28
6.02 Deliveries by Buyer..........................................................29
Section 7. Conditions to the Obligations of Buyer................................................29
7.01 Receipt of Consents..........................................................29
7.02 Holdings' and Midwest's Authority............................................30
7.03 Performance by Holdings and Midwest..........................................30
7.04 Absence of Breach of Warranties and Representations..........................30
7.05 Absence of Proceedings.......................................................30
Section 8. Conditions to the Obligations of Holdings.............................................30
8.01 Receipt of Consents..........................................................30
8.02 Corporate Action.............................................................30
8.03 Performance by Buyer and Merger Sub..........................................30
8.04 Absence of Breach of Representations and Warranties..........................31
8.05 Absence of Proceedings.......................................................31
8.06 Effectiveness of Shelf Registration Statement................................31
8.07 No Material Adverse Effect...................................................31
Section 9. Covenants.............................................................................31
-ii-
<PAGE>
9.01 Compliance with Conditions...................................................31
9.02 Compliance with HSR Act and Rules............................................31
9.03 Applications for Assignment of Contracts or CATV Instruments.................32
9.04 Records, Taxes and Related Matters...........................................33
9.05 Real Estate Proration And Adjustment Items...................................33
9.06 Furnishing of Information....................................................33
9.07 Covenant Not to Compete......................................................33
9.08 Remaining Franchises.........................................................34
Section 10. Survival of Representations, Warranties, Covenants and Other Agreements;
Indemnification.......................................................................34
10.01 Survival of Representations, Warranties, Covenants and Other
Agreements...................................................................34
10.02 Indemnification by Holdings..................................................34
10.03 Indemnification by Buyer.....................................................35
10.04 Third Party Claims...........................................................36
10.05 Tax Matters..................................................................36
10.06 Guarantee By Holdings........................................................37
Section 11. Further Assurances....................................................................37
Section 12. Closing...............................................................................37
12.01 Closing......................................................................37
12.02 Termination..................................................................38
Section 13. Miscellaneous.........................................................................38
13.01 Amendments; Waivers..........................................................38
13.02 Entire Agreement.............................................................38
13.03 Cablevision Name.............................................................39
13.04 Binding Effect; Assignment...................................................39
13.05 Construction; Counterparts...................................................39
13.06 Notices......................................................................39
13.07 Expenses of the Parties......................................................40
13.08 Non-Recourse.................................................................40
13.09 Third Party Beneficiary......................................................40
13.10 Governing Law................................................................40
13.11 Press Releases...............................................................41
13.12 Severability.................................................................41
13.13 Specific Performance.........................................................41
</TABLE>
-iii-
<PAGE>
EXHIBITS
Exhibit A - [Intentionally Omitted]
Exhibit B - Service Territory
Exhibit C - Form of Opinion of Counsel to Holdings and Midwest
Exhibit D - Form of Opinion of Counsel to Buyer and Merger Sub
Exhibit E - Registration Rights Agreement
-iv-
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 1.01(a) - CATV Licenses/Franchises
Schedule 1.01(b) - [Intentionally Omitted]
Schedule 1.01(c) - [Intentionally Omitted]
Schedule 1.01(d) - Excluded Assets
Schedule 1.01(e) - Excluded Liabilities
Schedule 1.01(f) - Permitted Encumbrances
Schedule 3.02 - Consents and Approvals
Schedule 3.05 - Tax Notices and Assessments
Schedule 3.06(b) - Real Property
Schedule 3.06(d) - Environmental Matters
Schedule 3.07(c) - Material Contracts
Schedule 3.07(d) - Notice of Claims or Purported Defaults in CATV Instruments
Schedule 3.07(e) - Non-Compliance with applicable laws; Documents not filed with
the FCC
Schedule 3.07(f) - Copyrights
Schedule 3.07(g) - Rates
Schedule 3.07(h) - Pending Claims
Schedule 3.07(i) - Subscriber Obligations
Schedule 3.07(j) - Free Service Liability/Refunds
Schedule 3.07(k) - Local Office Requirements
Schedule 3.07(l) - Overbuilds
Schedule 3.09 - Employee Benefit Plans
Schedule 3.10 - Contracts in Default
Schedule 3.11 - Legal Proceedings
Schedule 3.13 - Year 2000
Schedule 3.14 - Restoration
Schedule 3.15 - Pole Attachment Agreements
Schedule 3.16 - Right of First Refusal
Schedule 3.17 - Insurance
Schedule 4.05 - Consents and Approvals
Schedule 4.07 - Capital Stock
</TABLE>
-v-
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization is made and entered into as
of December 8, 1999, by and among Cablevision of the Midwest, Inc., a Delaware
corporation ("Midwest"), Cablevision of the Midwest Holding Co., Inc., a
Delaware corporation ("Holdings"), Adelphia General Holdings II, Inc., a
Delaware corporation ("Merger Sub") and Adelphia Communications Corporation, a
Delaware corporation ("Buyer").
R E C I T A L S
WHEREAS, Midwest owns and operates cable television systems serving the
communities described in Exhibit B.
WHEREAS, Holdings desires to transfer to Buyer, and Buyer desires to
acquire from Holdings, Midwest in accordance with the terms and conditions
contained herein.
WHEREAS, the respective boards of directors of Holdings, Midwest,
Merger Sub and Buyer have approved, and deem it advisable and in the best
interests of their respective shareholders to consummate, the merger of Merger
Sub with and into Midwest on the terms and conditions set forth herein.
WHEREAS, it is intended that, for federal income tax purposes, the
merger of Merger Sub with and into Midwest, on the terms contemplated by this
Agreement, qualifies as a "reorganization" under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows, each intending to be
legally bound as and to the extent herein provided.
1. Definitions.
-----------
1.01 Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
Adelphia Class B Common Stock has the meaning set forth in Section
4.07(a).
Adelphia Common Stock means the Class A common stock, par value $.01
per share, of Buyer or, in the event of a Reorganization of Buyer, the Capital
Stock of the resulting or surviving entity designated as the successor to the
Class A common stock, par value $.01 per share, of Buyer.
Adelphia Preferred Stock has the meaning set forth in Section 4.07(a).
Agreement means this Agreement and Plan of Reorganization and the
Exhibits and Schedules attached hereto.
Asserted Claim has the meaning set forth in Section 10.04.
-1-
<PAGE>
Asset Purchase Agreement means the Asset Purchase Agreement, dated as
of the date hereof, among Buyer, Telerama, Inc. and Cablevision of Cleveland,
L.P.
Basic Subscriber means as at any date of determination thereof, the sum
of (a) the total number of households (exclusive of "second outlets," as such
term is commonly understood in the cable television industry, and exclusive of
customers billed on a bulk-billing or commercial-account basis) subscribing on
such date to at least the most basic tier of service offered by the CATV
Business and paying the monthly service fees and charges imposed in respect of
such service, and who are not, as of the Closing Date, 90 days or more in
arrears in payment for service, as measured from the date that payment due
became a receivable and (b) the total number of Equivalent Subscribers on such
date.
Benefit Plans has the meaning set forth in Section 3.09(a).
Business Day means a day other than a Saturday, Sunday, national or New
York State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
Buyer has the meaning set forth in the Preamble to this Agreement.
Buyer Indemnified Party has the meaning set forth in Section 10.03(a).
Buyer Material Adverse Effect means a material adverse effect on the
assets, financial condition, or results of operations of Buyer and its
Subsidiaries, taken as a whole, other than any such effect resulting from
changes in general economic or political conditions or legal, governmental
regulatory or competitive factors affecting CATV System operators generally or
in the states in which Buyer engages in the CATV business.
Buyer SEC Documents has the meaning set forth in Section 4.09(a).
Buyer Significant Subsidiary means any Subsidiary of the Buyer that
would constitute a "Significant Subsidiary" as defined in Rule 1-02(w) of
Regulation S-X under the Exchange Act.
Buyer Subsidiary means a Subsidiary of Buyer.
----------------
Buyer's Counsel means Colin H. Higgin, Deputy General Counsel to Buyer.
---------------
Buyer's Securities has the meaning set forth in Section 4.07(c).
Buyer's Subscriber Objection has the meaning set forth in Section
2.10(a)(iii).
Cablevision Systems Corporation means Cablevision Systems Corporation,
a Delaware corporation.
Capital Stock of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations or interests, including partnership interests,
whether general or limited, and membership interests, whether managing or
non-managing, of such Person.
-2-
<PAGE>
CATV means cable television, which term also includes satellite master
antenna television not yet converted to cable television service.
CATV Business means the CATV business to be acquired by Buyer,
presently owned and operated by Midwest, which consists of the transmission,
distribution and local origination of audio and video signals over the system
used by the CATV Business, located in the Service Territory.
CATV Instruments means (a) all franchises listed in Schedule 1.01(a) or
ordinances granted to Midwest by any Governmental Authority; (b) permits for
wire crossings over or under highways, railroads, and other property; (c)
construction permits and certificates of occupancy; pole attachment and other
Contracts with utilities; (d) state, county and municipal permits, orders,
variances, exemptions, approvals, consents, licenses and other authorizations;
(e) agreements for the purchase, sale, receipt or distribution of news, data and
microwave relay signals, or for satellite services; and (f) all other approvals,
consents and authorizations used or held for use in the CATV Business.
CATV Licenses means the licenses issued by the FCC used in the CATV
Business as presently conducted by Midwest, all of which are listed in Schedule
1.01(a).
CATV System means a complete CATV reception and distribution system
consisting of one or more head-ends, trunk cable, subscriber drops and
associated electronic equipment, which is, or is capable of being, operated as
an independent system without interconnections to other systems.
Certificate of Merger has the meaning set forth in Section 2.01(b).
Closing means a meeting for the purpose of concluding the transactions
contemplated by this Agreement held at the place and on the date fixed in
accordance with Section 12.01.
Closing Date; Date of Closing means the date fixed for the Closing in
accordance with Section 12.01.
Code means the Internal Revenue Code of 1986, as amended.
Combined Basic Subscriber has the meaning set forth in Section
2.10(a)(ii).
Combined Basic Subscriber Amount has the meaning set forth in Section
2.10(a)(ii).
Combined Basic Subscriber Estimate has the meaning set forth in Section
2.10(a)(i).
Combined Basic Subscriber Statement has the meaning set forth in
Section 2.10(a)(ii).
Combined CATV Business means the CATV Business as defined in this
Agreement together with the CATV Business as defined in the Asset Purchase
Agreement.
Common Stock Consideration means a number of shares of Adelphia Common
Stock equal to the quotient (rounded upward to the nearest whole number) of (a)
$540 million less the Subscriber Adjustment, if any, based on the Combined Basic
Subscriber Estimate and (b) the Market Value of Adelphia Common Stock; provided,
that if the Market Value is less than $50 per share, the Common Stock
Consideration shall be 10,800,000 shares of Adelphia Common Stock and if the
Market Value
-3-
<PAGE>
is greater than $64 per share, the Common Stock Consideration shall be 8,437,500
shares of Adelphia Common Stock less, in each case in this proviso, the
Subscriber Adjustment, if any, based on the Combined Basic Subscriber Estimate,
expressed as a number of shares of Adelphia Common Stock by dividing any
Subscriber Adjustment by the Market Value (subject, in each case in this
definition, to adjustments to prevent dilution as provided in Section 2.03).
Communications Act has the meaning set forth in Section 3.07(e).
Contract means any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, certificate, option, warrant, right, or other instrument,
document or written agreement relating to the CATV Business to which Midwest is
a party or by which Midwest or the assets of Midwest included within the CATV
Business are bound, excluding any CATV Instrument.
Copyright Act has the meaning set forth in Section 3.07(f).
CPA Firm has the meaning set forth in Section 2.10(a)(iii).
Current Assets of Midwest means petty cash, marketable securities, 100%
of active subscriber accounts receivable that are 60 days or less past due and
90% of active subscriber accounts that are between 61 and 90 days past due (in
each case measured from the date the accounts became receivable), all deposits
with utilities, under leases or related to guides, billing service, postage, the
pro rata portion of any prepaid taxes (as of the Closing Date), all prepaid
expenses, including in respect of pole rental or equipment maintenance
agreements that are Liabilities, and in respect of rent, postage, promotional
expenditures, guides, security service or two-way radio and other current assets
(excluding Inventory), each as determined in accordance with GAAP (unless
otherwise specified herein) and consistent with Schedule 1.01(b) to the Asset
Purchase Agreement, which Schedule sets forth the type and amounts of Current
Assets of Midwest and Sellers, as defined in the Asset Purchase Agreement, as of
September 30, 1999.
DGCL has the meaning set forth in Section 2.01(b).
DOJ means the United States Department of Justice.
Effective Time has the meaning set forth in Section 2.01(b).
Employees means all current active employees of Midwest.
Encumbrances means liens, charges, encumbrances, security interests,
options, restrictions or any other similar third party rights other than liens
for taxes not yet due and payable.
Environmental Law means any law or regulation governing the protection
of the environment (including air, water, soil and natural resources) or the
use, storage, handling, release or disposal of any hazardous or toxic substance.
Equipment means all tangible personalty; electronic devices; towers;
trunk and distribution cable; decoders and spare decoders for scrambled
satellite signals; amplifiers; power supplies; conduit; vaults and pedestals;
grounding and pole hardware; installed subscriber's devices (including, without
limitation, drop lines, converters, encoders, transformers behind television
sets and fittings); "head- ends" and "hubs" (origination, transmission and
distribution system) hardware; tools; inventory; spare parts; maps and
engineering data; vehicles; supplies, tests and closed circuit devices;
furniture and furnishings; and all other tangible personal property and
facilities owned by Midwest and used in the CATV Business.
Equivalent Subscriber means, as at any date of determination thereof,
the total number of households served by the CATV Business on a bulk-billed
basis and the total number of establishments served on a commercial account
basis, or on a basis less than the standard monthly service fees and charges
imposed by Midwest, which shall be deemed to be equal to the quotient obtained
by dividing (i) the total fees and charges for basic service billed by Midwest
during the month including such date on a bulk-billed or commercial account
basis, or on a basis less than the standard monthly service fees and charges
imposed by Midwest, by (ii) the fees and charges for basic service that a Basic
Subscriber of the type described in clause (a) of the definition of such term in
this Section 1.01 was billed during such month.
ERISA means the Employee Retirement Income Security Act of 1974, as the
same has been and may be amended from time to time.
ERISA Affiliate of any entity means any other entity that, together
with such entity, would be considered one employer under Section 4001 of ERISA
or Section 414 of the Code.
Estimated Adjustment Amount has the meaning set forth in the Asset
Purchase Agreement.
Exchange Act means the United States Securities Exchange Act of 1934,
as amended.
Excluded Assets means (i) the assets and properties of Midwest listed
on Schedule 1.01(d); (ii) programming Contracts (including cable guide
Contracts) and retransmission consent Contracts; (iii) insurance policies and
rights and claims thereunder up to Midwest's self-insured retention or
deductible; (iv) Contracts relating to national advertising sales
representation; (v) bonds, letters of credit, surety instruments and other
similar items of Midwest; and (vi) trademarks, tradenames, service marks,
service names, logos and similar proprietary rights.
Excluded Liabilities means all of the following liabilities,
obligations and commitments: (i) those of Midwest identified on Schedule
1.01(e); (ii) those arising as a result of a breach by Midwest or Holdings of
any of its representations, warranties, covenants, agreements or obligations
under this Agreement but only to the extent that such representations,
warranties, covenants, agreements or obligations survive the consummation of the
Closing as provided in Section 10.1; and (iii) those relating to the Excluded
Assets.
FCC means the United States Federal Communications Commission.
---
Final Combined Basic Subscriber Statement has the meaning set forth in
Section 2.10(a)(iii).
Final Working Capital Amount has the meaning set forth in the Asset
Purchase Agreement.
Final Working Capital Statement has the meaning set forth in the Asset
Purchase Agreement.
FTC means the United States Federal Trade Commission.
---
-4-
<PAGE>
GAAP means United States generally accepted accounting principles as in
effect from time to time and consistently applied.
Governmental Authority means the United States Federal Government, any
state, county, municipal, local or foreign government and any governmental
agency, bureau, commission, authority or body.
Hazardous Substance means any substance listed, defined, designated or
classified as hazardous, toxic or radioactive under any applicable Environmental
Law, including petroleum products.
Holdings has the meaning set forth in the Preamble of this Agreement.
Holdings Indemnified Party has the meaning set forth in Section
10.02(a).
HSR Act and Rules means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder, as from time
to time in effect prior to the Closing.
HSR Report means the Notification and Report Form for certain mergers
and acquisitions mandated by the HSR Act and Rules.
Income Statement(s) has the meaning set forth in Section 3.03.
Indemnitee has the meaning set forth in Section 10.04.
Indemnitor has the meaning set forth in Section 10.04.
Interim Financial Statements has the meaning set forth in Section 3.03.
Inventory means all inventory as defined under GAAP, plus, without
limitation, all supplies, all maintenance equipment, all converters, all cables
and all amplifiers owned by Midwest on the Closing Date as determined by
Midwest's inventory control system and used in the CATV Business.
Judgment means any judgment, writ, order, injunction, award or decree
of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
Law means the common law and any statute, ordinance, code or other law,
rule, regulation, order, technical or other standard, requirement or procedure
enacted, adopted, promulgated, applied or followed by any Governmental Authority
or court.
Liabilities means accounts payable, accrued expenses and other
liabilities of Midwest determined in accordance with GAAP (including accrued
vacation pay for employees of Midwest hired by Buyer), except that the current
portion of any indebtedness for borrowed money and Excluded Liabilities shall
not be included, consistent with Schedule 1.01(c) of the Asset Purchase
Agreement, which Schedule sets forth the type and amounts of Liabilities of
Midwest and the Sellers, as defined in the Asset Purchase Agreement, as of
September 30, 1999.
-5-
<PAGE>
LMDS has the meaning set forth in Section 9.07.
Losses has the meaning set forth in Section 10.02(a).
Market Value means the average of the Trading Prices for the twenty
(20) consecutive Business Days through and including the date ending three
Business Days prior to the Closing Date (e.g., if the Closing Date is April 10,
Market Value would be calculated by determining the average of the Trading
Prices of the 20 consecutive Business Days ending on April 7, assuming each day
from and including April 7 through April 10 is a Business Day).
Material Adverse Effect means a material adverse effect on the assets,
financial condition or results of operations of the Combined CATV Business taken
as a whole other than any such effect resulting from changes in general economic
or political conditions or legal, governmental, regulatory or competitive
factors affecting CATV system operators generally or in the State of Ohio.
Merger has the meaning set forth in Section 2.01(a).
Merger Sub has the meaning set forth in the Preamble to this Agreement.
Midwest has the meaning set forth in the Preamble to this Agreement.
MMDS has the meaning set forth in Section 9.07.
Outside Date has the meaning set forth in Section 12.01.
Permitted Encumbrances means those Encumbrances set forth in Schedule
1.01(f) hereto and all other Encumbrances, if any, which do not materially
detract from the value of the tangible property subject thereto and which do not
materially interfere with the present and continued use of such property in the
operation of the CATV Business.
Person means any natural person, Governmental Authority, corporation,
general or limited partner, partnership, limited liability company, joint
venture, trust, association, or unincorporated entity of any kind.
Preliminary Working Capital Statement has the meaning set forth in the
Asset Purchase Agreement.
Real Property means all realty, fixtures, easements, rights-of-way,
leasehold and other interests in real property, buildings and improvements used
in the CATV Business.
Registration Rights Agreement means the registration rights agreement,
substantially in the form of Exhibit E hereto, as the same may be amended,
supplemented or otherwise modified in accordance with its terms.
Reorganization of Buyer means any merger, consolidation, share
exchange, business combination, reorganization, recapitalization or other
similar transaction in which Buyer is not the surviving or resulting entity.
-6-
<PAGE>
Required Consents means the consents and approvals designated as such
on Schedules 3.02 and 4.05 by an asterisk.
SEC means the United States Securities and Exchange Commission.
---
Securities Act means the United States Securities Act of 1933, as
amended.
Sellers has the meaning set forth in the Asset Purchase Agreement.
Service Territory means the geographical area as described in Exhibit B
hereto.
SMATV has the meaning set forth in Section 9.07.
Subscriber Adjustment means an amount equal to the product of (x)
$4,996.21 multiplied by (y) the difference between (i) 306,232 less (ii) the
number of Basic Subscribers of the Combined CATV Business on the Closing Date,
multiplied by (z) 54/153; provided, that, if the product obtained in the
foregoing clause is negative, the Subscriber Adjustment is zero.
Subsidiary of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof, (ii) a
partnership of which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, is the general partner and has the power to direct the policies,
management and affairs of the partnership, (iii) a limited liability company of
which such Person or one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, is the managing
member and has the power to direct the policies, management and affairs of the
company, or (iv) any other Person (other than a corporation, partnership or
limited liability company) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership and power to
direct the policies, management and affairs thereof.
Taxes means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock, stamp,
payroll, sales, employment, withholding, occupancy and other taxes, duties or
assessments imposed by a governmental authority.
Tax Returns has the meaning set forth in Section 3.05.
Trading Price on any day shall mean the weighted average of the
reported per share prices at which transactions in Adelphia Common Stock are
executed on the National Association of Securities Dealers Automated Quotations
National Market System during such day (weighted based on the number of shares
of Adelphia Common Stock traded), as determined by Bear, Stearns & Co. Inc. and
Merrill Lynch & Co., Inc.
Voting Stock of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
-7-
<PAGE>
Year 2000 Problem has the meaning set forth in Section 3.13.
1.02 Other Definitional Provisions. Terms defined in the singular
shall have a comparable meaning when used in plural, and vice versa.
2. The Merger.
2.01 The Merger
(a) Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, Merger Sub shall be merged with and into
Midwest (the "Merger"), with Midwest surviving, and the separate corporate
existence of Merger Sub shall thereupon cease.
(b) Immediately following the Closing, Midwest and Buyer will cause a
Certificate of Merger (the "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 Delaware General Corporation Law, as amended ("DGCL"). The
Merger shall become effective at the time when the Certificate of Merger has
been duly filed with the Secretary of the State of Delaware or such other time
as shall be agreed upon by the parties and set forth in the Certificate of
Merger in accordance with the DGCL (the "Effective Time"). From and after the
Effective Time, Midwest will possess all the rights, powers, privileges and
franchises and be subject to all of the obligations, liabilities, restrictions
and disabilities of Midwest and Merger Sub, all as provided under the DGCL.
2.02 Common Stock Consideration. At the Effective Time, as a
result of the Merger and without any action on the part of any holder of Capital
Stock of Midwest:
(i) all of the issued and outstanding Capital Stock of Midwest
immediately prior to the Effective Time will be converted into and
exchanged for the Common Stock Consideration, subject to adjustment as
provided in Section 2.03, and the shares of Adelphia Common Stock
representing the Common Stock Consideration shall be registered in the
name of Holdings or its nominees; and
(ii) all of the Capital Stock of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted
into one share of Capital Stock of Midwest and Midwest will become a
wholly-owned subsidiary of Buyer.
2.03 Adjustments to Prevent Dilution. In the event that prior to the
Effective Time there is (i) a change in the number of issued and outstanding
shares of Adelphia Common Stock or (ii) any cash distribution, dividend,
reclassification, stock split (including a reverse split), stock dividend or
other distribution, or other similar transaction, then, in the case of (i) or
(ii), the number of shares of Adelphia Common Stock to be received as the Common
Stock Consideration shall be adjusted equitably to eliminate the effects of such
event. In the case of a distribution of a new class or series of Capital Stock
of Buyer to holders of Adelphia Common Stock as a spin-off or as a result of a
reclassification of Adelphia Common Stock, Holdings may elect to have such
equitable adjustment take the form of Holdings receiving at Closing the same
number of shares of such new class or series of Capital Stock as Holdings would
have received had it been the record owner of the Common Stock Consideration on
the record date of such distribution, spin-off or reclassification.
-8-
<PAGE>
2.04 Directors of Midwest. At the Effective Time, the officers of
Midwest shall resign from their positions as such and the directors of Merger
Sub shall, from and after the Effective Time, be the directors of Midwest.
2.05 Officers of Midwest. At the Effective Time, the officers of
Midwest shall resign from their positions as such and the officers of Merger Sub
shall, from and after the Effective Time, be the officers of Midwest.
2.06 Surrender and Payment. Upon surrender by Holdings for cancellation
of a certificate formerly representing Capital Stock of Midwest, Buyer will
deliver to Holdings the Common Stock Consideration registered in such names and
denominations as Holdings shall reasonably request. After the Effective Time and
until so surrendered, the Capital Stock of Midwest shall represent for all
purposes only the right to receive the Common Stock Consideration.
2.07 New Name. From and after the Effective Time, the name of
Midwest will be Adelphia General Holdings III, Inc.
2.08 Charter of Midwest. The certificate of incorporation of Merger Sub
in effect at the Effective Time will, from and after the Effective Time, be the
certificate of incorporation of Midwest until amended in accordance with its
terms and the DGCL.
2.09 By-laws of Midwest. The by-laws of Merger Sub in effect at the
Effective Time will, from and after the Effective Time, be the by-laws of
Midwest until amended in accordance with their terms and the DGCL.
2.10 Adjustments.
-----------
(a) (i) At least three Business Days prior to the Closing
Date, Holdings shall prepare, or cause to be prepared, and deliver to
Buyer a statement setting forth Holdings' estimate of the number of
Basic Subscribers to be transferred to Buyer under this Agreement and
the Asset Purchase Agreement as of the Closing Date (the "Combined
Basic Subscriber Estimate"), which estimate shall be prepared in
conformity with the definition of Basic Subscriber contained herein.
Basic Subscribers transferred to Buyer under this Agreement and the
Asset Purchase Agreement shall be deemed to include all Basic
Subscribers to the Combined CATV Business on the Closing Date,
irrespective of the lack of approval or consent of Governmental
Authorities to transfer to Buyer any franchises containing Basic
Subscribers. The number of Basic Subscribers set forth in the Combined
Basic Subscriber Estimate shall be used for computing the Common Stock
Consideration and the Subscriber Adjustment, if any.
(ii) Within ninety (90) days after the Closing Date, Holdings
shall prepare, or cause to be prepared, and deliver to Buyer a
statement setting forth the number of Basic Subscribers to the "CATV
Business" as defined herein and to the "CATV Business" as defined in
the Asset Purchase Agreement as of the Closing Date (each, a "Combined
Basic Subscriber" and such number, the "Combined Basic Subscriber
Amount"), which statement (the "Combined Basic Subscriber Statement")
shall be prepared in conformity with the definition of Basic Subscriber
contained herein. Buyer shall cooperate in providing to Holdings
access, upon reasonable notice, to all relevant books, records and
personnel of the
-9-
<PAGE>
CATV Business in order to facilitate the preparation of the Combined
Basic Subscriber Statement.
(iii) During the thirty (30) day period following the delivery
of the Combined Basic Subscriber Statement to Buyer, Buyer shall have
the right to examine the Combined Basic Subscriber Statement and all
records used to prepare the Combined Basic Subscriber Statement. In the
event Buyer determines that the Combined Basic Subscriber Statement has
not been prepared on the basis set forth in Section 2.10(a)(ii). Buyer
shall so inform Holdings in writing (the "Buyer's Subscriber
Objection"), setting forth a reasonably specific description of the
basis of the Buyer's Subscriber Objection on or before the last day of
the thirty (30) day period referred to in the first sentence of this
Section 2.10(a)(i) hereof. If Buyer delivers a Buyer's Subscriber
Objection, Buyer and Holdings shall attempt to resolve the differences
underlying the Buyer's Subscriber Objection within twenty (20) days of
Holdings' receipt thereof. If Holdings and Buyer are unable to resolve
all their differences within such twenty (20) day period, they shall
refer their remaining differences to KPMG LLP, certified public
accountants, or such other nationally recognized firm of independent
public accountants as to which Buyer and Holdings may mutually agree
(the "CPA Firm"), who shall determine on the basis of the standard set
forth in Section 2.10(a)(ii) hereof and only with respect to the
remaining differences so submitted, whether and to what extent, if any,
the Combined Basic Subscriber Statement requires adjustment. The CPA
Firm will base its determination only on evidence brought to it by the
parties and shall not conduct an audit. The CPA Firm shall deliver its
written determination to Buyer and Holdings no later than the twentieth
(20th) business day after the remaining differences underlying the
Buyer's Subscriber Objection are referred to the CPA Firm. The CPA
Firm's determination shall be conclusive and binding upon the parties.
The fees and disbursements of the CPA Firm shall be allocated between
Buyer and Holdings in the same proportion that the aggregate number of
any disputed Combined Basic Subscribers submitted to the CPA Firm that
is unsuccessfully disputed by each (as finally determined by the CPA
Firm) bears to the total amount of any Combined Basic Subscribers so
submitted. Buyer and Holdings shall make readily available to the CPA
Firm all relevant invoices, books and records and any work papers
relating to the Combined Basic Subscriber Statement and all other items
reasonably requested by the CPA Firm. The "Final Combined Basic
Subscriber Statement" shall be the Combined Basic Subscriber Statement
in the event that (x) a Buyer's Subscriber Objection is not delivered
to Holdings in the period set forth in this Section 2.10(a)(iii)
hereof, or (y) Holdings and Buyer so agree; or (ii) the Combined Basic
Subscriber Statement, as adjusted by either (x) the agreement of
Holdings and Buyer or (y) the CPA Firm.
(iv) On the fifth (5th) business day following the delivery of
the Final Combined Basic Subscriber Statement pursuant to Section
2.10(a)(iii), if the number of Combined Basic Subscribers included in
the Final Combined Basic Subscriber Statement is less than 306,232 and
less than the number of Combined Basic Subscribers included in the
Combined Basic Subscriber Estimate, then Holdings shall pay the Buyer
an amount equal to the product of (a) $4,996.21 times the difference
between the number of Combined Basic Subscribers included in the
Combined Basic Subscriber Estimate (but not above 306,232) and the
number of Combined Basic Subscribers included in the Final Combined
Basic Subscriber Statement and (b) 54/153. If the number of Combined
Basic Subscribers included in the Final Combined Basic Subscriber
Statement is more than the number of Combined Basic Subscribers
included in the Combined Basic Subscriber Estimate and the number of
-10-
<PAGE>
Combined Basic Subscribers in the Combined Basic Subscriber Estimate
was less than 306,232, then on such fifth (5th) business day, Buyer
shall pay to Holdings an amount equal to the product of (a) $4,996.21
times the difference between the number of Combined Basic Subscribers
included in the Final Combined Basic Subscriber Statement (but not
above 306,232) and the number of Combined Basic Subscribers included in
the Combined Basic Subscriber Estimate and (b) 54/153.
(v) Any amount payable by Buyer pursuant to Section
2.10(a)(iv) hereof shall be paid by wire transfer of immediately
available funds in New York, New York to a bank account designated by
Holdings. Any amount payable by Holdings pursuant to Section
2.10(a)(iv) hereof shall be paid by delivering a number of shares of
Adelphia Common Stock that, based on the price per share used in
determining the Common Stock Consideration, has a value equivalent to
such amount, rounded up to the nearest whole number.
(b) (i) If the Estimated Adjustment Amount determined under
the Asset Purchase Agreement is positive, then at Closing Buyer shall
pay to Holdings at a bank account designated by Holdings, an amount
equal to the product of (i) the Estimated Adjustment Amount and (ii)
54/153. If the Estimated Adjustment Amount determined under the Asset
Purchase Agreement is negative, then at Closing Holdings shall pay to
Buyer at a bank account designated by Buyer, an amount equal to the
product of (i) the Estimated Adjustment Amount and (ii) 54/153.
(ii) If the Final Working Capital Amount determined under the
Asset Purchase Agreement exceeds the Estimated Adjustment Amount, then
Buyer shall pay to Holdings at a bank account designated by Holdings an
amount equal to the product of (i) such excess and (ii) 54/153. If the
Estimated Adjustment Amount exceeds the Final Working Capital Amount,
then Holdings shall pay to Buyer an amount equal to the product of (i)
such excess and (ii) 54/153. Any payment pursuant to this Section
2.10(b)(ii) shall be made on the same date as any payment is made under
Section 2.04(a)(v) of the Asset Purchase Agreement.
(iii) Any payments pursuant to this Section 2.10(b) shall be
made by wire transfer of immediately available funds in New York, New
York.
2.11 Sales and Transfer Taxes. Buyer, on the one hand, and Holdings, on
the other hand, shall each be responsible for one-half of all sales and use
taxes and transfer taxes, including realty transfer taxes, if any, arising from
the Merger.
3. Representations and Warranties of Holdings.
To induce Buyer and Merger Sub to enter into this Agreement, Holdings
represents and warrants to Buyer and Merger Sub as follows:
3.01 Organization and Authority. Holdings and Midwest are duly
organized under the laws of the State of Delaware.
3.02 Legal Capacity; Approvals and Consents.
--------------------------------------
-11-
<PAGE>
(a) Authority and Binding Effect. Subject to Section 9.02
hereof and the consents and approvals set forth on Schedule 3.02,
Holdings and Midwest have all requisite corporate power and authority
to execute, deliver and perform this Agreement and to approve, adopt
and consummate the Merger. Holdings and Midwest have duly taken all
corporate and shareholder actions necessary to authorize the execution,
delivery and performance of this Agreement. Without limiting the
foregoing, any actions of the directors and stockholders of Holdings
and Midwest required to approve and adopt this Agreement have been duly
taken in accordance with the requirements of the DGCL and no further
action of the directors or stockholders of Holdings or Midwest is
required in order to consummate this Merger. This Agreement has been
duly executed and delivered by Holdings and Midwest and is the valid
and binding obligation of Holdings and Midwest enforceable in
accordance with its terms, except as such enforceability may be
affected by laws of bankruptcy, insolvency, reorganization and
creditors rights generally and by the availability of equitable
remedies.
(b) No Breach. Subject only to obtaining the consents and
approvals set forth on Schedule 3.02, the execution, delivery and
performance of this Agreement does not, and will not, contravene the
relevant organizational documents of Holdings or Midwest, and does not,
and will not: (i) conflict with or result in a breach or violation by
Midwest of or constitute a default by Midwest under or result in the
termination, suspension, modification or impairment of any CATV
Instrument, Law, Judgment, or Contract to which Midwest is a party or
by which Midwest, the CATV Business or any of its assets is subject or
bound or may be affected; or (ii) create or impose any Encumbrance upon
any of Midwest's assets other than a Permitted Encumbrance, in each
case under clause (i) above, which conflict, breach, violation, default
or termination, suspension, modification or impairment would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) Required Consents. Except for the parties listed in
Schedule 3.02, there are no parties whose approval or consent, or with
whom the filing of any certificate, notice, application, report or
other document, is legally or contractually required or otherwise is
necessary in connection with the execution, delivery or performance of
this Agreement by Holdings or Midwest, except where failure to obtain
such consent or approval or failure to make such filing would not
reasonably be expected to have a Material Adverse Effect.
3.03 Financial Statements. Holdings has delivered to Buyer true and
complete copies of the statements of income of the Combined CATV Business for
the years ending December 31, 1998, 1997 and 1996 (the "Income Statements"). The
Income Statements were prepared in accordance with GAAP except for footnotes and
certain items that would require reclassification and certain expenses as
described in the Income Statements and present fairly in all material respects
the results of its operations for the periods then ended. Holdings has also
provided to Buyer a balance sheet of the Combined CATV Business as of June 30,
1999 and a balance sheet and income statement of the Combined CATV Business as
of September 30, 1999 (the "Interim Financial Statements"), which Interim
Financial Statements were prepared in accordance with GAAP, as noted above, to
the extent applicable thereto and the practices customarily followed by the
Combined CATV Business in preparing the interim statements and, subject to
normal year-end adjustments and the procedures followed in interim statements,
present fairly in all material respects the financial position and results of
operation of the Combined CATV Business as at the dates and for the period
indicated and in the case of the income statement, are stated on a basis
generally consistent with the above-described Income Statements.
-12-
<PAGE>
3.04 Changes in Operation. Since September 30, 1999, there has not been
any event or circumstance which, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect.
3.05 Tax Returns. Midwest has duly filed all material federal, state,
local and foreign income, information, franchise, sales, use, property, excise
and payroll and other tax returns or reports (herein "Tax Returns") required to
be filed by Midwest on or prior to the date hereof. All material taxes, fees and
assessments that are shown on such Tax Returns as due or payable by Midwest on
or before the date hereof and that might result in an Encumbrance upon any of
Midwest's assets have been duly paid. Except as set forth in Schedule 3.05,
Midwest has received no notice or assessment to the effect that there is any
unpaid tax, interest, penalty or addition to tax due or claimed to be due from
Midwest in respect of such Tax Returns; Midwest has received no notice of the
assertion or threatened assertion of any Encumbrances with respect to any of
Midwest's assets on account of any unpaid taxes; and no audits of such Tax
Returns by any Governmental Authority are pending or, so far as Midwest knows,
threatened.
3.06 Assets of Midwest.
-----------------
(a) Title; Encumbrances. Midwest has, or will have at Closing,
(i) good and marketable title to all of the Equipment and Real Property
owned in fee and (ii) the right, title and interest in and to the other
property or rights included in Midwest's assets, in each instance free
and clear of any Encumbrances, except for any instance in which the
failure to have such title, right or authority would not reasonably be
expected to have a Material Adverse Effect.
(b) Real Property. Schedule 3.06(b) sets forth a list of all
Real Property owned or leased by Midwest in connection with the
operation of the CATV Business as presently conducted. Except as set
forth in Schedule 3.06(b), Midwest has title in fee simple to all such
Real Property except for leases, easements and other interests not
constituting ownership in fee. To the knowledge of Midwest, except as
set forth in Schedule 3.06(b), there are no oral leases with respect to
head-ends used in the CATV Business.
(c) Assets at Closing. The assets of Midwest at Closing will
be comprised of the assets used by it to conduct the CATV Business as
it is presently being conducted except as would not reasonably be
expected to have a Material Adverse Effect. For the avoidance of doubt,
Buyer and Merger Sub agree with Midwest and Holdings that Midwest shall
be permitted to convey the Excluded Assets to another Person prior to
Closing without breaching any representation, warranty, covenant or
agreement in this Agreement.
(d) Environmental Matters. Except as disclosed in Schedule
3.06(d), or as would not reasonably be expected to have a Material
Adverse Effect on the CATV Business as presently conducted: (i) Midwest
is in material compliance with applicable Environmental Laws; (ii)
Midwest has not received any written notice from any Governmental
Authority alleging that its assets are in violation of any applicable
Environmental Law; (iii) Midwest is not the subject of any court order,
administrative order or decree arising under any Environmental Law that
is known to Midwest or which Midwest should know of with reasonable
investigation; and (iv) Midwest has not used its assets for the
generation, storage,
-13-
<PAGE>
discharge or disposal of any Hazardous Substances except as permitted
under applicable Environmental Laws.
3.07 The CATV Business. With respect to the CATV Business:
-----------------
(a) As of September 30, 1999, the Combined CATV Business
included not less than 306,232 Basic Subscribers. As of September 30,
1999, approximately 59% of the cable plant of the Combined CATV
Business has been rebuilt to 750 MHz bandwidth with a minimum of 600
MHz analog channel capacity.
(b) Since September 30, 1999, the CATV Business has been
operated in the ordinary course in all material respects, and no
material assets previously used therein have been disposed of except in
the ordinary course of business.
(c) Schedule 3.07(c) contains a complete list of all material
Contracts in effect on the date of this Agreement. As used in this
Section 3.07(c), the term "material Contracts" means any Contract
requiring in any calendar year payments aggregating $100,000 or more
and that cannot be terminated on 30 days' notice without liability.
(d) Midwest holds, or will hold at Closing, all of the
franchises, permits and licenses reasonably necessary to enable it to
operate the CATV Business as presently conducted except all such CATV
Instruments the failure of which to hold would not reasonably be
expected to have a Material Adverse Effect. Midwest is in compliance
with the terms and conditions of all such CATV Instruments except where
such non-compliance would not reasonably be expected to have a Material
Adverse Effect. Except as disclosed in Schedule 3.07(d), Midwest has
not received any notice of any claimed or purported default in any CATV
Instruments and there are no proceedings pending, or, to the knowledge
of Midwest, threatened, to cancel, modify or change any such CATV
Instruments, except in each case as would not reasonably be expected to
have a Material Adverse Effect.
(e) Except as set forth in Schedule 3.07(e), the CATV Business
is conducted by Midwest in compliance with all applicable laws,
regulations and other requirements of Governmental Authorities, CATV
Instruments, CATV Licenses and Contracts except where the violation of
any of the foregoing would not reasonably be expected to have a
Material Adverse Effect, including, but not limited to, compliance in
all material respects with the Communications Act of 1934, as amended,
and the rules and regulations promulgated thereunder (collectively, the
"Communications Act"). Except as set forth in Schedule 3.07(e), Midwest
has submitted to the FCC all filings, including, but not limited to,
cable television registration statements, annual reports and
aeronautical frequency usage notices, that are required under the rules
and regulations of the FCC; the CATV Business is in compliance with all
signal leakage criteria prescribed by the FCC for each relevant
reporting period. Midwest has made available to Buyer copies of all
reports and filings for the past year, made or filed pursuant to FCC
rules and regulations.
(f) Except as set forth in Schedule 3.07(f), Midwest has filed
all semi-annual statements of account and paid all compulsory licensing
fees required by Section 111 of the Copyright Act of 1976, and the
rules, regulations and orders of the Copyright Office of the
-14-
<PAGE>
Library of Congress promulgated thereunder (collectively, the
"Copyright Act"), with respect to the CATV Business, for the three
years preceding the date of the Agreement.
(g) The monthly rates charged by Midwest for each service
provided by Midwest to subscribers of the CATV Business as of September
30, 1999 are set forth in all material respects on Schedule 3.07(g).
Such rates comply with the rules and regulations of the FCC as of the
date thereof, except to the extent that such failure to comply would
not reasonably be expected to have a Material Adverse Effect.
(h) Except as set forth in Schedule 3.07(h), and except for
customer claims (other than those on Forms 329 and 394, which are
listed on Schedule 3.07(h)) arising in the ordinary course of business,
there are no claims pending or, to Midwest's knowledge, threatened
against Midwest with respect to the operation of the CATV Business
which would reasonably be expected to have a Material Adverse Effect.
(i) Except as set forth on Schedule 3.07(i), there are no
obligations or liabilities to subscribers of the CATV Business which
would reasonably be expected to have a Material Adverse Effect, except
(i) with respect to deposits made by such subscribers and (ii) the
obligation to supply services to subscribers in the ordinary course of
business, pursuant to the franchises.
(j) Except as set forth on Schedule 3.07(j), there is no free
service liability to subscribers existing with respect to the CATV
Business which would reasonably be expected to have a Material Adverse
Effect. Except with respect to deposits for converters, encoders,
decoders and related equipment, and any other prepaid income item which
is or will be reflected in the Final Working Capital Statement, Midwest
has no obligation or liability for the refund of monies to its
subscribers which would reasonably be expected to have a Material
Adverse Effect.
(k) Except as set forth on Schedule 3.07(k), with respect to
the CATV Business, Midwest has not made any commitments to any
franchising authority to maintain a local office in any location.
Further, Midwest has not made any commitment to any of the
municipalities served by the CATV Business to pay franchise fees to any
such municipality in excess of the amounts set forth on Schedule
3.07(k), except where such commitment would not reasonably be expected
to have a Material Adverse Effect.
(l) Except as set forth on Schedule 3.07(l), there is no
overbuild of the CATV Business at present, nor, to Midwest's knowledge,
is any overbuild pending.
3.08 Labor Contracts and Actions.
---------------------------
(a) Midwest is not a party to any Contract with any labor
organization, nor has Midwest agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of the employees of
Midwest with respect to the operation of the CATV Business.
-15-
<PAGE>
(b) As of the date of this Agreement, Midwest is not
experiencing any strikes, work stoppages, significant grievance
proceedings or, to the knowledge of Midwest, claims of unfair labor
practices filed with respect to the operation of the CATV Business.
3.09 Employee Benefit Plans.
----------------------
(a) All "employee benefit plans" within the meaning of Section
3(3) of ERISA covering Employees, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, and other benefit plans,
contracts or arrangements covering Employees (collectively, the
"Benefit Plans") are listed on Schedule 3.09. True and complete copies
of all Benefit Plans and all amendments thereto have been provided or
made available to Buyer. Schedule 3.09 also lists all multiemployer
plans covering Employees.
(b) All Benefit Plans, to the extent subject to ERISA, are in
substantial compliance with ERISA. There is no material pending or, to
the knowledge of Midwest, threatened litigation relating to the Benefit
Plans. Midwest has not engaged in a transaction with respect to any
Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject Midwest to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA in an amount which would be material.
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Midwest with respect to any
ongoing, frozen or terminated "single- employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by it, or the single-employer plan of any ERISA Affiliate of
Midwest. Midwest has not incurred and does not expect to incur any
withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be
filed for any Benefit Plan subject to Title IV of ERISA or by any ERISA
Affiliate of Midwest within the 12-month period ending on the date
hereof.
(d) Neither any Benefit Plan nor any single-employer plan of
an ERISA Affiliate of Midwest has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code
or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. Midwest has not provided, nor is it required to
provide, security to any Benefit Plan or to any single-employer plan of
an ERISA Affiliate of Midwest pursuant to Section 401(a)(29) of the
Code.
3.10 Contracts. Except as set forth in Schedule 3.10, there are no
defaults by Midwest under the Contracts (nor has Midwest received written notice
of a threatened default or notice of default) which would reasonably be expected
to have a Material Adverse Effect, and Midwest does not know of a default by any
other party to a Contract which would reasonably be expected to have a Material
Adverse Effect.
3.11 Legal and Governmental Proceedings and Judgments. Except as may
affect the cable television industry generally in the United States or the State
of Ohio, or as set forth on Schedule 3.11, there is no legal action or
proceeding, pending or, so far as is known to Midwest, any investigation pending
or threatened against Midwest, the CATV Business or Midwest's assets, nor is
there any
-16-
<PAGE>
Judgment outstanding against Midwest or to or by which Midwest, any of Midwest's
assets or the CATV Business is subject or bound, which (i) results in any
modification, termination, suspension, impairment or reformation of any CATV
Instrument or Contract or any right or privilege thereunder in a manner that
would reasonably be expected to have a Material Adverse Effect or (ii)
materially adversely affects the ability of Midwest to consummate any of the
transactions contemplated hereby.
3.12 Finders and Brokers. Midwest has employed Bear, Stearns & Co.
Inc. and Merrill Lynch & Co., Inc. as brokers in the sale provided for herein
and will pay and discharge the claim thereof for commission or expense
reimbursement in connection therewith. Midwest has not entered into any other
contract, arrangement or understanding with any Person or firm, nor is it aware
of any claim or basis for any claim based upon any act or omission of Midwest or
any of its affiliates, which may result in the obligation of Buyer to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
3.13 Year 2000. Except as set forth on Schedule 3.13, Midwest is not
aware of any Year 2000 Problem with respect to the operation of the CATV Systems
that would reasonably be expected to have a Material Adverse Effect. The "Year
2000 Problem" as used herein means any significant risk that computer hardware
or software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the case
of dates or time periods occurring after December 31, 1999, function at least as
effectively as in the case of dates or time periods occurring prior to January
1, 2000.
3.14 Restoration. Except as disclosed on Schedule 3.14, or as would not
reasonably be expected to have a Material Adverse Effect, (i) no restoration,
repaving, repair or other work is required to be made by Midwest to any street,
sidewalk or abutting or adjacent area pursuant to the requirements of any
ordinance, code, permit, easement or contract relating to the installation,
construction or operation of the CATV Business; and (ii) no property of any
person or entity has been damaged, destroyed, disturbed or removed in the
process of construction or maintenance of the CATV System which has not been, or
will not be, prior to Closing, repaired, restored or replaced (if required by
the terms of any applicable ordinance, code, permit, easement or contract) or,
if not repaired, restored or replaced, for which an adequate reserve has not
been accrued by Midwest prior to Closing.
3.15 Pole Attachment Agreements. Except as set forth on Schedule 3.15
or as would not reasonably be expected to have a Material Adverse Effect,
Midwest has not received any written notice of any claim against Midwest that it
is in default under any pole attachment agreements.
3.16 Right of First Refusal. Except as set forth on Schedule 3.16, no
Person has any option, warrant or right of first refusal to purchase the Capital
Stock of Midwest, the CATV Business or any of the assets of Midwest used in the
CATV Business.
3.17 Insurance. Schedule 3.17 is a list, accurate and complete in all
material respects, of insurance policies in full force and effect with respect
to Midwest as of September 30, 1999, and Midwest has not received any notice of
non-renewal or cancellation of such insurance policies. Except as Midwest may
determine, in the exercise of its business judgment, Midwest will maintain such
insurance policies in full force and effect up to and including the Closing
Date.
-17-
<PAGE>
3.18 Title to Capital Stock. Holdings has good and valid title to
the Capital Stock of Midwest, free and clear of all Encumbrances.
3.19 Securities Law Matters.
----------------------
(a) Holdings represents that it is an "accredited investor" as
that term is defined in Regulation D under the Securities Act and that
it has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of acquisition of
the Common Stock Consideration and of making an informed investment
decision with respect thereto.
(b) Holdings is aware that the Common Stock Consideration is
not on the date of this Agreement registered under the Securities Act
or under any state securities laws.
(c) Holdings agrees that it will not transfer the Common Stock
Consideration without compliance with the registration and other
provisions of all applicable securities laws and acknowledges that each
certificate representing the Common Stock Consideration which it
receives will be marked with an appropriate legend to such effect
(which legend will be removed when such Common Stock is transferred
pursuant to an effective registration statement or an exemption from
the Securities Act).
(d) Holdings is purchasing the Common Stock Consideration
solely for investment purposes, and has no present intention to sell
the Common Stock Consideration; provided, in each case, Holdings may
sell the Common Stock Consideration pursuant to an effective
registration statement or an exemption from registration under the
Securities Act.
(e) Holdings understands that it may be required to bear the
economic risk of the investment represented by the purchase of the
Common Stock Consideration for an indefinite period.
(f) Holdings agrees not to offer, sell, or otherwise dispose
of the shares of the Common Stock Consideration at any time prior to
the second anniversary of the date Holdings acquires the Common Stock
Consideration, unless such offer, sale or other disposition is
registered under the Securities Act or is pursuant to an exemption
under the Securities Act.
(g) Holdings acknowledges that the certificate(s) representing
the Common Stock Consideration delivered hereunder shall bear the
following legend (which legend will be removed when such Common Stock
is transferred pursuant to an effective registration statement or to an
exemption from the Securities Act):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY OR
INDIRECTLY, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT OR STATE
-18-
<PAGE>
SECURITIES LAWS OR COMPLIANCE WITH AN
APPLICABLE EXEMPTION THEREFROM.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE
CORPORATION.
3.20 Internet Service Agreements. Neither Holdings nor Midwest is a
party to an agreement with At Home Corporation requiring the offering of
internet access services to be provided by At Home Corporation across the CATV
Business.
4. Representations and Warranties of Buyer.
To induce Holdings and Midwest to enter into this Agreement, Buyer
represents and warrants to Holdings and Midwest as follows:
4.01 Organization and Authority of Buyer.
-----------------------------------
(a) Buyer is a Delaware corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has all corporate power and authority necessary to
carry on its business as now conducted. Buyer is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary except for those
jurisdictions where failure to be so qualified or in good standing,
individually or in the aggregate, has not had and would not reasonably
be expected to have a Buyer Material Adverse Effect. Buyer has
heretofore delivered or made available to Holdings true and complete
copies of the certificate of incorporation and by-laws of Buyer, as
currently in effect. Buyer has made no amendment or modification of its
certificate of incorporation or by-laws since the date of this
Agreement.
(b) Merger Sub is a Delaware corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization and has all corporate power and authority
necessary to carry on its business as now conducted. Merger Sub is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where such qualification is necessary
except for those jurisdictions where failure to be so qualified or in
good standing, individually or in the aggregate, has not had and would
not reasonably be expected to have a Buyer Material Adverse Effect.
Buyer has heretofore delivered or made available to Holdings true and
complete copies of the certificate of incorporation and by-laws of
Merger Sub, as currently in effect. Merger Sub has made no amendment or
modification of its certificate of incorporation or by-laws since the
date of this Agreement.
4.02 Legal Capacity: Approvals and Consents.
--------------------------------------
(a) Authority; Binding Effect. Buyer and Merger Sub have
all requisite corporate power and authority to execute, deliver and perform this
Agreement and, in the case of Buyer, the Registration Rights Agreement, and to
approve, adopt and consummate the
-19-
<PAGE>
Merger. Buyer and Merger Sub have duly taken all corporate and
shareholder actions necessary to authorize the execution, delivery and
performance of this Agreement and, in the case of Buyer, the
Registration Rights Agreement. Without limiting the foregoing, any
actions of the directors and stockholders of Buyer and Merger Sub
required to approve and adopt this Agreement and the Registration
Rights Agreement have been duly taken in accordance with the
requirements of the DGCL and no further action of the directors or
stockholders of Buyer or Merger Sub is required in order to consummate
the Merger. This Agreement and the Registration Rights Agreement have
been duly executed and delivered by Buyer and are the valid and binding
obligations of Buyer enforceable in accordance with their respective
terms, except as such enforceability may be affected by laws of
bankruptcy, insolvency, reorganization and creditors rights generally
and by the availability of equitable remedies. This Agreement has been
duly executed and delivered by Merger Sub and is the valid and binding
obligation of Merger Sub enforceable in accordance with its terms,
except as such enforceability may be affected by laws of bankruptcy,
insolvency, reorganization and creditors rights generally and by the
availability of equitable remedies.
(b) No Breach or Violation. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement do
not, and will not: (i) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of
incorporation or by-laws of Buyer or Merger Sub; (ii) contravene,
conflict with or result in any violation or breach of any provision of
the certificate of incorporation, by-laws or other governing
instruments of any Buyer Significant Subsidiary; (iii) contravene,
conflict with or result in a breach or violation by Buyer or any Buyer
Significant Subsidiary or Merger Sub of, or constitute a default by
Buyer or of any Buyer or any Buyer Significant Subsidiary or of Merger
Sub under any Law, Judgment, contract, arrangement, agreement,
instrument, obligation or understanding to which Buyer or any Buyer
Significant Subsidiary or Merger Sub is a party or by which Buyer or
any Buyer or any Buyer Significant Subsidiary or Merger Sub is subject
or bound or may be affected; (iv) result in the creation or imposition
of any Encumbrance on any asset of Buyer or any Buyer Significant
Subsidiary or Merger Sub; or (v) cause or permit the termination,
cancellation, acceleration, triggering or other change of any right or
obligation or the loss of any benefit to which Buyer or any Buyer
Significant Subsidiary or Merger Sub is entitled under (a) any
provision of any contract, arrangement, agreement or instrument binding
upon Buyer or any Buyer Significant Subsidiary or Merger Sub or (b) any
license, franchise, permit, certificate, approval or other similar
authorization held by, affecting, or relating in any way to the assets
or business of Buyer or any Buyer Significant Subsidiary or Merger Sub.
4.03 Legal and Governmental Proceedings and Judgments. There is no
legal action, proceeding, investigation or controversy pending or, to the
knowledge of Buyer, threatened against or otherwise involving Buyer or any Buyer
Subsidiary, nor are there any Judgments outstanding against Buyer or Merger Sub
or to or by which Buyer or any Buyer Subsidiary is, or may be, subject or bound
which adversely affect the ability of Buyer or Merger Sub to consummate any of
the transactions contemplated hereby.
4.04 Finders and Brokers. Neither Buyer nor Merger Sub has entered into
any contract, arrangement or understanding with any Person, and is not aware of
any claim or basis for any claim based upon any act or omission of Buyer or any
of its affiliates, which may result in the obligation of Holdings or Midwest to
pay any finder's fees, brokerage or agent's commissions or other like
-20-
<PAGE>
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
4.05 Buyer Consents. Other than approval and filings as required under
the federal securities laws or state securities laws or the rules or regulations
of any exchange on which Adelphia Common Stock is listed or quoted or as set
forth on Schedule 4.05 hereto, no consent, order, authorization, waiver,
approval or any other action by, or registration, declaration or filing with,
any third party or Governmental Authority is required for Buyer to execute and
deliver this Agreement and consummate the transactions contemplated hereby.
Buyer does not have an ownership interest in the Buffalo Sabres hockey team that
would require any party to the transactions contemplated by this Agreement to
obtain any consent of the National Hockey League.
4.06 Acquisition of Rights. Buyer is not aware of, and has no reason to
believe there is, any reason relating to Buyer that any Governmental Authority
or other party whose consent is required or contemplated hereunder would refuse
to consent to the transfer of CATV Instruments or any rights to Buyer hereunder
or would condition the granting of any such consent on the performance by
Holdings or Midwest or Buyer of any material obligation not expressly set forth
herein.
4.07 Capitalization. (a) The authorized Capital Stock of Buyer consists
of (i) 1,200,000,000 shares of Adelphia Common Stock, (ii) 300 million shares of
Class B common stock, par value $.01 per share ("Adelphia Class B Common Stock")
and (iii) 50,000,000 shares of preferred stock ("Adelphia Preferred Stock").
Except as set forth on Schedule 4.07, as of the close of business on December 7,
1999, there were outstanding (i) 141,210,000 shares of Adelphia Common Stock,
(ii) 10,834,476 shares of Adelphia Class B Common Stock, (iii) 3,105,000 shares
of Adelphia Preferred Stock, and (iv) no options or other rights to acquire any
shares of Capital Stock of Buyer or Adelphia Preferred Stock. All outstanding
shares of Capital Stock of Buyer have been duly authorized and validly issued
and are fully paid and nonassessable.
(b) The Common Stock Consideration has been duly authorized and, when
issued and delivered in accordance with the terms of this Agreement, will have
been validly issued and will be fully paid and nonassessable and the issuance
thereof is not subject to any preemptive or other similar right.
(c) All outstanding shares of Capital Stock of Buyer have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
set forth in this Section 4.07 or on Schedule 4.07, as of December 7, 1999,
there are outstanding (i) no shares of Capital Stock or Voting Stock of Buyer,
(ii) no securities of Buyer convertible into or exchangeable for shares of
Capital Stock or Voting Stock of Buyer and (iii) no options or other rights to
acquire from Buyer, and no obligation of Buyer to issue, any Capital Stock or
securities convertible into or exchangeable for Capital Stock of Buyer. The
securities described in clauses (a) and (c) of this Section 4.07 and the
securities referred to in Buyer SEC Documents are referred to collectively as
the "Buyer's Securities". Except pursuant to the terms of the Buyer's
Securities, there are no outstanding obligations of Buyer or any Buyer
Subsidiary to repurchase, redeem or otherwise acquire any Buyer's Securities.
(d) As of December 7, 1999, except as disclosed in the Buyer SEC
Documents, there are no outstanding contractual obligations of Buyer or any
Buyer Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any other Person other than to
wholly-owned Buyer Subsidiaries or in the ordinary course of business consistent
with past practice.
-21-
<PAGE>
4.08 Subsidiaries. (a) Each Buyer Significant Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, has all corporate,
partnership or other similar powers required to carry on its business as now
conducted other than such exceptions as, individually or in the aggregate, have
not had and would not reasonably be expected to have a Buyer Material Adverse
Effect. Each Buyer Significant Subsidiary is duly qualified to do business as a
foreign corporation or other foreign legal entity and is in good standing in
each jurisdiction where such qualification is necessary, other than such
exceptions as, individually or in the aggregate, have not had and would not
reasonably be expected to have a Buyer Material Adverse Effect.
(b) Except as set forth in the Buyer SEC Documents, all of the
outstanding Capital Stock of, or other voting securities or ownership interests
in, each Buyer Significant Subsidiary is owned by Buyer, directly or indirectly,
free and clear of any Encumbrance and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such Capital Stock or other Voting Securities or ownership
interests). There are no outstanding (i) securities of Buyer or any Buyer
Subsidiary convertible into or exchangeable for shares of Capital Stock or other
Voting Securities or ownership interests in any Buyer Subsidiary or (ii) options
or other rights to acquire from Buyer or any Buyer Subsidiary, or other
obligations of Buyer or any Buyer Subsidiary to issue, any Capital Stock or
other Voting Securities or ownership interests in, or any securities convertible
into or exchangeable for any Capital Stock or other Voting Securities or
ownership interests in, any Buyer Subsidiary. There are no outstanding
obligations of Buyer or any Buyer Subsidiary to repurchase, redeem or otherwise
acquire any of the securities referred to in clauses (i) or (ii) above.
4.09 SEC Filings. (a) Buyer has filed with the SEC on a timely basis
(i) Buyer's transition report on Form 10-K for the transition period from April
1, 1998 to December 31, 1998, and its annual reports on Form 10-K for the fiscal
years ended March 31, 1998 and 1997, including all amendments thereto, (ii) its
proxy or information statements relating to meetings of, or actions taken
without a meeting by Buyer's stockholders held since December 31, 1997, and
(iii) all of its other reports, statements, schedules and registration
statements required to be filed with the SEC since December 31, 1998 (the
documents referred to in this Section 4.09(a), collectively, the "Buyer SEC
Documents").
(b) As of its filing date, each Buyer SEC Document complied as to form
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be.
(c) As of its filing date, each Buyer SEC Document filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each Buyer SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such registration statement or amendment became effective, did not
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.
-22-
<PAGE>
4.10 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Buyer
included in the Buyer SEC Documents fairly present, in all material respects, in
conformity with GAAP applied on a consistent basis (except as may be indicated
in the notes thereto), the consolidated financial position of Buyer and its
consolidated Subsidiaries as of the dates thereof and their consolidated results
of operations and changes in stockholders' equity and cash flows for the periods
then ended (subject to normal year-end adjustments in the case of any unaudited
consolidated interim financial statements).
4.11 Absence of Certain Changes. Since December 31, 1998, except as
disclosed in the Buyer SEC Documents, the business of Buyer and the Buyer
Significant Subsidiaries has been conducted in the ordinary course consistent
with past practices. Since December 31, 1998, there has not been:
(a) any change in the financial condition, properties,
business or results of operations of Buyer and Buyer Subsidiaries or
any event or development or combination of events or developments that,
individually or in the aggregate, has had or would reasonably be
expected to have a Buyer Material Adverse Effect;
(b) any material damage, destruction or other casualty loss
with respect to any material asset or property owned, leased or
otherwise used by Buyer or any of Buyer Significant Subsidiaries,
whether or not covered by insurance;
(c) any incurrence, assumption or guarantee by Buyer or any of
the Buyer Subsidiaries of any material indebtedness for borrowed money
other than in the ordinary course of business and on terms consistent
with past practices.
4.12 Compliance with Laws and Court Orders. Buyer and the Buyer
Subsidiaries are in compliance with all laws, regulations and other Governmental
Authorities applicable to them, except where the failure to comply would not
reasonably be expected to have a Buyer Material Adverse Effect. Buyer and each
Buyer Subsidiary have obtained all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its properties or to
the conduct of its business, except where the failure to obtain such licenses,
permits, franchises or other governmental authorizations would not reasonably be
expected to have a Buyer Material Adverse Effect.
4.13 Litigation. Except as set forth in the Buyer SEC Documents, there
is no legal action or proceeding pending against, or, so far as is known to
Buyer, any investigation pending or threatened against Buyer, any Buyer
Subsidiary or any of their respective properties or assets, nor is there any
Judgment outstanding against Buyer or any Buyer Subsidiary or to or by which
Buyer or any Buyer Subsidiary or any of their respective properties or assets is
subject or bound, which (i) results or could reasonably be expected to result in
any modification, termination, suspension, impairment or reformation of any
instrument or contract of Buyer or any Buyer Subsidiary or any right or
privilege thereunder in a manner that would reasonably be expected to have a
Buyer Material Adverse Effect or (ii) materially adversely affects or could
reasonably be expected to affect the ability of Buyer to consummate any of the
transactions contemplated hereby.
4.14 Private Offering. Assuming the accuracy of Holdings'
representations as set forth in Section 3.20, the offer, issuance and delivery
to Holdings pursuant to the terms of this Agreement of the Common Stock
Consideration is exempt from registration under the Securities Act.
-23-
<PAGE>
4.15 Existing Registration Rights Agreements. Buyer has delivered to
Holdings copies of all agreements existing as of the date hereof pursuant to
which Buyer may be required to file a registration statement under the
Securities Act on behalf of any holders of the Buyer's Securities.
4.16 Ownership of Merger Sub; No Prior Activities. Merger Sub was
formed by Buyer solely for the purpose of engaging in the Merger and has not
engaged in any other activities. As of the date hereof and the Effective Time,
all of the Capital Stock of Merger Sub is and will be owned directly by Buyer,
and there are (i) no other shares of capital stock or other voting securities of
Merger Sub, (ii) no securities of Merger Sub convertible into or exchangeable
for shares of capital stock or other voting securities of Merger Sub and (iii)
no options or other rights to acquire from Merger Sub, and no obligations of
Merger Sub to issue, and capital stock, other voting securities or securities
convertible into or exchangeable for capital stock or other voting securities of
Merger Sub.
4.17 Tax Matters. Neither Buyer nor any of its affiliates has taken or
agreed to take any action, nor do its executive officers have any actual
knowledge of any fact or circumstance that would prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
5. Covenants Pending Closing.
5.01 Business of Midwest. From the date hereof to the Closing Date, and
except as otherwise consented to or approved by Buyer in writing (which consent
shall not be unreasonably withheld), Midwest covenants and agrees as follows:
(a) Business in Ordinary Course. Except as otherwise provided
herein, Midwest shall conduct the CATV Business in the ordinary course
(including, without limitation, in accordance with currently planned
capital expenditures), consistent with past practices and will not
engage in any material transaction, including, without limitation,
entering into or amending in any material respect any CATV Instrument
or Contract, or making any material advance or expenditure, other than
in the ordinary course of business, nor change in any material respect
its business policies or practices. Midwest shall use its reasonable
commercial efforts to preserve the CATV Business intact, to retain the
services of its present employees and agents, and to preserve its
business relationships with, and the goodwill of, its customers,
suppliers and others. Midwest shall pay before delinquent all taxes and
other charges upon or against Midwest or any of its properties or
income, file when due all tax returns and other reports required by
Governmental Authorities and pay when due all liabilities except those
which it chooses to contest in good faith and by appropriate
proceedings.
(b) Books and Records. Midwest shall maintain its books,
accounts and records in the usual, regular and ordinary manner.
(c) Litigation During Interim Period. Midwest will advise
Buyer in writing promptly of the assertion, commencement or threat of
any claim, litigation, labor dispute, pro ceeding or investigation in
which Midwest is a party or the assets of Midwest or CATV Business may
be affected and which could reasonably be expected to have a Material
Adverse Effect or which relates to the transactions contemplated
hereby.
-24-
<PAGE>
(d) Material Contracts. Midwest shall deliver to Buyer
copies of all material Contracts that are entered into prior to the
Closing.
(e) Renewal of Franchises. Midwest shall use reasonable
commercial efforts to obtain renewals or extensions of any franchises
that have expired or will expire within 12 months subsequent to the
date of this Agreement.
5.02 Access to Information.
---------------------
(a) Access by Buyer. Between the date of this Agreement and
the Closing, Buyer shall have reasonable access during normal business
hours to all of the properties, books, reports, records, CATV
Instruments and Contracts of Midwest, and Midwest shall furnish Buyer
with all information it may reasonably request; provided that no
investigation pursuant to this Section shall affect or be deemed to
modify any representation or warranty made by Midwest. After the
Closing, Holdings agrees to provide reasonable access during normal
business hours for reasonable business purposes, at Buyer's expense, to
its independent public accountants. All information obtained by Buyer
pursuant to this Agreement and in connection with the negotiation
hereof shall be used by Buyer solely for purposes related to this
Agreement and the acquisition of Midwest and, in the case of non-
public information, shall, except as may be required for the
performance of this Agreement or by Law, be kept in strict confidence
by Buyer in accordance with the terms of the Confidentiality Agreement
dated October 6, 1999 between Buyer and Cablevision Systems
Corporation.
(b) Access by Holdings. (i) Between the date of this Agreement
and Closing, Holdings shall have reasonable access during normal
business hours to all of the properties, books, reports, records,
contracts and CATV instruments of Buyer and the Buyer Significant
Subsidiaries and Buyer shall furnish Holdings with all information as
it may reasonably request; provided that no investigation pursuant to
this Section shall affect or be deemed to modify any representation or
warranty made by Buyer; and (ii) subsequent to the Closing, Buyer shall
preserve and give to Holdings reasonable access during normal business
hours to all of the books, reports, records, CATV Instruments and
Contracts from files and records transferred to Buyer at the time of
Closing, for the purposes of the preparation of tax returns, the
preparation of the Preliminary Working Capital Statement, the defense
of any claims asserted or which may be asserted with respect to which
Holdings is the Indemnitor as contemplated by the Agreement, or other
proper business purposes.
5.03 Covenants of Buyer. Except as otherwise set forth in this
Agreement, from and after the date hereof through the Closing Date, Buyer shall
not, nor shall it permit any Buyer Subsidiary to:
(a) amend Buyer's or Merger Sub's certificate of incorporation
or by-laws in any manner that is adverse to the rights of Holdings
under this Agreement or to the rights of holders of Adelphia Common
Stock;
(b) amend any terms of the Adelphia Common Stock;
-25-
<PAGE>
(c) take any action that would or would reasonably be expected
to prevent, impair or materially delay the ability of Holdings,
Midwest, Buyer or Merger Sub to consummate the transactions
contemplated by this Agreement;
(d) consummate any Reorganization of Buyer unless (a) Capital
Stock of such surviving or resulting entity is designated as the
Adelphia Common Stock for all purposes hereof, (b) the common equity
market capitalization of the Capital Stock of the surviving or
resulting entity designated as the Adelphia Common Stock exceeds the
common equity market capitalization of Adelphia Common Stock
immediately prior to the consummation of such transaction, and (c) such
surviving or resulting entity agrees to assume all of the obligations
of Buyer under this Agreement and the Asset Purchase Agreement;
(e) take any action that would prevent the Merger from
qualifying as a "reorganization" within the meaning of Section 368(a)
of the Code;
(f) take any action from and after the date hereof through the
Closing Date that would cause or that would reasonably be expected to
cause the number of shares of Adelphia Common Stock to be delivered as
the Common Stock Consideration to equal or exceed 10% of the number of
issued and outstanding shares of Adelphia Common Stock as of the
Closing; or
(g) agree or commit to do any of the foregoing.
Buyer will advise Holdings in writing promptly of the assertion,
commencement or threat of any claim, litigation, labor dispute, proceeding or
investigation in which Buyer or its subsidiaries is a party and which could
reasonably be expected to have a Buyer Material Adverse Affect or which relates
to the transactions contemplated hereby.
5.04 Listing of Common Stock Consideration. Buyer shall use its best
efforts to have the Common Stock Consideration approved for quotation on the
Nasdaq National Market System on or prior to the Closing Date, subject only to
official notice of issuance.
5.05 Covenant to File Certificate of Merger. Holdings, Midwest and
Buyer covenant and agree to file or to cause to be filed, the Certificate of
Merger, as provided in Section 2.01(b).
5.06 Change in Channel Lineup. Midwest will consult with Buyer
with respect to any decision by Midwest to adjust the channel lineup of the CATV
System.
5.07 Excluded Liabilities. Midwest will pay, transfer or otherwise
extinguish the Excluded Liabilities on or prior to the Closing Date.
5.08 Required Consents. The parties hereto shall proceed as promptly as
practicable and in good faith and shall each use reasonable commercial efforts
to obtain each consent or approval required to be obtained prior to the
consummation of the transactions contemplated hereby, subject to Section 9.03.
5.09 Lien Searches. Midwest shall have delivered to Buyer copies
of lien searches conducted by Midwest not more than thirty (30) days prior to
the Closing Date.
-26-
<PAGE>
5.10 Trading in Adelphia Common Stock. Except for the execution and
delivery of this Agreement and the Registration Rights Agreement or as otherwise
contemplated by this Agreement or the Registration Rights Agreement, Holdings
and Midwest covenant and agree that from and including the date of this
Agreement through the Closing Date they will not, and they will cause
Cablevision Systems Corporation and its Subsidiaries not to, engage in
transactions in shares of Adelphia Common Stock or acquire any option or other
instrument giving them the right to buy or to sell shares of Adelphia Common
Stock in a transaction intended to manipulate the Trading Price of Adelphia
Common Stock.
6. Deliveries at Closing.
---------------------
6.01 Deliveries to Buyer. At the Closing, Holdings will deliver or
cause to be delivered to Buyer:
(a) A certificate signed by a principal officer of Holdings,
dated as of the Closing, representing and certifying to Buyer as to the
matters set forth in Sections 7.03 and 7.04.
(b) An opinion of Holdings' internal counsel or of outside
counsel , including local counsel, appointed by Holdings, substantially
in the form of Exhibit C hereto.
(c) Evidence that the waiting period under the HSR Act and
Rules, if applicable, has expired.
(d) Evidence in a form and substance reasonably satisfactory
to Buyer that the Required Consents listed on Schedule 3.02 have been
obtained.
(e) a certificate, dated the Closing Date, signed by the
Secretary or an Assistant Secretary of Midwest certifying (i) that
attached thereto is a true, complete and correct copy of Midwest's
certificate of incorporation and by-laws and (ii) that attached thereto
is a specimen of the stock certificate for the Capital Stock of
Midwest.
(f) a certificate, dated the Closing Date, signed by the
Secretary or an Assistant Secretary of Holdings certifying that
attached thereto is a true, complete and correct copy of the
resolutions of Holdings authorizing the execution of this Agreement and
authorizing the Merger.
6.02 Deliveries by Buyer. At the Closing, Buyer will deliver or
cause to be delivered to Holdings:
(a) The Common Stock Consideration as provided in Section 2.02
(b) A certificate signed by a principal officer of Buyer,
dated as of the Closing, representing and certifying to Holdings as to
the matters set forth in Sections 8.03 and 8.04.
(c) An opinion of Buyer's Counsel, substantially in the form
of Exhibit D hereto.
-27-
<PAGE>
(d) Evidence in a form and substance reasonably satisfactory
to Holdings that the Required Consents listed on Schedule 4.05 have
been obtained.
(e) Evidence that the waiting period under the HSR Act and
Rules, if applicable, has expired.
(f) a certificate, dated the Closing Date, signed by the
Secretary or an Assistant Secretary of the Buyer certifying (i) that
attached thereto is a true, complete and correct copy of (A) the
Buyer's certificate of incorporation and by-laws and (B) resolutions
duly adopted by the board of directors of Buyer authorizing the
execution and delivery of this Agreement and the other agreements to
which Buyer is a party and (ii) that attached thereto is a specimen of
the stock certificate for the Adelphia Common Stock.
(g) The Registration Rights Agreement in the form of Exhibit E
hereto, duly authorized and executed by or on behalf of Buyer.
(h) A certificate, dated the Closing Date, signed by the
Secretary or an Assistant Secretary of the Merger Sub certifying that
attached thereto is a true, complete and correct copy of (A) the Merger
Sub's certificate of incorporation and by-laws and (B) resolutions duly
adopted by the board of directors of Merger Sub authorizing the
execution and delivery of this Agreement and the other agreements to
which Merger Sub is a party.
7. Conditions to the Obligations of Buyer.
The obligations of Buyer to complete the transactions provided for
herein are subject to the fulfillment of all of the following conditions, any of
which may be waived in writing by Buyer:
7.01 Receipt of Consents. The conditions specified in Section 9.02
shall have been satisfied and all of the approvals and consents described in
Schedule 4.05 shall have been obtained and shall be in full force and effect;
provided that if the approvals and consents of Governmental Authorities for
franchises which represent at least 80% of the Combined Basic Subscribers shall
have been obtained, then this condition shall have been deemed to have been
satisfied if the conditions specified in Section 9.02 shall have been satisfied
and all Required Consents on Schedule 4.05 shall have been obtained and shall be
in full force and effect.
7.02 Holdings' and Midwest's Authority. All actions under the documents
governing Holdings and Midwest necessary to authorize (i) the execution and
delivery of this Agreement by Holdings and Midwest and the performance by
Holdings and Midwest of their respective obligations under this Agreement and
(ii) the consummation of the transactions contemplated hereby, shall have been
duly and validly taken by Holdings and Midwest and shall be in full force and
effect on the Closing Date.
7.03 Performance by Holdings and Midwest. Holdings and Midwest shall
have performed in all material respects their respective agreements and
covenants hereunder (including, without limitation, their respective covenants
in Articles 5 and 6) to the extent such are required to be performed at or prior
to the Closing and are material to the CATV Business as a whole.
-28-
<PAGE>
7.04 Absence of Breach of Warranties and Representations. The
representations and warranties of Holdings contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as if made on and as of such date, except (i) to the
extent that such representations and warranties describe a condition on a
specified time or date or are affected by the conclusion of the transactions
permitted or contemplated hereby or the conduct of the CATV Business in
accordance with Article 5 hereof between the date hereof and the Closing Date,
or (ii) where the failure of such representations and warranties to be true and
correct, individually or in the aggregate, does not have, has not had and would
not reasonably be expected to have, a Material Adverse Effect.
7.05 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority,
enjoining or preventing the consummation of the transactions contemplated
hereby.
8. Conditions to the Obligations of Holdings.
The obligations of Holdings and Midwest to complete the transactions
provided for herein are subject to the fulfillment of all of the following
conditions, any of which may be waived in writing by Holdings:
8.01 Receipt of Consents. The conditions specified in Section 9.02
shall have been satisfied and all of approvals and consents described in
Schedule 3.02 shall have been obtained and shall be in full force and effect;
provided that if the approvals and consents of Governmental Authorities for
franchises which represent at least 80% of the Combined Basic Subscribers shall
have been obtained, this condition shall have been deemed to have been satisfied
if the conditions specified in Section 9.02 shall have been satisfied and all
Required Consents on Schedule 3.02 shall have been obtained and shall be in full
force and effect.
8.02 Corporate Action. All corporate and other actions necessary to
authorize (i) the execution, delivery and performance by Buyer and Merger Sub of
this Agreement and (ii) the consummation of the transactions contemplated
hereby, shall have been duly and validly taken by Buyer and Merger Sub and shall
be in full force and effect on the Closing Date.
8.03 Performance by Buyer and Merger Sub. Buyer and Merger Sub shall
have performed in all material respects all their respective covenants and
agreements to be performed by them hereunder to the extent such are required to
be performed at or prior to the Closing.
8.04 Absence of Breach of Representations and Warranties. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if then made except where the failure of such representations and
warranties to be true and correct, individually or in the aggregate, does not
have, has not had and would not reasonably be expected to have, a material
adverse effect on Buyer's ability to consummate the transactions contemplated by
this Agreement or a Buyer Material Adverse Effect.
8.05 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority,
enjoining or preventing the consummation of the transactions contemplated
hereby.
-29-
<PAGE>
8.06 Effectiveness of Shelf Registration Statement. If required by
Holdings, the shelf registration statement in respect of the Common Stock
Consideration that is contemplated by the Registration Rights Agreement shall be
effective under the Securities Act.
8.07 No Material Adverse Effect. From and after the date hereof
through the Closing Date, there shall not have occurred any event or
circumstance which has a Buyer Material Adverse Effect.
9. Covenants.
9.01 Compliance with Conditions. Each of the parties hereto covenants
and agrees with the other to use reasonable commercial efforts to perform,
comply with and otherwise satisfy each and every one of the conditions to be
satisfied by such party hereunder, and each party shall use reasonable
commercial efforts to notify promptly the other if it shall learn that any
conditions to performance of either party will not be fulfilled.
9.02 Compliance with HSR Act and Rules.
---------------------------------
(a) The performance of the obligations of all parties under
this Agreement is subject to the condition that, if the HSR Act and
Rules are applicable to the transactions contemplated hereby, the
waiting period specified therein, as the same may be extended, shall
have expired or been terminated without action taken to prevent the
consummation of the transactions contemplated hereby.
(b) Each of the parties hereto will use its reasonable
commercial efforts to comply promptly with any applicable requirements
under the HSR Act and Rules relating to filing and furnishing of
information to the FTC and the Antitrust Division of the DOJ, the
parties' actions to include, without limitation, (i) filing or causing
to be filed the HSR Report required to be filed by them, or by any
other Person that is part of the same "person" (as defined in the HSR
Act and Rules) or any of them, and taking all other action required by
the HSR Act or Rules; (ii) coordinating the filing of such HSR Reports
(and exchanging mutual information required to be disclosed therein) so
as to present both HSR Reports to the FTC and the DOJ at the time
selected by the mutual agreement of Holdings and Buyer, and to avoid
substantial errors or inconsistencies between the two in the
description of the transaction; and (iii) using their reasonable
commercial efforts to comply with any additional request for documents
or information made by the FTC or the DOJ or by a court and assisting
the other parties to so comply.
(c) Notwithstanding anything herein to the contrary, in the
event that the consummation of the transactions contemplated hereby is
challenged by the FTC or the DOJ or any agency or instrumentality of
the federal government by an action to stay or enjoin such
consummation, then either Buyer or Holdings shall have the right to
terminate this Agreement unless the other of such parties, at its sole
cost and expense, elects to contest such action, in which case the
noncontesting party shall cooperate with the contesting party and
assist the contesting party, as reasonably requested, to contest such
action until such time as either party terminates this Agreement under
this Section or Article 12. In the event that such a stay or injunction
is granted (preliminary or otherwise), then either Buyer or Holdings
may terminate this Agreement by prompt written notice to the other. If
any other form of equitable relief
-30-
<PAGE>
affecting any party is granted to the FTC, the DOJ or other such agency
or instrumentality, then such party may terminate this Agreement by
prompt written notice to the other party. To effectuate the intent of
the foregoing provisions of this Section 9.02, the parties agree to
exchange requested or required information in making the filings and in
complying as provided above, and the parties agree to take all
necessary steps to preserve the confidentiality of the information set
forth in any filings including, without limitation, limiting disclosure
of exchanged information to counsel for the nondisclosing party.
9.03 Applications for Assignment of Contracts or CATV Instruments. In
order to secure requisite consents or approvals of the transfer of control to
Buyer of any Contracts or CATV Instruments, Buyer (with respect to CATV
Instruments) and Midwest (with respect to Contracts) shall proceed as promptly
as practicable and in good faith and using reasonable commercial efforts, to
prepare, file and prosecute such application or applications as may be necessary
to obtain each such consent or approval. Buyer and Midwest shall use reasonable
commercial efforts to promptly assist each other and shall take such prompt and
affirmative actions as may be reasonably necessary in obtaining such approvals
and shall cooperate with each other in the preparation, filing and prosecution
of such applications as may be reasonably necessary, and agree to furnish all
information required by the approving entity, and to be represented at such
meetings or hearings as may be scheduled to consider such applications. Without
limiting in any respect the foregoing, each party agrees to file mutually
acceptable applications to all appropriate Governmental Authorities for all
consents or approvals required to consummate the transactions hereunder within
45 days after the date of this Agreement. Buyer further agrees that it will not,
without the prior written consent of Holdings, take any action to amend or that
would amend or modify any application filed as provided in this Section 9.03
after the date that such application is accepted as complete. In the event that
Buyer amends or modifies any such application for transfer of control of any
Contracts or CATV Instruments without Holdings prior written consent, and the
approval period for such transfer is extended by any such Governmental Authority
or other third party, then Holdings may (if it so elects) (i) extend the Outside
Date in Section 12.01 to a date that will give effect to any resulting delay or
(ii) terminate this Agreement under Section 12.02 hereof. Midwest shall use
commercially reasonable efforts to include a provision in each consent referred
to in this Section 9.03 that permits Buyer to assign such contract to a
wholly-owned Subsidiary of Buyer subsequent to the Closing Date. If a
governmental authority refuses to include such a provision, Midwest shall notify
Buyer and Buyer may discuss such refusal with the governmental authority;
provided, however, that upon such refusal, Midwest shall have no further
obligation to seek or to obtain such a provision in the relevant contract.
9.04 Records, Taxes and Related Matters.
----------------------------------
(a) Midwest and Buyer shall each make their respective books
and records (including work papers in the possession of their
respective accountants) available for inspection by the other party, or
by its duly authorized representatives, for reasonable business
purposes at all reasonable times during normal business hours, for a
seven year period after the Closing Date with respect to all
transactions of the CATV Business occurring prior to or relating to the
Closing, and the historical financial condition, assets, liabilities,
results of operation and cash flows of the CATV Business for any period
prior to the Closing. In the case of records owned by Midwest, such
records shall be made available at Midwest's executive office, and in
the case of records owned by Buyer, such records shall be made
available at the office at which such records are maintained. As used
in this Section 9.04, the
-31-
<PAGE>
right of inspection includes the right to make copies at the requesting
parties' expense for reasonable business purposes.
(b) Holdings and Buyer each agree that they shall take no act
which would cause the Merger to fail to qualify as a "reorganization"
within the meaning of Section 368(a) of the Code and that they and
their respective affiliates shall file all Tax Returns in a manner
consistent with the qualification of the Merger as a "reorganization"
within the meaning of Section 368(a) of the Code.
9.05 Real Estate Proration And Adjustment Items. Water and sewer
charges, municipal garbage and rubbish removal charges, rents, interest, real
estate taxes, utilities and other charges of an annual or recurrent nature
assessed against or paid in conjunction with the ownership or operation of any
real property owned by Midwest to be transferred to Buyer hereunder shall be
prorated as of Closing Date. Real estate taxes shall be prorated as of the
Closing Date. Real estate taxes for the calendar year of Closing shall be
prorated based upon real estate taxes levied or estimated to be levied in that
year by each taxing body (without regard to the date of levy or the fiscal year
of the taxing body); provided, however, if any of such real estate taxes have
not yet been levied as of the Closing Date for the calendar year in which the
Closing Date occurs, the tax proration shall be based upon the prior year's tax
levy, taking into account any adjustments in real estate tax assessments which
may have been made.
9.06 Furnishing of Information. From the date hereof and so long as
Cablevision Systems Corporation or a Subsidiary thereof owns Adelphia Common
Stock, Buyer will promptly furnish to Cablevision Systems Corporation, at the
address set forth in Section 13.06, all reports filed by it pursuant to Section
13(a) or 15(d) of the Exchange Act (or if Buyer is not at the time required to
file reports pursuant to said Section 13(a) or 15(d), annual and quarterly
reports comparable to those required by Sections 13(a) or 15(d) of the Exchange
Act).
9.07 Covenant Not to Compete. Holdings covenants and agrees that for a
period of three years after Closing (or such period as allowed by law if less
than three years), Holdings will not, and will cause Cablevision Systems
Corporation and its Subsidiaries not to, acquire, manage, operate or control,
any cable television system, multichannel multipoint distribution system
("MMDS"), satellite master antenna system ("SMATV") or local multipoint
distribution system ("LMDS") within the Service Territory. Notwithstanding
anything contained herein, (i) the ownership of securities of any company which
is "publicly held" and which do not constitute more than five percent (5%) of
the voting rights or equity interests of such entity shall not constitute a
violation of this covenant and (ii) this Section 9.07 shall not be construed to
restrict ownership of entities in the direct broadcast satellite business or
wireless personal services communications business or ownership of licenses
relating to the foregoing.
9.08 Remaining Franchises. In the event that a Closing under this
Agreement occurs without the receipt of all consents and approvals to transfer
all franchises, Buyer and Midwest, on the one hand, and Holdings, on the other
hand, covenant and agree to act in good faith to obtain the approval or consent
of any Governmental Authorities that have not consented to the transfer of any
franchises included in the CATV Business. Until such time as approval or consent
to transfer such franchises is obtained, Buyer covenants and agrees to satisfy
all obligations of Midwest under the applicable franchise agreement. Buyer and
Midwest, on the one hand, and Holdings, on the other hand, agree to enter into
such agreements, including, without limitation, management agreements, as
-32-
<PAGE>
are reasonably necessary to cause Midwest not to be in breach of Midwest's
obligations under the applicable franchise agreements and to permit Midwest to
receive the economic benefits of such franchise agreements.
10. Survival of Representations, Warranties, Covenants and Other
Agreements;
Indemnification.
10.01 Survival of Representations, Warranties, Covenants and Other
Agreements. All representations and warranties made by Buyer and Holdings in
this Agreement shall survive the Closing for a period of six months, and shall
thereafter terminate with the exception of (i) Section 3.06(a) (relating to
title matters) and Section 4.07(b) (relating to the Common Stock Consideration)
which shall survive for the applicable statute of limitations periods and (ii)
Section 3.06(d) which shall survive the Closing for a period of two years. The
obligations to indemnify and hold harmless a party hereto pursuant to this
Article 10 shall terminate when the applicable representation or warranty
terminates pursuant to this Section 10.01; provided, however, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified or the related party thereto
shall have, before the expiration of the applicable period, previously made a
claim by delivering a notice of such claim (stating in reasonable detail the
basis of such claim) to the indemnifying party.
10.02 Indemnification by Holdings.
---------------------------
(a) Subject to Section 10.01, Holdings agrees to indemnify,
defend and hold harmless Buyer, its affiliates and their respective
shareholders, directors, officers, partners, employees, agents,
successors and assigns (a "Holdings Indemnified Party"), from and
against (i) all losses, damages, liabilities, deficiencies or
obligations, including, without limitation, all claims, actions, suits,
proceedings, demands, judgments, assessments, fines, interest,
penalties, costs and expenses (including, without limitation,
settlement costs and reasonable legal fees) (collectively, "Losses") to
which they may become subject as a direct result of (x) the Excluded
Liabilities, (y) any and all misrepresentations or breaches of a
representation or warranty of Holdings herein or the nonperformance or
breach of any covenants or agreements of Holdings contained herein, or
(z) the ownership and operation of Midwest and the CATV Business before
the Closing and (ii) any Taxes for which Holdings is responsible under
Section 10.05 hereof.
(b) Any obligations of Holdings under the provisions of this
Article 10 shall be paid promptly to a Holdings Indemnified Party by
Holdings and shall represent a retrospective adjustment to Common Stock
Consideration. The amount of such payment (and adjustment) shall be an
amount in cash equal to the amount of the Loss incurred by a Holdings
Indemnified Party on account of the matter for which indemnification is
required hereunder less any payments made or to be made to a Holdings
Indemnified Party under any insurance, indemnity or similar policy or
arrangement. Notwithstanding anything contained herein to the contrary,
the indemnification provided above shall only apply to the extent that,
and not until, the aggregate of all amounts subject to indemnification
under this Section 10.02 and Section 10.02 of the Asset Purchase
Agreement exceeds $10 million (in which event Buyer shall be entitled
to indemnification as provided herein for all such Losses and not just
the excess over $10 million) and as to any particular indemnity claim
or series of related indemnity claims only to the extent that, and only
if, such indemnity claim or series of related
-33-
<PAGE>
indemnity claims equals or exceeds $100,000. In any event, the maximum
aggregate amount that Holdings will be required to pay under this
Section 10.02 and that the Sellers under the Asset Purchase Agreement
will be required to pay under Section 10.02 of the Asset Purchase
Agreement in respect of all claims by all parties under both agreements
is $100 million.
(c) In the event that Holdings and Midwest elect to proceed to
Closing at any time that approvals and consents of Governmental
Authorities to transfer franchises which represent less than 90% of the
Combined Basic Subscribers shall not have been obtained, and prior to
Closing Buyer and Merger Sub give written notice to Holdings and
Midwest that they desire not to proceed to Closing, Holdings agrees to
indemnify, defend and hold harmless the Holdings Indemnified Parties,
from and against all losses, damages, liabilities, deficiencies or
obligations including, without limitation, all Losses to which they may
become subject as a result of such election.
(d) In no event will a claim to be indemnified by Sellers
under the Asset Purchase Agreement be entitled to indemnification by
Holdings under this Agreement. Buyer further acknowledges and agrees
that, should the Closing occur, its sole and exclusive remedy with
respect to any and all claims relating to this Agreement and the
transactions contemplated hereby shall be pursuant to the
indemnification provisions set forth in this Section 10.02. In
furtherance of the foregoing, Buyer hereby waives, from and after the
Closing, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action it may have against Holdings
and its affiliates arising under or based upon any Federal, state,
local or foreign statute, law, ordinance, rule or regulation or
otherwise (except pursuant to the indemnification provisions set forth
in this Section 10.02).
10.03 Indemnification by Buyer.
------------------------
(a) Buyer agrees to indemnify, defend and hold harmless
Holdings and its affiliates and their shareholders, partners,
directors, officers, employees, agents, successors and assigns (a
"Buyer Indemnified Party"), from and against all losses, damages,
liabilities, deficiencies or obligations including, without limitation,
(i) all Losses to which they may become subject as a direct result of:
(x) any and all misrepresentations or breaches of a representation
herein or warranty or the nonperformance or breach of any covenant or
agreement of Buyer contained herein; (y) the Liabilities that are not
Excluded Liabilities; or (z) the ownership and operation of the assets
of Midwest and the CATV Business after the Closing and (ii) any Taxes
for which Buyer is responsible under Section 10.05 hereof. Any
obligations of Buyer under the provisions of this Article shall be paid
in cash promptly to a Buyer Indemnified Party by Buyer. Notwithstanding
anything contained herein to the contrary, the indemnification provided
above shall apply as to any particular indemnity claim or series of
related indemnity claims only to the extent that, and only if, such
indemnity claim or series of related indemnity claims equals or exceeds
$100,000. In any event, the maximum aggregate amount that Buyer will be
required to pay under this Section 10.03(a) and under Section 10.03(a)
of the Asset Purchase Agreement in respect of all claims by all parties
under both agreements is $250 million.
(b) In the event that Buyer elects to proceed to Closing at
any time that approvals and consents of Governmental Authorities to
transfer franchises which represent less than 90% of the Combined Basic
Subscribers shall not have been obtained, and prior to Closing
-34-
<PAGE>
Holdings and Midwest give written notice to Buyer and Merger Sub that
they desire not to proceed to Closing, Buyer agrees to indemnify,
defend and hold harmless the Buyer Indemnified Parties, from and
against all losses, damages, liabilities, deficiencies or obligations
including, without limitation, all Losses to which they may become
subject as a result of such election.
(c) In no event will a claim to be indemnified by Buyer under
the Asset Purchase Agreement be entitled to indemnification under this
Agreement. Holdings further acknowledges and agrees that, should the
Closing occur, its sole and exclusive remedy with respect to any and
all claims relating to this Agreement and the transactions contemplated
hereby shall be pursuant to the indemnification provisions set forth in
this Section 10.03. In furtherance of the foregoing, Holdings hereby
waives, from and after the Closing, to the fullest extent permitted
under applicable law, any and all rights, claims and causes of action
it may have against Buyer and its affiliates arising under or based
upon any Federal, state, local or foreign statute, law, ordinance, rule
or regulation or otherwise (except pursuant to the indemnification
provisions set forth in this Section 10.03).
10.04 Third Party Claims. If any claim ("Asserted Claim") covered by
the foregoing indemnities is asserted against any indemnified party
("Indemnitee"), it shall be a condition to the obligations under this Article
that the Indemnitee shall promptly give the indemnifying party ("Indemnitor")
notice thereof in accordance with Section 13.06. The Indemnitee shall give
Indemnitor an opportunity to control negotiations toward resolution of such
claim without the necessity of litigation, and, if litigation ensues, to defend
the same with counsel reasonably acceptable to Indemnitee, at Indemnitor's
expense, and Indemnitee shall extend reasonable cooperation in connection with
such defense. If the Indemnitor fails to assume control of the negotiations
prior to litigation or to defend such action within a reasonable time,
Indemnitee shall be entitled, but not obligated, to assume control of such
negotiations or defense of such action, and Indemnitor shall be liable to the
Indemnitee for its expenses reasonably incurred in connection therewith which
Indemnitor shall promptly pay. Neither Indemnitor nor Indemnitee shall settle,
compromise, or make any other disposition of any Asserted Claims, which would or
might result in any liability to Indemnitee or Indemnitor, respectively, under
this Article 10 without the written consent of Indemnitee or Indemnitor,
respectively, which shall not be unreasonably withheld.
10.05 Tax Matters.
-----------
(a) Holdings agrees with Buyer that Holdings shall, at
Holdings expense, complete and file on a timely basis all federal,
state and local Tax Returns for Midwest for taxable periods ending on
or prior to the Closing Date. Except as otherwise provided in Section
2.11 hereof, Holdings shall be responsible for all Taxes of Midwest for
such taxable periods, except to the extent that such Taxes were
reflected in the Final Working Capital Statement as Liabilities. Buyer
will cause Midwest to furnish to Holdings all information pertaining to
Midwest reasonably requested by Holdings and necessary for the
preparation of Tax Returns that include Midwest for taxable periods
ending on or prior to the Closing Date and will otherwise cooperate
fully, and cause Midwest to cooperate fully, with Holdings and any of
its parents in the preparation of such returns. The income, deductions
and credits with respect to Midwest on such returns will be computed
consistent with past practices, principles and methods and be
determined on the basis of the appropriate permanent records of
Midwest. Prior to filing any such return, Holdings shall submit the
applicable portion of such return to
-35-
<PAGE>
Buyer for its review. In the event a judicial or administrative
proceeding is commenced with respect to any Taxes for which Holdings or
any of its parents are responsible under this Section 10.05, Holdings
shall have the option to represent Midwest before the Internal Revenue
Service or any other governmental agency or authority or any court
regarding such Taxes and to settle, or cause Midwest to settle, any
such matters; provided that Holdings will not settle or cause Midwest
to settle any such matter which would affect the Tax liability of
Midwest for periods ending after the Closing Date without the consent
of Buyer, which consent shall not be unreasonably withheld.
(b) Except as otherwise provided in Section 2.11 hereof, Buyer
and Midwest shall be responsible for all Taxes of Midwest for any
taxable period ending after the Closing Date and will prepare and file
all Tax Returns of Midwest for such periods. Holdings agrees to make
available to Buyer records in the custody of Holdings necessary for the
preparation of such Tax Returns and otherwise to cooperate to the
extent reasonably required for the filing of such Tax Returns.
(c) Holdings, Buyer and Midwest shall cooperate fully, as and
to the extent reasonably requested by the other party, in connection
with the filing of Tax Returns pursuant to this Section and any audit,
litigation or other proceeding with respect to Taxes of Midwest. Such
cooperation shall include the retention and, upon the other party's
request, the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder.
10.06 Guarantee By Holdings. Subject to the rights of the Sellers under
the Asset Purchase Agreement, Holdings agrees to guarantee all obligations of
the Sellers under Section 10 of the Asset Purchase Agreement as if it were a
Seller. Holdings agrees to hold, either directly or through a nominee, shares of
Adelphia Common Stock with a market value of not less than $100,000,000 for a
period of not less than six months from the Closing Date; provided that
notwithstanding the foregoing, Holdings may at any time during such period hold
shares of Adelphia Common Stock with a market value of less than $100,000,000 so
long as a holder of shares of Adelphia Common Stock with a market value of not
less than $100,000,000 agrees in writing to assume Holdings' obligations under
this Section 10.06 for the remainder of such period, subject to the limitations
on such obligations in this Article 10. For purposes of this Section 10.06, the
market value of a share of Adelphia Common Stock on any date shall equal the
average of the reported high and low prices at which transactions in shares of
Adelphia Common Stock were executed on the National Association of Securities
Dealers Automated Quotations National Market System during such day.
11. Further Assurances.
From time to time after the Closing, each party will execute and
deliver such other instruments of conveyance and transfer, fully cooperate with
the other party and take such other actions as the other party reasonably may
request to effect the purposes and intent of this Agreement.
12. Closing.
12.01 Closing. The Closing shall take place at the offices of
Sullivan & Cromwell, 125 Broad Street, New York, New York at 10:00 a.m., local
time, on the date which is (i) the fifth business
-36-
<PAGE>
day after all consents required as conditions to the sale as provided in Section
7.01 have been received or, if permitted under applicable law, waived, and (ii)
designated by Buyer or Holdings in a written notice to the other specifying that
all conditions to Closing (other than those that can only be satisfied at
Closing) have been satisfied or waived and specifying the date of the Closing
(the "Closing Date"); provided, however, that if the Closing shall not have
occurred prior to December 31, 2000 or as extended pursuant to Section 9.03 (the
"Outside Date"), this Agreement shall terminate unless otherwise provided by the
mutual written agreement of Buyer and Holdings which shall be binding on all
parties hereto; provided, further, however, that in no event shall the Closing
under this Agreement occur unless it shall occur simultaneously with the Closing
as defined in the Asset Purchase Agreement. If, as of the Outside Date, the
Closing cannot be effected, all parties hereto shall be released from all
obligations hereunder other than obligations arising from a breach or default
hereunder, and each party hereto will bear expenses as provided in Section 13.07
hereof. At the Closing, the parties hereto shall execute and deliver all
instruments and documents as shall be necessary in the reasonable opinion of
counsel for the respective parties to consummate the transactions contemplated
herein.
12.02 Termination. In addition to the termination provided for in
Section 12.01, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned:
(a) At any time, by the mutual written agreement of Buyer and
Holdings;
(b) By Buyer, upon and effective as of the date of written
notice to Holdings, if any of the conditions to the obligations of
Buyer and Merger Sub set forth in Article 7 shall not have been waived
or materially satisfied at the time of the Closing or, if applicable,
the Outside Date, as the case may be;
(c) By Holdings, upon and effective as of the date of written
notice to Buyer, if any of the conditions to the obligations of
Holdings and Midwest set forth in Article 8 shall not have been waived
or materially satisfied at the time of the Closing or, if applicable,
the Outside Date, as the case may be;
(d) By Holdings or Buyer, upon and effective as of the date of
written notice to the other, pursuant to the termination provisions of
Section 9.02(c); or
(e) By Holdings, upon and effective as of the date of written
notice to Buyer, pursuant to the termination provisions of Section
9.03.
13. Miscellaneous.
13.01 Amendments; Waivers. This Agreement cannot be changed or
terminated orally and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the party hereto sought to be charged
with such waiver or consent. No waiver of any term or provision hereof shall be
construed as a further or continuing waiver of such term or provision or any
other term or provision. Any condition to the performance of any party hereto
which may legally be waived at or prior to the Closing may be waived in writing
at any time by the party or parties entitled to the benefit thereof.
-37-
<PAGE>
13.02 Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties and supersedes any and all prior
agreements, memoranda, arrangements and understandings relating to the subject
matter hereof other than the Confidentiality Agreement referred to in Section
5.02(a). No representation, warranty, promise, inducement or statement of
intention has been made by any party which is not contained in this Agreement,
and no party shall be bound by, or be liable for, any alleged representation,
promise, inducement or statement of intention not contained herein or therein.
13.03 Cablevision Name. The parties agree that Holdings and its
affiliates shall retain the right to use the names "Cablevision," "Cablevision
Systems," "Optimum," "Optimum Cable" or any and all derivations thereof or any
name which may include any of such terms, and after the Closing, Buyer shall
remove or delete the names "Cablevision," "Cablevision Systems," "Optimum,"
"Optimum Cable," "Optimum TV" or any and all derivations thereof or any name
which may include any of such terms from the assets of Midwest as soon as
reasonably practicable but in any event by the 60th day following the Closing.
From and after the 60th day following the Closing, Holdings and its affiliates
shall retain the sole and exclusive right to use the names "Cablevision,"
"Cablevision Systems," "Optimum," "Optimum Cable" or any and all derivations
thereof or any name which may include any of such terms.
13.04 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto; provided, however, that Buyer
may assign its rights under this Agreement to one or more Subsidiaries of Buyer
with respect to which Buyer owns at least 66 2/3% of the Voting Stock, without
the prior written consent of Holdings, provided Buyer remains liable to fully
perform the obligations and terms of this Agreement.
13.05 Construction; Counterparts. The Article and Section headings of
this Agreement are for convenience of reference only and do not form a part
hereof and do not in any way modify, interpret or construe the intentions of the
parties. This Agreement may be executed in one or more counterparts, and all
such counterparts shall constitute one and the same instrument.
13.06 Notices. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given to a party when delivered in
person, faxed (with confirmation) or three business days after such notice is
enclosed in a properly sealed envelope, certified or registered, and deposited
(postage and certification or registration prepaid) in a post office or
collection facility regularly maintained by the United States Postal Service, or
one business day after delivery to a nationally recognized overnight courier
service, and addressed as follows:
If to Holdings
or Midwest: Cablevision of the Midwest
Holding, Inc.
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
-38-
<PAGE>
copies to: Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
Attention: John P. Mead
If to Buyer
or Merger Sub: Adelphia Communications Corporation
One North Main Street
Coudersport, Pennsylvania 16915
Telephone: (814) 274-6446
Facsimile: (814) 274-6586
Attention: Colin H. Higgin
Deputy General Counsel
copies to: Buchanan Ingersoll P.C.
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania 15219
Telephone: (412) 562-8339
Facsimile: (412) 562-1041
Attention: Bruce I. Booken
Any party may change its address for the purpose of notice by giving notice in
accordance with the provisions of this Section 13.06.
13.07 Expenses of the Parties. Except as otherwise provided herein, all
expenses incurred by or on behalf of the parties hereto in connection with the
authorization, preparation and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants employed by the parties hereto in connection with the
authorization, preparation, execution and consummation of this Agreement shall
be borne solely by the party who shall have incurred the same. Buyer and
Holdings agree to share equally the filing fee payable under the HSR Act and
Rules.
13.08 Non-Recourse. No partner, officer, director, shareholder or other
holder of an ownership interest of or in any party to this Agreement shall have
any personal liability in respect of any such party's obligations under this
Agreement by reason of his or its status as such partner, officer, director,
shareholder or other holder.
-39-
<PAGE>
13.09 Third Party Beneficiary. This Agreement is entered into only for
the benefit of the parties and their respective successors and assigns, and
nothing hereunder shall be deemed to constitute any person a third party
beneficiary to this Agreement.
13.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF NEW YORK.
13.11 Press Releases. No press release or other public information
relating to the purchase and sale contemplated in this Agreement shall be made
or disclosed by either party hereto without the consent of the other party;
provided, however, that either party may disclose such information if reasonably
deemed to be required by law by the legal counsel for such party; provided
further that such party shall notify the other as soon as reasonably practicable
prior to the issuance of such press release.
13.12 Severability. If any provision of this Agreement is finally
determined to be illegal, void or unenforceable, such determination shall not,
of itself, nullify this Agreement which shall continue in full force and effect
subject to the conditions and provisions hereof.
13.13 Specific Performance. So long as Buyer is not then in breach or
in default of its obligations under this Agreement, Buyer shall be entitled to
require Holdings to specifically perform and consummate the transactions
described herein in accordance with this Agreement in the event of a failure by
Holdings to perform its obligations hereunder.
(SIGNATURE PAGE FOLLOWS)
-40-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CABLEVISION OF THE MIDWEST, INC.
By: /s/ William J. Bell
Name: William J. Bell
Title: Vice Chairman
CABLEVISION OF THE MIDWEST HOLDING CO.,
INC.
By: /s/ William J. Bell
Name: William J. Bell
Title: Vice Chairman
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ James R. Brown
Name: James R. Brown
Title: Vice President
ADELPHIA GENERAL HOLDINGS II, INC.
By: /s/ James R. Brown
Name: James R. Brown
Title: Vice President
-41-
<PAGE>
EXHIBIT A
[Intentionally Omitted]
-1-
<PAGE>
EXHIBIT B
SERVICE TERRITORY
-2-
<PAGE>
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO HOLDINGS AND MIDWEST]
---------------------------------------------------
[Date]
[Name and Address of Buyer]
Ladies and Gentlemen:
[Introduction]
1. Holdings is a corporation duly organized and validly existing under the
law of the State of Delaware with all requisite corporate power and authority to
conduct its business and operations as presently conducted.
2. Midwest is a corporation duly organized and validly existing under the
law of the State of Delaware with all requisite corporate power and authority to
conduct its business and operations as presently conducted.
3. Holdings and Midwest have all requisite power and authority to execute,
deliver and perform the Agreement and Plan of Reorganization and all documents
contemplated therein to be executed and delivered by them (collectively, the
"Documents"). The execution, delivery and performance of the Agreement and Plan
of Reorganization and the other Documents have been duly authorized by all
necessary action by Holdings and Midwest. The Agreement and Plan of
Reorganization and the other Documents have each been duly executed and
delivered by Holdings and Midwest, as applicable, and each is the valid and
legally binding obligation of Holdings and Midwest, as applicable, enforceable
against Holdings and Midwest, as applicable, in accordance with their respective
terms subject to insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
4. After the inquiry described herein, I have no knowledge of any consents
which are required in connection with Holdings' or Midwest's performance of the
Agreement and Plan of Reorganization other than those referred to in the
Agreement, including, without limitation, Schedule 3.02 of the Agreement and
Plan of Reorganization.
5. The execution, delivery and performance by Holdings of the Agreement and
Plan of Reorganization and the other Documents do not contravene Holdings'
organizational documents.
6. The execution, delivery and performance by Midwest of the Agreement and
Plan of Reorganization and the other Documents do not contravene Midwest's
organizational documents.
-1-
<PAGE>
7. The Capital Stock of Midwest has been duly and validly authorized and
issued and is fully paid and non-assessable.
[Conclusion]
Very truly yours,
[Counsel]
-2-
<PAGE>
EXHIBIT D
[FORM OF OPINION OF COUNSEL TO BUYER AND MERGER SUB]
---------------------------------------------------
[Date]
[Name and Address of Holdings and Midwest]
Ladies and Gentlemen:
[Introduction]
1. Buyer is a corporation duly organized and validly existing under the law
of the State of Delaware with all requisite corporate power and authority to
conduct its business and operations as presently conducted.
2. Merger Sub is a corporation duly organized and validly existing under
the law of the State of Delaware with all requisite corporate power and
authority to conduct its business and operations as presently conducted.
3. Buyer and Merger Sub have all requisite power and authority to execute,
deliver and perform the Agreement and Plan of Reorganization and all documents
contemplated therein to be executed and delivered by Holdings and/or Midwest
(collectively, the "Documents"). The execution, delivery and performance of the
Agreement and Plan of Reorganization and the other Documents have been duly
authorized by all necessary action by Buyer and Merger Sub. The Agreement and
Plan of Reorganization and the other Documents have each been duly executed and
delivered by Buyer and Merger Sub, as applicable, and each is the valid and
legally binding obligation of Buyer and Merger Sub, as applicable, enforceable
against Buyer and Merger Sub, as applicable, in accordance with their respective
terms subject to insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
4. After the inquiry described herein, I have no knowledge of any consents
which are required in connection with Buyer's or Merger Sub's performance of the
Agreement and Plan of Reorganization other than those referred to in the
Agreement, including, without limitation, Schedule 3.02 of the Agreement and
Plan of Reorganization.
5. The execution, delivery and performance by Buyer of the Agreement and
Plan of Reorganization and the other Documents do not contravene Buyer's
organizational documents.
6. The execution, delivery and performance by Merger Sub of the Agreement
and Plan of Reorganization and the other Documents do not contravene Merger
Sub's organizational documents.
-1-
<PAGE>
7. The Class A Common Stock, par value $.01 per share, of Buyer that was
issued as the Common Stock Consideration has been duly and validly
authorized and issued and is fully paid and non-assessable.
[Conclusion]
Very truly yours,
[Counsel]
-2-
<PAGE>
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
-1-
<PAGE>
EXHIBIT 10.118
ASSET PURCHASE AGREEMENT
AS OF DECEMBER 8, 1999
BY AND AMONG
TELERAMA, INC.
CABLEVISION OF CLEVELAND, L.P.
AND
ADELPHIA COMMUNICATIONS CORPORATION
-1-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Section 1. Definitions............................................................................1
1.01 Certain Definitions....................................................................1
1.02 Other Definitional Provisions..........................................................7
Section 2. Purchase and Sale......................................................................7
2.01 Transfer of Assets.....................................................................7
2.02 Purchase Price.........................................................................8
2.03 Estimated Working Capital Statement....................................................8
2.04 Adjustments............................................................................8
2.05 Assumption of Liabilities.............................................................11
2.06 Sales and Transfer Taxes..............................................................11
Section 3. Representations and Warranties of Sellers.............................................11
3.01 Organization and Authority............................................................11
3.02 Legal Capacity; Approvals and Consents................................................11
3.03 Financial Statements..................................................................12
3.04 Changes in Operation..................................................................12
3.05 Tax Returns...........................................................................12
3.06 Acquired Assets.......................................................................13
3.07 The CATV Business.....................................................................13
3.08 Labor Contracts and Actions...........................................................15
3.09 Employee Benefit Plans................................................................15
3.10 Contracts.............................................................................16
3.11 Legal and Governmental Proceedings and Judgments......................................16
3.12 Finders and Brokers...................................................................16
3.13 Year 2000.............................................................................16
3.14 Restoration...........................................................................17
3.15 Pole Attachment Agreements............................................................17
3.16 Right of First Refusal................................................................17
3.17 Insurance.............................................................................17
3.18 Internet Service Agreements...........................................................17
Section 4. Representations and Warranties of Buyer...............................................17
4.01 Organization and Authority of Buyer...................................................17
4.02 Legal Capacity: Approvals and Consents................................................17
4.03 Legal and Governmental Proceedings and Judgments......................................18
4.04 Finders and Brokers...................................................................18
4.05 Buyer Consents........................................................................18
4.06 Acquisition of Rights.................................................................18
4.07 Buyer's Financial Capability..........................................................18
Section 5. Covenants Pending Closing.............................................................19
5.01 Business of Sellers...................................................................19
-i-
<PAGE>
5.02 Access to Information.................................................................19
5.03 Change in Channel Lineup..............................................................20
5.04 Required Consents.....................................................................20
5.05 Lien Searches.........................................................................20
Section 6. Deliveries at Closing.................................................................20
6.01 Deliveries by Seller..................................................................20
6.02 Deliveries by Buyer...................................................................21
Section 7. Conditions to the Obligations of Buyer................................................21
7.01 Receipt of Consents...................................................................21
7.02 Sellers' Authority....................................................................21
7.03 Performance by the Sellers............................................................21
7.04 Absence of Breach of Warranties and Representations...................................22
7.05 Absence of Proceedings................................................................22
Section 8. Conditions to the Obligations of Sellers..............................................22
8.01 Receipt of Consents...................................................................22
8.02 Corporate Action......................................................................22
8.03 Performance by Buyer..................................................................22
8.04 Absence of Breach of Representations and Warranties...................................22
8.05 Absence of Proceedings................................................................22
Section 9. Covenants.............................................................................23
9.01 Compliance with Conditions............................................................23
9.02 Compliance with HSR Act and Rules.....................................................23
9.03 Applications for Assignment of Contracts or CATV Instruments..........................24
9.04 Records, Taxes and Related Matters....................................................24
9.05 Determination and Allocation of Consideration.........................................24
9.06 Non-Assignment........................................................................25
9.07 Real Estate Proration And Adjustment Items............................................25
9.08 Covenant Not to Compete...............................................................25
9.09 Remaining Franchises..................................................................25
Section 10. Survival of Representations, Warranties, Covenants and Other Agreements;
Indemnification.......................................................................26
10.01 Survival of Representations, Warranties, Covenants and Other Agreements...............26
10.02 Indemnification by the Sellers........................................................26
10.03 Indemnification by Buyer..............................................................27
10.04 Third Party Claims....................................................................27
Section 11. Further Assurances....................................................................28
Section 12. Closing...............................................................................28
12.01 Closing...............................................................................28
12.02 Termination...........................................................................28
Section 13. Miscellaneous.........................................................................29
-ii-
<PAGE>
13.01 Amendments; Waivers...................................................................29
13.02 Entire Agreement......................................................................29
13.03 Cablevision Name......................................................................29
13.04 Binding Effect; Assignment............................................................29
13.05 Construction; Counterparts............................................................29
13.06 Notices...............................................................................29
13.07 Expenses of the Parties...............................................................30
13.08 Non-Recourse..........................................................................31
13.09 Third Party Beneficiary...............................................................31
13.10 Governing Law.........................................................................31
13.11 Press Releases........................................................................31
13.12 Severability..........................................................................31
13.13 Specific Performance..................................................................31
-iii-
</TABLE>
<PAGE>
EXHIBITS
Exhibit A - Sellers
Exhibit B - Service Territory
Exhibit C - Assumption Agreement
Exhibit D - Bill of Sale and General Assignment
Exhibit E - Form of Opinion of Sellers' Counsel
Exhibit F - Form of Opinion of Buyer's Counsel
-iv-
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 1.01(a) - CATV Licenses/Franchises
Schedule 1.01(b) - Current Assets
Schedule 1.01(c) - Liabilities
Schedule 1.01(d) - Excluded Assets
Schedule 1.01(e) - Excluded Liabilities
Schedule 1.01(f) - Permitted Encumbrances
Schedule 3.02 - Consents and Approvals
Schedule 3.05 - Tax Notices and Assessments
Schedule 3.06(b) - Real Property
Schedule 3.06(d) - Environmental Matters
Schedule 3.07(c) - Material Contracts
Schedule 3.07(d) - Notice of Claims or Purported Defaults in CATV Instruments
Schedule 3.07(e) - Non-compliance with applicable laws; documents not filed with the FCC
Schedule 3.07(f) - Copyrights
Schedule 3.07(g) - Rates
Schedule 3.07(h) - Pending Claims
Schedule 3.07(i) - Subscriber Obligations
Schedule 3.07(j) - Free Service Liability/Refunds
Schedule 3.07(k) - Local Office Requirements
Schedule 3.07(l) - Overbuilds
Schedule 3.09 - Employee Benefit Plans
Schedule 3.10 - Contracts in Default
Schedule 3.11 - Legal Proceedings
Schedule 3.13 - Year 2000
Schedule 3.14 - Restoration
Schedule 3.15 - Pole Attachment Agreements
Schedule 3.16 - Right of First Refusal
Schedule 3.17 - Insurance
Schedule 4.05 - Consents and Approvals
-v-
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made and entered into as of December
8, 1999, by and among the sellers listed in Exhibit A (each, a "Seller" and
together, the "Sellers") and Adelphia Communications Corporation, a Delaware
corporation ("Buyer").
R E C I T A L S
WHEREAS, the Sellers own and operate cable television systems serving
the communities described in Exhibit B.
WHEREAS, the Sellers desire to transfer to Buyer, and Buyer desires to
acquire from the Sellers , the CATV Business and the assets used or held for the
operation thereof in accordance with the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows, each intending to be
legally bound as and to the extent herein provided.
1. Definitions.
-----------
1.01 Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings set forth below:
Acquired Assets means all of the properties, assets, privileges,
rights, interests, claims and goodwill, real and personal, tangible and
intangible, of every type and description, including each Seller's leasehold
interests or rights to possession, whether owned or leased or otherwise
possessed, primarily used by the Sellers in connection with the CATV Business,
now in existence or hereafter acquired by the Sellers prior to the Closing,
including, without limitation, the CATV Instruments, the Equipment, the Real
Property, the Contracts, the Inventory and the Intangible Property; provided
that Acquired Assets shall exclude the Excluded Assets and any assets disposed
of prior to the Closing in the usual and ordinary course of business and not in
violation of this Agreement.
Agreement means this Asset Purchase Agreement and the Exhibits and
Schedules attached hereto.
Agreement and Plan of Reorganization means the Agreement and Plan of
Reorganization, dated as of the date hereof, among Cablevision of the Midwest,
Inc., Cablevision of the Midwest Holding Co., Inc, Adelphia General Holdings II,
Inc. and Adelphia Communications Corporation.
Appraiser has the meaning set forth in Section 9.05.
Asserted Claim has the meaning set forth in Section 10.04.
Assumed Liabilities means all liabilities, obligations and commitments
(whether direct or indirect, matured or unmatured, known or unknown, absolute,
accrued, contingent or otherwise) of each Seller relating to or arising from the
CATV Business or the condition of the Acquired Assets,
-1-
<PAGE>
including, without limitation, all liabilities, obligations and commitments
arising after the Closing Date under CATV Instruments and the Contracts or in
respect of the operation of the CATV Business after the Closing Date, other than
the Excluded Liabilities.
Basic Subscriber means as at any date of determination thereof, the sum
of (a) the total number of households (exclusive of "second outlets," as such
term is commonly understood in the cable television industry, and exclusive of
customers billed on a bulk-billing or commercial-account basis) subscribing on
such date to at least the most basic tier of service offered by the CATV
Business and paying the monthly service fees and charges imposed in respect of
such service, and who are not, as of the Closing Date, 90 days or more in
arrears in payment for service, as measured from the date that payment due
became a receivable and (b) the total number of Equivalent Subscribers on such
date.
Benefit Plans has the meaning set forth in Section 3.09(a).
Business Day means a day other than a Saturday, Sunday, national or New
York State holiday or other day on which commercial banks in New York City are
authorized or required by law to close.
Buyer has the meaning set forth in the Preamble to this Agreement.
Buyer Indemnified Party has the meaning set forth in Section 10.03(a).
Buyer's Counsel means Colin H. Higgin, Deputy General Counsel to Buyer.
Buyer's Subscriber Objection has the meaning set forth in Section
2.04(b)(iii).
Buyer's Working Capital Objection has the meaning set forth in Section
2.04(a)(iii).
CATV means cable television, which term also includes satellite master
antenna television not yet converted to cable television service.
CATV Business means the CATV business to be transferred to Buyer,
presently owned and operated by the Sellers, which consists of the transmission,
distribution and local origination of audio and video signals over the system
used by the CATV Business, located in the Service Territory.
CATV Instruments means (a) all franchises listed in Schedule 1.01(a) or
ordinances granted to Sellers by any Governmental Authority; (b) permits for
wire crossings over or under highways, railroads, and other property; (c)
construction permits and certificates of occupancy; pole attachment and other
Contracts with utilities; (d) state, county and municipal permits, orders,
variances, exemptions, approvals, consents, licenses and other authorizations;
(e) agreements for the purchase, sale, receipt or distribution of news, data and
microwave relay signals, or for satellite services; and (f) all other approvals,
consents and authorizations used or held for use in the CATV Business.
CATV Licenses means the licenses issued by the FCC used in the CATV
Business as presently conducted by the Sellers, all of which are listed in
Schedule 1.01(a).
-2-
<PAGE>
CATV System means a complete CATV reception and distribution system
consisting of one or more head-ends, trunk cable, subscriber drops and
associated electronic equipment, which is, or is capable of being, operated as
an independent system without interconnections to other systems.
Closing means a meeting for the purpose of concluding the transactions
contemplated by this Agreement held at the place and on the date fixed in
accordance with Section 12.01.
Closing Date; Date of Closing means the date fixed for the Closing in
accordance with Section 12.01.
Code means the Internal Revenue Code of 1986, as amended.
Combined Basic Subscriber has the meaning set forth in Section
2.04(b)(i).
Combined Basic Subscriber Amount has the meaning set forth in Section
2.04(b)(i).
Combined Basic Subscriber Estimate has the meaning set forth in Section
2.03.
Combined Basic Subscriber Statement has the meaning set forth in
Section 2.04(b)(i).
Combined CATV Business means the CATV Business as defined in this
Agreement together with the CATV Business as defined in the Agreement and Plan
of Reorganization.
Combined Current Assets means Current Assets as defined in this
Agreement together with Current Assets as defined in the Agreement and Plan of
Reorganization.
Combined Liabilities means Liabilities as defined in this Agreement
together with Liabilities as defined in the Agreement and Plan of
Reorganization.
Combined Working Capital means Combined Current Assets less Combined
Liabilities.
Communications Act has the meaning set forth in Section 3.07(e).
Contract means any contract, mortgage, deed of trust, bond, indenture,
lease, license, note, certificate, option, warrant, right, or other instrument,
document or written agreement relating to the CATV Business to which a Seller is
a party or by which a Seller or the assets of a Seller included within the CATV
Business are bound, excluding any CATV Instrument.
Copyright Act has the meaning set forth in Section 3.07(f).
CPA Firm has the meaning set forth in Section 2.04(a)(iii).
Current Assets means petty cash, marketable securities, 100% of active
subscriber accounts receivable that are 60 days or less past due and 90% of
active subscriber accounts that are between 61 and 90 days past due (in each
case measured from the date the accounts became receivable), all deposits with
utilities, under leases or related to guides, billing service, postage, the pro
rata portion of any prepaid taxes (as of the Closing Date), all prepaid
expenses, including in respect of pole rental or equipment maintenance
agreements that are Assumed Liabilities, and in respect of rent, postage,
-3-
<PAGE>
promotional expenditures, guides, security service or two-way radio and other
current assets (excluding Inventory), each as determined in accordance with GAAP
(unless otherwise specified herein) and consistent with Schedule 1.01(b) hereto,
which Schedule sets forth the type and amounts of Current Assets of Midwest and
Sellers as of September 30, 1999.
DOJ means the United States Department of Justice.
Employees mean all current active employees of Sellers.
Encumbrances means liens, charges, encumbrances, security interests,
options, restrictions or any other similar third party rights other than liens
for taxes not yet due and payable.
Environmental Law means any law or regulation governing the protection
of the environment (including air, water, soil and natural resources) or the
use, storage, handling, release or disposal of any hazardous or toxic substance.
Equipment means all tangible personalty; electronic devices; towers;
trunk and distribution cable; decoders and spare decoders for scrambled
satellite signals; amplifiers; power supplies; conduit; vaults and pedestals;
grounding and pole hardware; installed subscriber's devices (including, without
limitation, drop lines, converters, encoders, transformers behind television
sets and fittings); "head- ends" and "hubs" (origination, transmission and
distribution system) hardware; tools; inventory; spare parts; maps and
engineering data; vehicles; supplies, tests and closed circuit devices;
furniture and furnishings; and all other tangible personal property and
facilities owned by Seller and used in the CATV Business.
Equivalent Subscriber means, as at any date of determination thereof,
the total number of households served by the CATV Business on a bulk-billed
basis and the total number of establishments served on a commercial account
basis, or on a basis less than the standard monthly service fees and charges
imposed by the Sellers, which shall be deemed to be equal to the quotient
obtained by dividing (i) the total fees and charges for basic service billed by
Sellers during the month including such date on a bulk-billed or commercial
account basis, or on a basis less than the standard monthly service fees and
charges imposed by Sellers, by (ii) the fees and charges for basic service that
a Basic Subscriber of the type described in clause (a) of the definition of such
term in this Section 1.01 was billed during such month.
ERISA means the Employee Retirement Income Security Act of 1974, as the
same has been and may be amended from time to time.
ERISA Affiliate of any entity means any other entity that, together
with such entity, would be considered one employer under Section 4001 of ERISA
or Section 414 of the Code.
Estimated Adjustment Amount means (i) if Combined Working Capital as
reflected on the Estimated Working Capital Statement is less than zero, the
amount by which the Purchase Price shall be decreased, or (ii) if Combined
Working Capital as reflected on the Estimated Working Capital Statement is more
than zero, the amount by which the Purchase Price shall be increased.
Estimated Working Capital Statement has the meaning set forth in
Section 2.03.
-4-
<PAGE>
Excluded Assets means (i) the assets and properties of Sellers listed
on Schedule 1.01(d); (ii) programming Contracts (including cable guide
Contracts) and retransmission consent Contracts; (iii) insurance policies and
rights and claims thereunder up to Sellers' self-insured retention or
deductible; (iv) Contracts relating to national advertising sales
representation; (v) bonds, letters of credit, surety instruments and other
similar items of Sellers; and (vi) trademarks, tradenames, service marks,
service names, logos and similar proprietary rights.
Excluded Liabilities means all of the following liabilities,
obligations and commitments: (i) those of Sellers identified on Schedule
1.01(e); (ii) those arising as a result of a breach by Sellers of any of their
representations, warranties, covenants, agreements or obligations under this
Agreement but only to the extent that such representations, warranties,
covenants, agreements or obligations survive the consummation of the Closing as
provided in Section 10.1; and (iii) those relating to the Excluded Assets.
FCC means the United States Federal Communications Commission.
---
Final Combined Basic Subscriber Statement has the meaning set forth in
Section 2.04(b)(iii).
Final Working Capital Amount means Combined Working Capital as
reflected on the Final Working Capital Statement.
Final Working Capital Statement has the meaning set forth in Section
2.04(a)(iii).
FTC means the United States Federal Trade Commission.
---
GAAP means United States generally accepted accounting principles as in
effect from time to time and consistently applied.
Governmental Authority means the United States Federal Government, any
state, county, municipal, local or foreign government and any governmental
agency, bureau, commission, authority or body.
Hazardous Substance means any substance listed, defined, designated or
classified as hazardous, toxic or radioactive under any applicable Environmental
Law, including petroleum products.
Holdings means Cablevision of the Midwest Holding Co., Inc., a Delaware
corporation.
HSR Act and Rules means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder, as from time
to time in effect prior to the Closing.
HSR Report means the Notification and Report Form for certain mergers
and acquisitions mandated by the HSR Act and Rules.
Income Statements has the meaning set forth in Section 3.03.
Indemnitee has the meaning set forth in Section 10.04.
-5-
<PAGE>
Indemnitor has the meaning set forth in Section 10.04.
Intangible Property means the copyrights, patents, trademarks, service
marks and trade names used in the CATV Business excluding the right to use the
names "Cablevision," "Cablevision Systems," "Optimum," "Optimum Cable," "Optimum
TV," or any and all derivatives thereof or any name which may include any of
such terms, and all applications for, or licenses or other rights to use any
thereof, and the value associated therewith, which are owned by Midwest and used
in the CATV Business.
Interim Financial Statements has the meaning set forth in Section 3.03.
Inventory means all inventory as defined under GAAP, plus, without
limitation, all supplies, all maintenance equipment, all converters, all cables
and all amplifiers owned by a Seller on the Closing Date as determined by
Sellers' inventory control system and used in the CATV Business.
Judgment means any judgment, writ, order, injunction, award or decree
of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, and any order of or by any Governmental Authority.
Law means the common law and any statute, ordinance, code or other law,
rule, regulation, order, technical or other standard, requirement or procedure
enacted, adopted, promulgated, applied or followed by any Governmental Authority
or court.
Liabilities means accounts payable, accrued expenses and other
liabilities of the Sellers determined in accordance with GAAP (including accrued
vacation pay for employees of Sellers hired by Buyer), except that the current
portion of any indebtedness for borrowed money and Excluded Liabilities shall
not be included, consistent with Schedule 1.01(c) hereto, which Schedule sets
forth the type and amounts of Liabilities of Midwest and Sellers as of September
30, 1999.
LMDS has the meaning set forth in Section 9.08.
Losses has the meaning set forth in Section 10.02(a).
Material Adverse Effect means a material adverse effect on the assets,
financial condition or results of operations of the Combined CATV Business taken
as a whole other than any such effect resulting from changes in general economic
or political conditions or legal, governmental, regulatory or competitive
factors affecting CATV system operators generally or in the State of Ohio.
Midwest means Cablevision of the Midwest, Inc., a Delaware corporation.
-------
MMDS has the meaning set forth in Section 9.08.
Outside Date has the meaning set forth in Section 12.01.
Permitted Encumbrances means those Encumbrances set forth in Schedule
1.01(f) hereto and all other Encumbrances, if any, which do not materially
detract from the value of the tangible property subject thereto and which do not
materially interfere with the present and continued use of such property in the
operation of the CATV Business.
-6-
<PAGE>
Person means any natural person, Governmental Authority, corporation,
general or limited partner, partnership, limited liability company, joint
venture, trust, association, or unincorporated entity of any kind.
Preliminary Working Capital Statement has the meaning set forth in
Section 2.04(a)(i).
Purchase Price has the meaning set forth in Section 2.02.
Real Property means all realty, fixtures, easements, rights-of-way,
leasehold and other interests in real property, buildings and improvements used
in the CATV Business.
Required Consents means the consents and approvals designated as such
on Schedules 3.02 and 4.05 by an asterisk.
Sellers has the meaning set forth in the Preamble to this Agreement.
Seller Indemnified Party has the meaning set forth in Section 10.02(a).
Sellers' Account has the meaning set forth in Section 2.02.
Subscriber Adjustment means an amount equal to (i) $4,996.21 multiplied
by (ii) the difference between (x) 306,232 less (y) the number of Basic
Subscribers of the Combined CATV Business on the Closing Date, multiplied by
(iii) 99/153; provided, that if the product obtained in the foregoing clause is
negative, the Subscriber Adjustment shall be zero.
Subsidiary of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof, (ii) a
partnership of which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, is the general partner and has the power to direct the policies,
management and affairs of the partnership, (iii) a limited liability company of
which such Person or one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, is the managing
member and has the power to direct the policies, management and affairs of the
company, or (iv) any other Person (other than a corporation, partnership or
limited liability company) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership and power to
direct the policies, management and affairs thereof.
Service Territory means the geographical area as described in Exhibit B
hereto.
Tax Returns has the meaning set forth in Section 3.05.
Voting Stock has the meaning set forth in the Agreement and Plan of
Reorganization.
Year 2000 Problem has the meaning set forth in Section 3.13.
-7-
<PAGE>
1.02 Other Definitional Provisions. Terms defined in the singular
shall have a comparable meaning when used in plural, and vice versa.
2. Purchase and Sale.
2.01 Transfer of Assets. At the Closing, upon the terms and conditions
set forth in this Agreement, the Sellers shall sell, convey, transfer, assign
and deliver to Buyer, and Buyer shall purchase, accept and receive, all of the
Sellers' right, title and interest in and to the Acquired Assets, such
transaction to be effective as of the opening of business on the Closing Date.
2.02 Purchase Price. In consideration for the transfer of the Acquired
Assets, pursuant to Section 2.01, and the other covenants, agreements,
representations and warranties contained herein, Buyer shall at Closing (i) pay
to the Sellers $990 million plus, if a positive number, or minus, if a negative
number, an amount equal to the product of (x) the Estimated Adjustment Amount,
determined in accordance with Section 2.03, and (y) 99/153, less, the Subscriber
Adjustment, if any, based on the Combined Basic Subscriber Estimate (together,
the "Purchase Price") by federal funds wire transfer of immediately available
funds in New York, New York to such account at a United States bank as shall be
designated by the Sellers (the "Sellers' Account") and (ii) assume and agree to
pay, discharge and perform the Assumed Liabilities as and when due in accordance
with the Assumption Agreement attached as Exhibit C hereto.
2.03 Estimated Working Capital Statement. At least three Business Days
prior to the Closing Date, the Sellers shall deliver to Buyer an estimated
working capital statement as of the Closing Date, which statement shall set
forth the Sellers' good faith estimate of the Combined Current Assets and
Combined Liabilities of the Combined CATV Business and the Estimated Adjustment
Amount as of the Closing Date as determined in accordance with GAAP and in a
manner consistent with the preparation of the Interim Financial Statements,
except as otherwise required by this Agreement (the "Estimated Working Capital
Statement").
On the date that Sellers deliver the Estimated Working Capital
Statement, the Sellers shall also deliver to Buyer an estimate of the number of
Basic Subscribers to be transferred to Buyer under this Agreement and the
Agreement and Plan of Reorganization as of the Closing Date (the "Combined Basic
Subscriber Estimate"). The number of Basic Subscribers set forth in the Combined
Basic Subscriber Estimate shall be used on the Closing Date for computing the
Purchase Price and the Subscriber Adjustment, if any. Basic Subscribers
transferred to Buyer under this Agreement and the Agreement and Plan of
Reorganization shall be deemed to include all Basic Subscribers of the Combined
CATV Business, irrespective of the lack of approval or consent of Governmental
Authorities to transfer to Buyer any franchises containing Basic Subscribers.
2.04 Adjustments.
-----------
(a) (i) Within 90 days after the Closing Date, the Sellers
shall prepare, or cause to be prepared, and deliver to Buyer a working
capital statement of the Combined CATV Business as of the Closing Date,
which statement shall be prepared in accordance with GAAP and in a
manner consistent with the preparation of the Interim Financial
Statements, except as otherwise required by this Agreement, and shall
set forth the Combined Current Assets and Combined Liabilities of the
Combined CATV Business and the Estimated Adjustment Amount, each as of
the Closing Date (the "Preliminary Working Capital Statement"). Buyer
-8-
<PAGE>
shall cooperate in providing to Sellers all relevant books, records and
personnel of the Combined CATV Business in order to facilitate the
preparation of the Preliminary Working Capital Statement.
(ii) During the 30-day period following the delivery of the
Preliminary Working Capital Statement to Buyer, Buyer shall have the
right to examine the Preliminary Working Capital Statement and all
records used to prepare the Preliminary Working Capital Statement.
(iii) In the event Buyer determines that the Preliminary
Working Capital Statement has not been prepared on the basis set forth
in Section 2.04(a)(i) hereof, Buyer shall so inform Sellers in writing
(the "Buyer's Working Capital Objection"), setting forth a reasonably
specific description of the basis of the Buyer's Working Capital
Objection on or before the last day of the 30-day period referred to in
Section 2.04(a)(ii) hereof. In the event Buyer delivers a Buyer's
Working Capital Objection, Buyer and Sellers shall attempt to resolve
the differences underlying the Buyer's Working Capital Objection within
20 days of Sellers' receipt thereof. If Sellers and Buyer are unable to
resolve all their differences within such 20-day period, they shall
refer their remaining differences to KPMG LLP, certified public
accountants, or such other nationally recognized firm of independent
public accountants as to which Buyer and Sellers may mutually agree
(the "CPA Firm"), who shall, acting as experts and not as arbitrators,
determine on the basis of the standard set forth in Section 2.04(a)(i)
hereof and only with respect to the remaining differences so submitted,
whether and to what extent, if any, the Preliminary Working Capital
Statement requires adjustment. The CPA Firm will base its determination
only on evidence brought to it by the parties and shall not conduct an
audit. The CPA Firm shall deliver its written determination to Buyer
and Sellers no later than the 20th business day after the remaining
differences underlying the Buyer's Working Capital Objection are
referred to the CPA Firm. The CPA Firm's determination shall be
conclusive and binding upon the parties. The fees and disbursements of
the CPA Firm shall be allocated between Buyer and Sellers in the same
proportion that the aggregate amount of any disputed items submitted to
the CPA Firm that are unsuccessfully disputed by each (as finally
determined by the CPA Firm) bears to the total amount of any disputed
items so submitted. Buyer and Sellers shall make readily available to
the CPA Firm all relevant books and records and any work papers
relating to the Preliminary Working Capital Statement and all other
items reasonably requested by the CPA Firm. The "Final Working Capital
Statement" shall be (i) the Preliminary Working Capital Statement in
the event that (x) the Buyer's Working Capital Objection is not
delivered to Sellers in the period set forth in Section 2.04(a)(ii)
hereof or (y) Sellers and Buyer so agree; or (ii) the Preliminary
Working Capital Statement, as adjusted by either (x) the agreement of
Sellers and Buyer or (y) the CPA Firm.
(iv) If the Final Working Capital Amount exceeds the Estimated
Adjustment Amount, then Buyer shall pay to Sellers an amount equal to
the product of (i) such excess and (ii) 99/153. If the Estimated
Adjustment Amount exceeds the Final Working Capital Amount, then
Sellers shall pay to Buyer an amount equal to the product of (i) such
excess and (ii) 99/153.
(v) Any amount payable pursuant to Section 2.04(a)(iv) hereof
shall be paid by wire transfer of immediately available funds in New
York, New York to a bank account designated by Buyer or Sellers, as the
case may be, on or before the fifth business day
-9-
<PAGE>
following the determination of the Final Working Capital Statement
pursuant to Section 2.04(a)(iii) hereof.
(b)(i) Within ninety (90) days after the Closing Date, Sellers
shall prepare, or cause to be prepared, and deliver to Buyer a
statement setting forth the number of Basic Subscribers to the "CATV
Business" as defined herein and to the "CATV Business" as defined in
the Agreement and Plan of Reorganization as of the Closing Date (each,
a "Combined Basic Subscriber" and such number, the "Combined Basic
Subscriber Amount"), which statement (the "Combined Basic Subscriber
Statement") shall be prepared in conformity with the definition of
Basic Subscriber contained herein. Buyer shall cooperate in providing
to Sellers access, upon reasonable notice, to all relevant books,
records and personnel of the CATV Business in order to facilitate the
preparation of the Combined Basic Subscriber Statement.
(ii) During the thirty (30) day period following the delivery
of the Combined Basic Subscriber Statement to Buyer, Buyer shall have
the right to examine the Combined Basic Subscriber Statement and all
records used to prepare the Combined Basic Subscriber Statement.
(iii) In the event Buyer determines that the Combined Basic
Subscriber Statement has not been prepared on the basis set forth in
Section 2.04(b)(i) hereof, Buyer shall so inform Seller in writing (the
"Buyer's Subscriber Objection"), setting forth a reasonably specific
description of the basis of the Buyer's Subscriber Objection on or
before the last day of the thirty (30) day period referred to in
Section 2.04(b)(ii) hereof. If Buyer delivers a Buyer's Subscriber
Objection, Buyer and Sellers shall attempt to resolve the differences
underlying the Buyer's Subscriber Objection within twenty (20) days of
the Sellers' receipt thereof. If Sellers and Buyer are unable to
resolve all their differences within such twenty (20) day period, they
shall refer their remaining differences to the CPA Firm, who shall
determine on the basis of the standard set forth in Section 2.04(b)(i)
hereof and only with respect to the remaining differences so submitted,
whether and to what extent, if any, the Combined Basic Subscriber
Statement requires adjustment. The CPA Firm will base its determination
only on evidence brought to it by the parties and shall not conduct an
audit. The CPA Firm shall deliver its written determination to Buyer
and Sellers no later than the twentieth (20th) business day after the
remaining differences underlying the Buyer's Subscriber Objection are
referred to the CPA Firm. The CPA Firm's determination shall be
conclusive and binding upon the parties. The fees and disbursements of
the CPA Firm shall be allocated between Buyer and Sellers in the same
proportion that the aggregate number of any disputed Combined Basic
Subscribers submitted to the CPA Firm that is unsuccessfully disputed
by each (as finally determined by the CPA Firm) bears to the total
amount of any Combined Basic Subscribers so submitted. Buyer and
Sellers shall make readily available to the CPA Firm all relevant
invoices, books and records and any work papers relating to the
Combined Basic Subscriber Statement and all other items reasonably
requested by the CPA Firm. The "Final Combined Basic Subscriber
Statement" shall be the Combined Basic Subscriber Statement in the
event that (x) a Buyer's Subscriber Objection is not delivered to the
Sellers in the period set forth in Section 2.04(b)(iii) hereof, or (y)
the Sellers and Buyer so agree; or (ii) the Combined Basic Subscriber
Statement, as adjusted by either (x) the agreement of Sellers and Buyer
or (y) the CPA Firm.
-10-
<PAGE>
(iv) On the fifth (5th) business day following the
determination of the Final Combined Basic Subscriber Statement pursuant
to Section 2.04(b)(iii), if the number of Combined Basic Subscribers
included in the Final Combined Basic Subscriber Statement is less than
306,232 and less than the number of Combined Basic Subscribers included
in the Combined Basic Subscriber Estimate, then Sellers shall pay the
Buyer an amount equal to the product of (a) $4,996.21 times the
difference between the number of Combined Basic Subscribers included in
the Combined Basic Subscriber Estimate (but not above 306,232) and the
number of Combined Basic Subscribers included in the Final Combined
Basic Subscriber Statement and (b) 99/153. If the number of Combined
Basic Subscribers included in the Final Combined Basic Subscriber
Statement is more than the number of Combined Basic Subscribers
included in the Combined Basic Subscriber Estimate and the number of
Combined Basic Subscribers in the Combined Basic Subscriber Estimate
was less than 306,232, then on such fifth (5th) business day, Buyer
shall pay to Sellers an amount equal to (a) $4,996.21 multiplied by (b)
the difference between (i) the number of Combined Basic Subscribers
included in the Final Combined Basic Subscriber Statement (but not
above 306,232) and (ii) the number of Combined Basic Subscribers
included in the Combined Basic Subscriber Estimate multiplied by (c)
99/153.
(v) Any amount payable pursuant to Section 2.04(b)(iv) hereof
shall be paid by wire transfer of immediately available funds in New
York, New York to a bank account designated by Buyer or Sellers, as the
case may be.
2.05 Assumption of Liabilities. At the Closing Date, Buyer shall assume
the Assumed Liabilities in accordance with the Assumption Agreement attached
hereto as Exhibit C, and all liabilities and obligations for the operations of
the CATV Business after the Closing Date.
2.06 Sales and Transfer Taxes. Buyer, on the one hand, and Sellers, on
the other hand, shall each be responsible for one-half of all sales and use
taxes and transfer taxes, if any, including realty transfer taxes, arising from
the transfer of the Acquired Assets.
3. Representations and Warranties of Sellers.
To induce Buyer to enter into this Agreement, Sellers represent and
warrant to Buyer as follows:
3.01 Organization and Authority. Sellers are duly organized under
the laws of the State of Delaware.
3.02 Legal Capacity; Approvals and Consents.
--------------------------------------
(a) Authority and Binding Effect. Subject to Section 9.02
hereof and the consents and approvals set forth on Schedule 3.02, the
Sellers have all requisite corporate power and authority to execute,
deliver and perform this Agreement. The Sellers have duly taken all
corporate and shareholder actions necessary to authorize the execution,
delivery and performance of this Agreement. This Agreement has been
duly executed and delivered by Sellers and is the valid and binding
obligation of each Seller enforceable in accordance with its terms,
except as such enforceability may be affected by laws of bankruptcy,
insolvency, reorganization and creditors rights generally and by the
availability of equitable remedies.
-11-
<PAGE>
(b) No Breach. Subject only to obtaining the consents and
approvals set forth on Schedule 3.02, the execution, delivery and
performance of this Agreement does not, and will not, contravene the
relevant organizational documents of Sellers, and does not, and will
not: (i) conflict with or result in a breach or violation by Sellers of
or constitute a default by a Seller under or result in the termination,
suspension, modification or impairment of any CATV Instrument, Law,
Judgment, or Contract to which a Seller is a party or by which a
Seller, the CATV Business or any of the Acquired Assets is subject or
bound or may be affected; or (ii) create or impose any Encumbrance upon
any of the Acquired Assets other than a Permitted Encumbrance, in each
case under clause (i) above, which conflict, breach, violation, default
or termination, suspension, modification or impairment would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) Required Consents. Except for the parties listed in
Schedule 3.02, there are no parties whose approval or consent, or with
whom the filing of any certificate, notice, application, report or
other document, is legally or contractually required or otherwise is
necessary in connection with the execution, delivery or performance of
this Agreement by Sellers, except where failure to obtain such consent
or approval or failure to make such filing would not reasonably be
expected to have a Material Adverse Effect.
3.03 Financial Statements. Sellers have delivered to Buyer true and
complete copies of the statements of income of the Combined CATV Business for
the years ending December 31, 1998, 1997 and 1996 (the "Income Statements"). The
Income Statements were prepared in accordance with GAAP except for footnotes and
certain items that would require reclassification and certain expenses as
described in the Income Statements and present fairly in all material respects
the results of its operations for the periods then ended. Sellers have also
provided to Buyer a balance sheet of the Combined CATV Business as of June 30,
1999 and a balance sheet and income statement of the Combined CATV Business as
of September 30, 1999 (the "Interim Financial Statements"), which Interim
Financial Statements were prepared in accordance with GAAP, as noted above, to
the extent applicable thereto and the practices customarily followed by the
Combined CATV Business in preparing the interim statements and, subject to
normal year-end adjustments and the procedures followed in interim statements,
present fairly in all material respects the financial position and results of
operation of the Combined CATV Business as at the dates and for the period
indicated and in the case of the income statement, are stated on a basis
generally consistent with the above-described Income Statements.
3.04 Changes in Operation. Since September 30, 1999, there has not been
any event or circumstance which, individually or in the aggregate, has had or
would reasonably be expected to have a Material Adverse Effect.
3.05 Tax Returns. Sellers have duly filed all material federal, state,
local and foreign income, information, franchise, sales, use, property, excise
and payroll and other tax returns or reports (herein "Tax Returns") required to
be filed by a Seller on or prior to the date hereof. All material taxes, fees
and assessments that are shown on such Tax Returns as due or payable by a Seller
on or before the date hereof and that might result in an Encumbrance upon any of
the Acquired Assets have been duly paid. Except as set forth in Schedule 3.05,
no Seller has received notice or assessment to the effect that there is any
unpaid tax, interest, penalty or addition to tax due or claimed to be due from a
Seller in respect of such Tax Returns; no Seller has received notice of the
assertion or threatened assertion of any Encumbrances with respect to any
Acquired Assets on account of any unpaid taxes;
-12-
<PAGE>
and no audits of such Tax Returns by any Governmental Authority are pending or,
so far as Sellers know, threatened.
3.06 Acquired Assets.
---------------
(a) Title; Encumbrances. Sellers have, or will have at
Closing, (i) good and marketable title to all of the Equipment and Real
Property owned in fee and (ii) the right and authority (subject to the
Required Consents specified herein) to transfer to Buyer all of
Sellers' right, title and interest in and to the other property or
rights included in the Acquired Assets, in each instance free and clear
of any Encumbrances, except for any instance in which the failure to
have such title, right or authority would not reasonably be expected to
have a Material Adverse Effect.
(b) Real Property. Schedule 3.06(b) sets forth a list of all
Real Property owned or leased by a Seller in connection with the
operation of the CATV Business as presently conducted. Except as set
forth in Schedule 3.06(b), Sellers have title in fee simple to all such
Real Property except for leases, easements and other interests not
constituting ownership in fee. To the knowledge of Sellers, except as
set forth in Schedule 3.06(b), there are no oral leases with respect to
head-ends used in the CATV Business.
(c) Acquired Assets. The Acquired Assets include all
assets used by Sellers to conduct the CATV Business as it is presently
being conducted except as would not reasonably be expected to have a
Material Adverse Effect.
(d) Environmental Matters. Except as disclosed in Schedule
3.06(d), or as would not reasonably be expected to have a Material
Adverse Effect on the CATV Business as presently conducted: (i) the
Acquired Assets materially comply with applicable Environmental Laws;
(ii) no Seller has received written notice from any Governmental
Authority alleging that the Acquired Assets are in violation of any
applicable Environmental Law; (iii) the Acquired Assets are not the
subject of any court order, administrative order or decree arising
under any Environmental Law that is known by Sellers or which Sellers
should know with reasonable investigation; (iv) the Acquired Assets
have not been used by Sellers for the generation, storage, discharge or
disposal of any Hazardous Substances except as permitted under
applicable Environmental Laws.
3.07 The CATV Business. With respect to the CATV Business:
-----------------
(a) As of September 30, 1999, the Combined CATV Business
included not less than 306,232 Basic Subscribers. As of September 30,
1999, approximately 59% of the cable plant of the Combined CATV
Business has been rebuilt to 750 MHz bandwidth with a minimum of 600
MHz analog channel capacity.
(b) Since September 30, 1999, the CATV Business has been
operated in the ordinary course in all material respects, and no
material assets previously used therein have been disposed of except in
the ordinary course of business.
(c) Schedule 3.07(c) contains a complete list of all
material Contracts in effect on the date of this Agreement. As used in
this Section 3.07(c), the term "material Contracts"
-13-
<PAGE>
means any Contract requiring in any calendar year payments aggregating
$100,000 or more and that cannot be terminated on 30 days' notice
without liability.
(d) Sellers hold, or will hold at Closing, all of the
franchises, permits and licenses reasonably necessary to enable it to
operate the CATV Business as presently conducted except all such CATV
Instruments the failure of which to hold would not reasonably be
expected to have a Material Adverse Effect. Sellers are in compliance
with the terms and conditions of all such CATV Instruments except where
such non-compliance would not reasonably be expected to have a Material
Adverse Effect. Except as disclosed in Schedule 3.07(d), no Seller has
received notice of any claimed or purported default in any CATV
Instruments and there are no proceedings pending, or, to the knowledge
of Sellers, threatened, to cancel, modify or change any such CATV
Instruments, except in each case as would not reasonably be expected to
have a Material Adverse Effect.
(e) Except as set forth in Schedule 3.07(e), the CATV Business
is conducted by Sellers in compliance with all applicable laws,
regulations and other requirements of Governmental Authorities, CATV
Instruments, CATV Licenses and Contracts except where the violation of
any of the foregoing would not reasonably be expected to have a
Material Adverse Effect, including, but not limited to, compliance in
all material respects with the Communications Act of 1934, as amended,
and the rules and regulations promulgated thereunder (collectively, the
"Communications Act"). Except as set forth in Schedule 3.07(e), Sellers
have submitted to the FCC all filings, including, but not limited to,
cable television registration statements, annual reports and
aeronautical frequency usage notices, that are required under the rules
and regulations of the FCC; the CATV Business is in compliance with all
signal leakage criteria prescribed by the FCC for each relevant
reporting period. Sellers have made available to Buyer copies of all
reports and filings for the past year, made or filed pursuant to FCC
rules and regulations.
(f) Except as set forth in Schedule 3.07(f), Sellers have
filed all semi-annual statements of account and paid all compulsory
licensing fees required by Section 111 of the Copyright Act of 1976,
and the rules, regulations and orders of the Copyright Office of the
Library of Congress promulgated thereunder (collectively, the
"Copyright Act"), with respect to the CATV Business, for the three
years preceding the date of the Agreement.
(g) The monthly rates charged by Sellers for each service
provided by Sellers to subscribers of the CATV Business as of September
30, 1999 are set forth in all material respects on Schedule 3.07(g).
Such rates comply with the rules and regulations of the FCC as of the
date thereof, except to the extent that such failure to comply would
not reasonably be expected to have a Material Adverse Effect.
(h) Except as set forth in Schedule 3.07(h), and except for
customer claims (other than those on Forms 329 and 394, which are
listed on Schedule 3.07(h)) arising in the ordinary course of business,
there are no claims pending or, to Sellers' knowledge, threatened
against Sellers with respect to the operation of the CATV Business
which would reasonably be expected to have a Material Adverse Effect.
(i) Except as set forth on Schedule 3.07(i), there are no
obligations or liabilities to subscribers of the CATV Business which
would reasonably be expected to have a Material
-14-
<PAGE>
Adverse Effect, except (i) with respect to deposits made by such
subscribers and (ii) the obligation to supply services to subscribers
in the ordinary course of business, pursuant to the franchises.
(j) Except as set forth on Schedule 3.07(j), there is no free
service liability to subscribers existing with respect to the CATV
Business which would reasonably be expected to have a Material Adverse
Effect. Except with respect to deposits for converters, encoders,
decoders and related equipment, and any other prepaid income item which
is or will be reflected in the Final Working Capital Statement, Sellers
have no obligation or liability for the refund of monies to its
subscribers which would reasonably be expected to have a Material
Adverse Effect.
(k) Except as set forth on Schedule 3.07(k), with respect to
the CATV Business, Sellers have not made any commitments to any
franchising authority to maintain a local office in any location.
Further, Sellers have not made any commitment to any of the
municipalities served by the CATV Business to pay franchise fees to any
such municipality in excess of the amounts set forth on Schedule
3.07(k), except where such commitment would not reasonably be expected
to have a Material Adverse Effect.
(l) Except as set forth on Schedule 3.07(l), there is no
overbuild of the CATV Business at present, nor, to Sellers' knowledge,
is any overbuild pending.
3.08 Labor Contracts and Actions.
---------------------------
(a) No Seller is a party to a Contract with any labor
organization, nor has a Seller agreed to recognize any union or other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of the employees of
a Seller with respect to the operation of the CATV Business.
(b) As of the date of this Agreement, Sellers are not
experiencing any strikes, work stoppages, significant grievance
proceedings or, to the knowledge of Sellers, claims of unfair labor
practices filed with respect to the operation of the CATV Business.
3.09 Employee Benefit Plans.
----------------------
(a) All "employee benefit plans" within the meaning of Section
3(3) of ERISA covering Employees, other than "multiemployer plans"
within the meaning of Section 3(37) of ERISA, and other benefit plans,
contracts or arrangements covering Employees (collectively, the
"Benefit Plans") are listed on Schedule 3.09. True and complete copies
of all Benefit Plans and all amendments thereto have been provided or
made available to Buyer. Schedule 3.09 also lists all multiemployer
plans covering Employees.
(b) All Benefit Plans, to the extent subject to ERISA, are in
substantial compliance with ERISA. There is no material pending or, to
the knowledge of Sellers, threatened litigation relating to the Benefit
Plans. No Seller has engaged in a transaction with respect to any
Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject Seller to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA
in an amount which would be material.
-15-
<PAGE>
(c) No liability under Subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by Sellers with respect to any
ongoing, frozen or terminated "single- employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by it, or the single-employer plan of any ERISA Affiliate of
Sellers. No Seller has incurred and no Seller expects to incur any
withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be
filed for any Benefit Plan subject to Title IV of ERISA or by any ERISA
Affiliate of Sellers within the 12-month period ending on the date
hereof.
(d) Neither any Benefit Plan nor any single-employer plan of
an ERISA Affiliate of a Seller has an "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code
or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. No Seller has provided, nor is a Seller required to
provide, security to any Benefit Plan or to any single-employer plan of
an ERISA Affiliate of Sellers pursuant to Section 401(a)(29) of the
Code.
3.10 Contracts. Except as set forth in Schedule 3.10, there are no
defaults by a Seller under the Contracts (nor has a Seller received written
notice of a threatened default or notice of default) which would reasonably be
expected to have a Material Adverse Effect, and Sellers do not know of a default
by any other party to a Contract which would reasonably be expected to have a
Material Adverse Effect.
3.11 Legal and Governmental Proceedings and Judgments. Except as may
affect the cable television industry generally in the United States or the State
of Ohio, or as set forth on Schedule 3.11, there is no legal action or
proceeding, pending or, so far as is known to Sellers, any investigation pending
or threatened against a Seller, the CATV Business or the Acquired Assets, nor is
there any Judgment outstanding against a Seller or to or by which a Seller, any
of the Acquired Assets or the CATV Business is subject or bound, which (i)
results in any modification, termination, suspension, impairment or reformation
of any CATV Instrument or Contract or any right or privilege thereunder in a
manner that would reasonably be expected to have a Material Adverse Effect or
(ii) materially adversely affects the ability of a Seller to consummate any of
the transactions contemplated hereby.
3.12 Finders and Brokers. Sellers have employed Bear, Stearns & Co.
Inc. and Merrill Lynch & Co., Inc. as brokers in the sale provided for herein
and will pay and discharge the claim thereof for commission or expense
reimbursement in connection therewith. No Seller has entered into any other
contract, arrangement or understanding with any Person or firm, nor is it aware
of any claim or basis for any claim based upon any act or omission of a Seller
or any of their respective affiliates, which may result in the obligation of
Buyer to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
3.13 Year 2000. Except as set forth on Schedule 3.13, the Sellers are
not aware of any Year 2000 Problem with respect to the operation of the CATV
Systems that would reasonably be expected to have a Material Adverse Effect. The
"Year 2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of
-16-
<PAGE>
mechanical or electrical systems of any kind will not, in the case of dates or
time periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1, 2000.
3.14 Restoration. Except as disclosed on Schedule 3.14, or as would not
reasonably be expected to have a Material Adverse Effect, (i) no restoration,
repaving, repair or other work is required to be made by a Seller to any street,
sidewalk or abutting or adjacent area pursuant to the requirements of any
ordinance, code, permit, easement or contract relating to the installation,
construction or operation of the CATV Business; and (ii) no property of any
person or entity has been damaged, destroyed, disturbed or removed in the
process of construction or maintenance of the CATV System which has not been, or
will not be, prior to Closing, repaired, restored or replaced (if required by
the terms of any applicable ordinance, code, permit, easement or contract) or,
if not repaired, restored or replaced, for which an adequate reserve has not
been accrued by the Sellers prior to Closing.
3.15 Pole Attachment Agreements. Except as set forth on Schedule 3.15
or as would not reasonably be expected to have a Material Adverse Effect, no
Seller has received any written notice of any claim against it that it is in
default of any pole attachment agreements.
3.16 Right of First Refusal. Except as set forth on Schedule 3.16,
no Person has any option, warrant or right of first refusal to purchase either
the CATV Business or any of the Acquired Assets.
3.17 Insurance. Schedule 3.17 is a list, accurate and complete in all
material respects, of insurance policies in full force and effect with respect
to Sellers as of September 30, 1999, and Sellers have not received any notice of
non-renewal or cancellation of such insurance policies. Except as Sellers may
determine, in the exercise of their business judgment, Sellers will maintain
such insurance policies in full force and effect up to and including the Closing
Date.
3.18 Internet Service Agreements. Neither Seller is a party to an
agreement with At Home Corporation requiring the offering of internet access
services to be provided by At Home Corporation across the CATV Business.
4. Representations and Warranties of Buyer.
To induce the Sellers to enter into this Agreement, Buyer represents
and warrants to the Sellers as follows:
4.01 Organization and Authority of Buyer.
-----------------------------------
(a) Buyer is a Delaware corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization and has all corporate power and authority necessary to
carry on its business as now conducted.
4.02 Legal Capacity: Approvals and Consents.
--------------------------------------
(a) Authority; Binding Effect. Buyer has all requisite
corporate power and authority to execute, deliver and perform this
Agreement. Buyer has duly taken all corporate
-17-
<PAGE>
and shareholder actions necessary to authorize the execution, delivery
and performance of this Agreement. This Agreement has been duly
executed and delivered by Buyer and is the valid and binding obligation
of Buyer enforceable in accordance with its terms, except as such
enforceability may be affected by laws of bankruptcy, insolvency,
reorganization and creditors rights generally and by the availability
of equitable remedies.
(b) No Breach or Violation. The execution, delivery and
performance of this Agreement does not, and will not, contravene the
organizational documents of Buyer, and does not and will not: (i)
conflict with or result in a breach or violation by Buyer of, or (ii)
constitute a default by Buyer under, any Law, Judgment, contract,
arrangement or understanding to which Buyer is a party or by which
Buyer is subject or bound or may be affected.
4.03 Legal and Governmental Proceedings and Judgments. There is no
legal action, proceeding, investigation or controversy pending or, to the
knowledge of Buyer, threatened against or otherwise involving Buyer, nor are
there any Judgments outstanding against Buyer or to or by which Buyer is, or may
be, subject or bound which adversely affect the ability of Buyer to consummate
any of the transactions contemplated hereby.
4.04 Finders and Brokers. Buyer has not entered into any contract,
arrangement or understanding with any Person, and is not aware of any claim or
basis for any claim based upon any act or omission of Buyer or any of its
affiliates, which may result in the obligation of a Seller to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
4.05 Buyer Consents. Other than as set forth on Schedule 4.05 hereto,
no consent, order, authorization, waiver, approval or any other action by, or
registration, declaration or filing with, any third party or Governmental
Authority is required for Buyer to execute and deliver this Agreement and
consummate the transactions contemplated hereby. Buyer does not have an
ownership interest in the Buffalo Sabres hockey team that would require any
party to the transactions contemplated by this Agreement to obtain any consent
of the National Hockey League.
4.06 Acquisition of Rights. Buyer is not aware of, and has no reason to
believe there is, any reason relating to Buyer that any Governmental Authority
or other party whose consent is required or contemplated hereunder would refuse
to consent to the transfer of CATV Instruments or any rights to Buyer hereunder
or would condition the granting of any such consent on the performance by
Sellers or Buyer of any material obligation not expressly set forth herein.
4.07 Buyer's Financial Capability. Buyer has the financial capability,
including all financing, necessary to consummate the transactions contemplated
in this Agreement and pay the Purchase Price.
-18-
<PAGE>
5. Covenants Pending Closing.
5.01 Business of Sellers. From the date hereof to the Closing Date, and
except as otherwise consented to or approved by Buyer in writing (which consent
shall not be unreasonably withheld), the Sellers covenant and agree as follows:
(a) Business in Ordinary Course. Except as otherwise provided
herein, the Sellers shall conduct the CATV Business in the ordinary
course (including, without limitation, in accordance with currently
planned capital expenditures), consistent with past practices and will
not engage in any material transaction, including, without limitation,
entering into or amending in any material respect any CATV Instrument
or Contract, or making any material advance or expenditure, other than
in the ordinary course of business, nor change in any material respect
its business policies or practices. The Sellers shall use reasonable
commercial efforts to preserve the CATV Business intact, to retain the
services of its present employees and agents, and to preserve its
business relationships with, and the goodwill of, its customers,
suppliers and others. The Sellers shall pay before delinquent all taxes
and other charges upon or against the Sellers or any of their
respective properties or income, file when due all tax returns and
other reports required by Governmental Authorities and pay when due all
liabilities except those which they choose to contest in good faith and
by appropriate proceedings.
(b) Books and Records. The Sellers shall maintain their
respective books, accounts and records in the usual, regular and
ordinary manner.
(c) Litigation During Interim Period. The Sellers will advise
Buyer in writing promptly of the assertion, commencement or threat of
any claim, litigation, labor dispute, pro ceeding or investigation in
which any Seller is a party or the Acquired Assets or CATV Business may
be affected and which could reasonably be expected to have a Material
Adverse Effect or which relates to the transactions contemplated
hereby.
(d) Material Contracts. The Sellers shall deliver to
Buyer copies of all material Contracts that are entered into prior to
the Closing.
(e) Renewal of Franchises. The Sellers shall use reasonable
commercial efforts to obtain renewals or extensions of any franchises
that have expired or will expire within 12 months subsequent to the
date of this Agreement.
5.02 Access to Information.
---------------------
(a) Access by Buyer. Between the date of this Agreement and
the Closing, Buyer shall have reasonable access during normal business
hours to all of the properties, books, reports, records, CATV
Instruments and Contracts of Sellers, and Sellers shall furnish Buyer
with all information it may reasonably request; provided that no
investigation pursuant to this Section shall affect or be deemed to
modify any representation or warranty made by Sellers. After the
Closing, Sellers agree to provide reasonable access during normal
business hours for reasonable business purposes, at Buyer's expense, to
their independent public accountants. All information obtained by Buyer
pursuant to this Agreement and in connection with the negotiation
hereof shall be used by Buyer solely for purposes related to this
-19-
<PAGE>
Agreement and the acquisition of the Acquired Assets and, in the case
of non-public information, shall, except as may be required for the
performance of this Agreement or by Law, be kept in strict confidence
by Buyer in accordance with the terms of the Confidentiality Agreement
dated October 6, 1999 between Buyer and Cablevision Systems
Corporation.
(b) Access by Sellers. Subsequent to the Closing, Buyer shall
preserve and give to Sellers reasonable access during normal business
hours to all of the books, reports, records, CATV Instruments and
Contracts from files and records transferred to Buyer at the time of
Closing, for the purposes of the preparation of tax returns, the
preparation of the Preliminary Working Capital Statement, the defense
of any claims asserted or which may be asserted with respect to which
Sellers are the Indemnitor as contemplated by the Agreement, or other
proper business purposes.
5.03 Change in Channel Lineup. Sellers will consult with Buyer
with respect to any decision by the Sellers to adjust the channel lineup of the
CATV System.
5.04 Required Consents. The parties hereto shall proceed as
promptly as practicable and in good faith and shall each use reasonable
commercial efforts to obtain each consent or approval required to be obtained
prior to the consummation of the transactions contemplated hereby, subject to
Section 9.03
5.05 Lien Searches. Sellers shall have delivered to Buyer copies
of lien searches conducted by Sellers not more than thirty (30) days prior to
the Closing Date.
6. Deliveries at Closing.
---------------------
6.01 Deliveries by Seller. At the Closing, Sellers will deliver or
cause to be delivered to
Buyer:
(a) such warranty deeds, bills of sale, endorsements, and
other good and sufficient instruments of conveyance, transfer and
assignment as are necessary to vest in Buyer the right, title and
interest of the Sellers in accordance herewith in and to the Acquired
Assets in a form reasonably satisfactory to Buyer, which shall include,
without limitation, a form of Bill of Sale and General Assignment in
the form of Exhibit D hereto.
(b) A certificate signed by a principal officer of each
Seller, dated as of the Closing, representing and certifying to Buyer
as to the matters set forth in Sections 7.03 and 7.04.
(c) The Assumption Agreement in the form of Exhibit C hereto.
(d) An opinion of internal counsel to the Sellers or of
outside counsel, including local counsel, appointed by the Sellers,
substantially in the form of Exhibit E hereto.
(e) Evidence that the waiting period under the HSR Act and
Rules, if applicable, has expired.
-20-
<PAGE>
(f) Evidence in a form and substance reasonably satisfactory
to Buyer that the Required Consents listed on Schedule 3.02 have been
obtained.
6.02 Deliveries by Buyer. At the Closing, Buyer will
deliver or cause to be delivered to the Sellers:
(a) The Purchase Price as provided in Section 2.02.
(b) The Assumption Agreement in the form of Exhibit C hereto.
(c) A certificate signed by a principal officer of Buyer,
dated as of the Closing, representing and certifying to the Sellers as
to the matters set forth in Sections 8.03 and 8.04.
(d) An opinion of Buyer's Counsel, substantially in the form
of Exhibit F hereto.
(e) Evidence in a form and substance reasonably satisfactory
to the Sellers that the Required Consents listed on Schedule 4.05 have
been obtained.
(f) Evidence that the waiting period under the HSR Act and
Rules, if applicable, has expired.
7. Conditions to the Obligations of Buyer.
The obligations of Buyer to complete the transactions provided for
herein are subject to the fulfillment of all of the following conditions, any of
which may be waived in writing by Buyer:
7.01 Receipt of Consents. The conditions specified in Section 9.02
shall have been satisfied and all of the approvals and consents described in
Schedule 4.05 shall have been obtained and shall be in full force and effect;
provided that if the approvals and consents of Governmental Authorities for
franchises which represent at least 80% of the Combined Basic Subscribers shall
have been obtained, then this condition shall have been deemed to have been
satisfied if the conditions specified in Section 9.02 shall have been satisfied
and all Required Consents on Schedule 4.05 shall have been obtained and shall be
in full force and effect.
7.02 Sellers' Authority. All actions under the documents governing the
Sellers necessary to authorize (i) the execution and delivery of this Agreement
by the Sellers and the performance by the Sellers of their respective
obligations under this Agreement and (ii) the consummation of the transactions
contemplated hereby, shall have been duly and validly taken by the Sellers and
shall be in full force and effect on the Closing Date.
7.03 Performance by the Sellers. The Sellers shall have performed in
all material respects their respective agreements and covenants hereunder
(including, without limitation, their respective covenants in Articles 5 and 6)
to the extent such are required to be performed at or prior to the Closing and
are material to the CATV Business as a whole.
7.04 Absence of Breach of Warranties and Representations. The
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as if made on and as of such date, except
-21-
<PAGE>
(i) to the extent that such representations and warranties describe a condition
on a specified time or date or are affected by the conclusion of the
transactions permitted or contemplated hereby or the conduct of the CATV
Business in accordance with Article 5 hereof between the date hereof and the
Closing Date, or (ii) where the failure of such representations and warranties
to be true and correct, individually or in the aggregate, does not have, has not
had and would not reasonably be expected to have, a Material Adverse Effect.
7.05 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority,
enjoining or preventing the consummation of the transactions contemplated
hereby.
8. Conditions to the Obligations of Sellers.
The obligations of the Sellers to complete the transactions provided
for herein are subject to the fulfillment of all of the following conditions,
any of which may be waived in writing by the Sellers:
8.01 Receipt of Consents. The conditions specified in Section 9.02
shall have been satisfied and all of the approvals and consents described in
Schedule 3.02 shall have been obtained and shall be in full force and effect;
provided that if the approvals and consents of Governmental Authorities for
franchises which represent at least 80% of the Combined Basic Subscribers shall
have been obtained, this condition shall have been deemed to have been satisfied
if the conditions specified in Section 9.02 shall have been satisfied and all
Required Consents on Schedule 3.02 shall have been obtained and shall be in full
force and effect.
8.02 Corporate Action. All corporate and other actions necessary to
authorize (i) the execution, delivery and performance by Buyer of this Agreement
and (ii) the consummation of the transactions contemplated hereby, shall have
been duly and validly taken by Buyer and shall be in full force and effect on
the Closing Date.
8.03 Performance by Buyer. Buyer shall have performed in all material
respects all covenants and agreements to be performed by it hereunder to the
extent such are required to be performed at or prior to the Closing.
8.04 Absence of Breach of Representations and Warranties. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if then made except where the failure of such representations and
warranties to be true and correct, individually or in the aggregate, does not
have, has not had and would not reasonably be expected to have, a material
adverse effect on Buyer's ability to consummate the transactions contemplated by
this Agreement.
8.05 Absence of Proceedings. No Judgment shall have been issued, and no
action or proceeding shall have been instituted by any Governmental Authority,
enjoining or preventing the consummation of the transactions contemplated
hereby.
-22-
<PAGE>
9. Covenants.
9.01 Compliance with Conditions. Each of the parties hereto covenants
and agrees with the other to use reasonable commercial efforts to perform,
comply with and otherwise satisfy each and every one of the conditions to be
satisfied by such party hereunder, and each party shall use reasonable
commercial efforts to notify promptly the other if it shall learn that any
conditions to performance of either party will not be fulfilled.
9.02 Compliance with HSR Act and Rules.
---------------------------------
(a) The performance of the obligations of all parties under
this Agreement is subject to the condition that, if the HSR Act and
Rules are applicable to the transactions contemplated hereby, the
waiting period specified therein, as the same may be extended, shall
have expired or been terminated without action taken to prevent the
consummation of the transactions contemplated hereby.
(b) Each of the parties hereto will use its reasonable
commercial efforts to comply promptly with any applicable requirements
under the HSR Act and Rules relating to filing and furnishing of
information to the FTC and the Antitrust Division of the DOJ, the
parties' actions to include, without limitation, (i) filing or causing
to be filed the HSR Report required to be filed by them, or by any
other Person that is part of the same "person" (as defined in the HSR
Act and Rules) or any of them, and taking all other action required by
the HSR Act or Rules; (ii) coordinating the filing of such HSR Reports
(and exchanging mutual information required to be disclosed therein) so
as to present both HSR Reports to the FTC and the DOJ at the time
selected by the mutual agreement of the Sellers and Buyer, and to avoid
substantial errors or inconsistencies between the two in the
description of the transaction; and (iii) using their reasonable
commercial efforts to comply with any additional request for documents
or information made by the FTC or the DOJ or by a court and assisting
the other parties to so comply.
(c) Notwithstanding anything herein to the contrary, in the
event that the consummation of the transactions contemplated hereby is
challenged by the FTC or the DOJ or any agency or instrumentality of
the federal government by an action to stay or enjoin such
consummation, then either Buyer or the Sellers shall have the right to
terminate this Agreement unless the other of such parties, at its sole
cost and expense, elects to contest such action, in which case the
noncontesting party shall cooperate with the contesting party and
assist the contesting party, as reasonably requested, to contest such
action until such time as either party terminates this Agreement under
this Section or Article 12. In the event that such a stay or injunction
is granted (preliminary or otherwise), then either Buyer or the Sellers
may terminate this Agreement by prompt written notice to the other. If
any other form of equitable relief affecting any party is granted to
the FTC, the DOJ or other such agency or instrumentality, then such
party may terminate this Agreement by prompt written notice to the
other party. To effectuate the intent of the foregoing provisions of
this Section 9.02, the parties agree to exchange requested or required
information in making the filings and in complying as provided above,
and the parties agree to take all necessary steps to preserve the
confidentiality of the information set forth in any filings including,
without limitation, limiting disclosure of exchanged information to
counsel for the nondisclosing party.
-23-
<PAGE>
9.03 Applications for Assignment of Contracts or CATV Instruments. In
order to secure requisite consents or approvals of the transfer of control to
Buyer of any Contracts or CATV Instruments, Buyer (with respect to CATV
Instruments) and the Sellers (with respect to Contracts) shall proceed as
promptly as practicable and in good faith and using reasonable commercial
efforts, to prepare, file and prosecute such application or applications as may
be necessary to obtain each such consent or approval. Buyer and the Sellers
shall use reasonable commercial efforts to promptly assist each other and shall
take such prompt and affirmative actions as may be reasonably necessary in
obtaining such approvals and shall cooperate with each other in the preparation,
filing and prosecution of such applications as may be reasonably necessary, and
agree to furnish all information required by the approving entity, and to be
represented at such meetings or hearings as may be scheduled to consider such
applications. Without limiting in any respect the foregoing, each party agrees
to file mutually acceptable applications to all appropriate Governmental
Authorities for all consents or approvals required to consummate the
transactions hereunder within 45 days after the date of this Agreement. Buyer
further agrees that it will not, without the prior written consent of the
Sellers, take any action to amend or that would amend or modify any application
filed as provided in this Section 9.03 after the date that such application is
accepted as complete. In the event that Buyer amends or modifies any such
application for transfer of control of any Contracts or CATV Instruments without
the Sellers prior written consent, and the approval period for such transfer is
extended by any such Governmental Authority or other third party, then the
Sellers may (if they so elect) (i) extend the Outside Date in Section 12.01 to a
date that will give effect to any resulting delay or (ii) terminate this
Agreement under Section 12.02 hereof. The Sellers shall use commercially
reasonable efforts to include a provision in each consent referred to in this
Section 9.03 that permits Buyer to assign such contract to a wholly-owned
Subsidiary of Buyer subsequent to the Closing Date. If a governmental authority
refuses to include such a provision, the Sellers shall notify Buyer and Buyer
may discuss such refusal with the governmental authority; provided, however,
that upon such refusal, the Sellers shall have no further obligation to seek or
to obtain such a provision in the relevant contract.
9.04 Records, Taxes and Related Matters. The Sellers and Buyer shall
each make their respective books and records (including work papers in the
possession of their respective accountants) available for inspection by the
other party, or by its duly authorized representatives, for reasonable business
purposes at all reasonable times during normal business hours, for a seven year
period after the Closing Date with respect to all transactions of the CATV
Business occurring prior to or relating to the Closing, and the historical
financial condition, assets, liabilities, results of operation and cash flows of
the CATV Business for any period prior to the Closing. In the case of records
owned by the Sellers, such records shall be made available at the Sellers
executive office, and in the case of records owned by Buyer, such records shall
be made available at the office at which such records are maintained. As used in
this Section 9.04, the right of inspection includes the right to make copies at
the requesting parties' expense for reasonable business purposes.
9.05 Determination and Allocation of Consideration. Kane Reece
Associates, Inc. or such other nationally recognized appraiser as shall be
mutually acceptable to Sellers and Buyer (the "Appraiser") shall determine the
amount of (including any changes resulting from payments after the Closing Date)
and allocate the total consideration transferred from Buyer to the Sellers
pursuant to this Agreement in accordance with the fair market value of the
assets and liabilities transferred, as determined by the Appraiser. Buyer and
the Sellers shall file all necessary tax returns and forms in a manner
consistent with such allocation and shall not take any tax position inconsistent
therewith.
-24-
<PAGE>
9.06 Non-Assignment. Notwithstanding any provision to the contrary
contained herein (but not in limitation of the Sellers' obligations under
Section 9.03 or the conditions set forth in Section 7.01), the Sellers shall not
be obligated to assign to Buyer any Contract or CATV Instrument which provides
that it may not be assigned without the consent of the other party thereto and
for which such consent is not obtained, but in any such event, the Sellers
shall, to the extent reasonably necessary and at Buyer's cost, cooperate with
Buyer in any commercially reasonable arrangement designed to provide the
benefits thereof to Buyer. Without limiting the generality of any provision
elsewhere herein contained, the non-assignment of any of the foregoing shall
not, to the extent that it is otherwise an Assumed Liability hereunder, alter
its status as such or relieve Buyer of its obligations or liabilities with
respect thereto.
9.07 Real Estate Proration And Adjustment Items. Water and sewer
charges, municipal garbage and rubbish removal charges, rents, interest, real
estate taxes, utilities and other charges of an annual or recurrent nature
assessed against or paid in conjunction with the ownership or operation of any
real property owned by the Sellers to be transferred to Buyer hereunder shall be
prorated as of Closing Date. Real estate taxes shall be prorated as of the
Closing Date. Real estate taxes for the calendar year of Closing shall be
prorated based upon real estate taxes levied or estimated to be levied in that
year by each taxing body (without regard to the date of levy or the fiscal year
of the taxing body); provided, however, if any of such real estate taxes have
not yet been levied as of the Closing Date for the calendar year in which the
Closing Date occurs, the tax proration shall be based upon the prior year's tax
levy, taking into account any adjustments in real estate tax assessments which
may have been made.
9.08 Covenant Not to Compete. Sellers covenant and agree that for a
period of three years after Closing (or such period as allowed by law if less
than three years), Sellers will not, and will cause Cablevision Systems
Corporation and its Subsidiaries not to, acquire, manage, operate or control,
any cable television system, multichannel multipoint distribution system
("MMDS"), satellite master antenna system ("SMATV") or local multipoint
distribution system ("LMDS") within the Service Territory. Notwithstanding
anything contained herein, (i) the ownership of securities of any company which
is "publicly held" and which do not constitute more than five percent (5%) of
the voting rights or equity interests of such entity shall not constitute a
violation of this covenant and (ii) this Section 9.08 shall not be construed to
restrict ownership of entities in the direct broadcast satellite business or
wireless personal communications services business or ownership of licenses
related to the foregoing.
9.09 Remaining Franchises. In the event that a Closing under this
Agreement occurs without the receipt of all consents and approvals to transfer
all franchises, Buyer and Sellers covenant and agree to act in good faith to
obtain the approval or consent of any Governmental Authorities that have not
consented to the transfer of any franchises included in the CATV Business. Until
such time as approval or consent to transfer such franchises is obtain, Buyer
covenants and agrees to satisfy all obligations of Sellers arising after Closing
under the applicable franchise agreement. Buyer and Sellers agree to enter into
such agreements, including, without limitation, management agreements, as are
reasonably necessary to cause Sellers not to be in breach of Sellers'
obligations under the applicable franchise agreements and to permit Buyer to
receive the economic benefits of such franchise agreements.
10. Survival of Representations, Warranties, Covenants and Other Agreements;
Indemnification.
-25-
<PAGE>
10.01 Survival of Representations, Warranties, Covenants and Other
Agreements. All representations and warranties made by Buyer and the Sellers in
this Agreement shall survive the Closing for a period of six months, and shall
thereafter terminate with the exception of (i) Sections 3.05 and Section 3.06(a)
(relating to title matters) which shall survive for the applicable statute of
limitations periods and Section 3.06(d) which shall survive the Closing a for a
period of two years. The obligations to indemnify and hold harmless a party
hereto pursuant to this Article 10 shall terminate when the applicable
representation or warranty terminates pursuant to this Section 10.01; provided,
however, that such obligations to indemnify and hold harmless shall not
terminate with respect to any item as to which the person to be indemnified or
the related party thereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice of such claim (stating in
reasonable detail the basis of such claim) to the indemnifying party.
10.02 Indemnification by the Sellers.
------------------------------
(a) Subject to Section 10.01, the Sellers agree to indemnify,
defend and hold harmless Buyer, its affiliates and their respective
shareholders, directors, officers, partners, employees, agents,
successors and assigns (a "Seller Indemnified Party"), from and against
all losses, damages, liabilities, deficiencies or obligations,
including, without limitation, all claims, actions, suits, proceedings,
demands, judgments, assessments, fines, interest, penalties, costs and
expenses (including, without limitation, settlement costs and
reasonable legal fees) (collectively, "Losses") to which they may
become subject as a direct result of (x) the Excluded Liabilities, (y)
any and all misrepresentations or breaches of a representation or
warranty of the Sellers herein or the nonperformance or breach of any
covenants or agreements of the Sellers contained herein, or (z) the
ownership and operation of the Acquired Assets and the CATV Business
before the Closing.
(b) Any obligations of the Sellers under the provisions of
this Article 10 shall be paid promptly to a Seller Indemnified Party by
a Seller and shall represent a retrospective adjustment to the Purchase
Price. The amount of such payment (and adjustment) shall be an amount
in cash equal to the amount of the Loss incurred by a Seller
Indemnified Party on account of the matter for which indemnification is
required hereunder less any payments made or to be made to the Seller
Indemnified Party under any insurance, indemnity or similar policy or
arrangement. Notwithstanding anything contained herein to the contrary,
the indemnification provided above shall only apply to the extent that,
and not until, the aggregate of all amounts subject to indemnification
under this Section 10.02 and Section 10.02 of the Agreement and Plan of
Reorganization exceeds $10 million (in which event Buyer shall be
entitled to indemnification as provided herein for all such Losses and
not just the excess over $10 million) and as to any particular
indemnity claim or series of related indemnity claims only to the
extent that, and only if, such indemnity claim or series of related
indemnity claims equals or exceeds $100,000. In any event, the maximum
aggregate amount that the Sellers will be required to pay under this
Section 10.02 and that Holdings will be required to pay under Section
10.02 of the Agreement and Plan of Reorganization in respect of all
claims by all parties under both agreements is $100 million.
(c) In the event that Sellers elect to proceed to Closing at
any time that approvals and consents of Governmental Authorities to
transfer franchises which represent less than 90% of the Combined Basic
Subscribers shall not have been obtained, and prior to Closing
-26-
<PAGE>
Buyer gives written notice to Sellers that Buyer desires not to proceed
to Closing, Sellers agree to indemnify, defend and hold harmless the
Seller Indemnified Parties, from and against all losses, damages,
liabilities, deficiencies or obligations including, without limitation,
all Losses to which they may become subject as a result of such
election.
(d) In no event will a claim to be indemnified by Holdings
under the Agreement and Plan of Reorganization be entitled to
indemnification by Sellers under this Agreement. Buyer further
acknowledges and agrees that, should the Closing occur, its sole and
exclusive remedy with respect to any and all claims relating to this
Agreement and the transactions contemplated hereby shall be pursuant to
the indemnification provisions set forth in this Section 10.02. In
furtherance of the foregoing, Buyer hereby waives, from and after the
Closing, to the fullest extent permitted under applicable law, any and
all rights, claims and causes of action it may have against Holdings
and its affiliates arising under or based upon any Federal, state,
local or foreign statute, law, ordinance, rule or regulation or
otherwise (except pursuant to the indemnification provisions set forth
in this Section 10.02).
10.03 Indemnification by Buyer.
------------------------
(a) Buyer agrees to indemnify, defend and hold harmless
Sellers and their respective affiliates and their shareholders,
partners, directors, officers, employees, agents, successors and
assigns (a "Buyer Indemnified Party"), from and against all losses,
damages, liabilities, deficiencies or obligations including, without
limitation, all Losses to which they may become subject as a direct
result of: (i) any and all misrepresentations or breaches of a
representation herein or warranty or the nonperformance or breach of
any covenant or agreement of Buyer contained herein; (ii) the Assumed
Liabilities; or (iii) the ownership and operation of the Acquired
Assets and the CATV Business after the Closing. Any obligations of
Buyer under the provisions of this Article shall be paid promptly to
Buyer Indemnified Party by Buyer. Notwithstanding anything contained
herein to the contrary, the indemnification provided above shall apply
as to any particular indemnity claim or series of related indemnity
claims only to the extent that, and only if, such indemnity claim or
series of related indemnity claims equals or exceeds $100,000. In any
event, the maximum aggregate amount that Buyer will be required to pay
under this Section 10.03 and under Section 10.03 of the Agreement and
Plan of Reorganization in respect of all claims by all parties under
both agreements is $250 million.
(b) In the event that Buyer elects to proceed to Closing at
any time that approvals and consents of Governmental Authorities to
transfer franchises which represent less than 90% of the Combined Basic
Subscribers shall not have been obtained, and prior to Closing Sellers
give written notice to Buyer that they desire not to proceed to
Closing, Buyer agrees to indemnify, defend and hold harmless the Buyer
Indemnified Parties, from and against all losses, damages, liabilities,
deficiencies or obligations including, without limitation, all Losses
to which they may become subject as a result of such election.
(c) In no event will a claim to be indemnified by Buyer under
the Agreement and Plan of Reorganization be entitled to indemnification
by Buyer under this Agreement. Sellers further acknowledge and agree
that, should the Closing occur, their sole and exclusive remedy with
respect to any and all claims relating to this Agreement and the
transactions contemplated hereby shall be pursuant to the
indemnification provisions set forth in this
-27-
<PAGE>
Section 10.03. In furtherance of the foregoing, Sellers hereby waive,
from and after the Closing, to the fullest extent permitted under
applicable law, any and all rights, claims and causes of action they
may have against Buyer and its affiliates arising under or based upon
any Federal, state, local or foreign statute, law, ordinance, rule or
regulation or otherwise (except pursuant to the indemnification
provisions set forth in this Section 10.03).
10.04 Third Party Claims. If any claim ("Asserted Claim") covered by
the foregoing indemnities is asserted against any indemnified party
("Indemnitee"), it shall be a condition to the obligations under this Article
that the Indemnitee shall promptly give the indemnifying party ("Indemnitor")
notice thereof in accordance with Section 13.06. The Indemnitee shall give
Indemnitor an opportunity to control negotiations toward resolution of such
claim without the necessity of litigation, and, if litigation ensues, to defend
the same with counsel reasonably acceptable to Indemnitee, at Indemnitor's
expense, and Indemnitee shall extend reasonable cooperation in connection with
such defense. If the Indemnitor fails to assume control of the negotiations
prior to litigation or to defend such action within a reasonable time,
Indemnitee shall be entitled, but not obligated, to assume control of such
negotiations or defense of such action, and Indemnitor shall be liable to the
Indemnitee for its expenses reasonably incurred in connection therewith which
Indemnitor shall promptly pay. Neither Indemnitor nor Indemnitee shall settle,
compromise, or make any other disposition of any Asserted Claims, which would or
might result in any liability to Indemnitee or Indemnitor, respectively, under
this Article 10 without the written consent of Indemnitee or Indemnitor,
respectively, which shall not be unreasonably withheld.
11. Further Assurances.
From time to time after the Closing, each party will execute and
deliver such other instruments of conveyance and transfer, fully cooperate with
the other party and take such other actions as the other party reasonably may
request to effect the purposes and intent of this Agreement.
12. Closing.
12.01 Closing. The Closing shall take place at the offices of Sullivan
& Cromwell, 125 Broad Street, New York, New York at 10:00 a.m., local time, on
the date which is (i) the fifth business day after all consents required as
conditions to the sale as provided in Section 7.01 have been received or, if
permitted under applicable law, waived, and (ii) designated by Buyer or Sellers
in a written notice to the other specifying that all conditions to Closing
(other than those that can only be satisfied at Closing) have been satisfied or
waived (the "Closing Date"); provided, however, that if the Closing shall not
have occurred prior to December 21, 2000 or as extended pursuant to Section 9.03
(the "Outside Date"), this Agreement shall terminate unless otherwise provided
by the mutual written agreement of Buyer and Sellers; provided, further,
however, that in no event shall the Closing under this Agreement occur unless it
shall occur simultaneously with the Closing as defined in the Agreement and Plan
of Reorganization. If, as of the Outside Date, the Closing cannot be effected,
all parties hereto shall be released from all obligations hereunder other than
obligations arising from a breach or default hereunder, and each party hereto
will bear expenses as provided in Section 13.07 hereof. At the Closing, the
parties hereto shall execute and deliver all instruments and documents as shall
be necessary in the reasonable opinion of counsel for the respective parties to
consummate the transactions contemplated herein.
-28-
<PAGE>
12.02 Termination. In addition to the termination provided for in
Section 12.01, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned:
(a) At any time, by the mutual written agreement of Buyer and
Sellers;
(b) By Buyer, upon and effective as of the date of written
notice to Sellers, if any of the conditions to the obligations of
Sellers set forth in Article 7 shall not have been waived or materially
satisfied at the time of the Closing or, if applicable, the Outside
Date, as the case may be;
(c) By Sellers, upon and effective as of the date of written
notice to Buyer, if any of the conditions to the obligations of Sellers
set forth in Article 8 shall not have been waived or materially
satisfied at the time of the Closing or, if applicable, the Outside
Date, as the case may be;
(d) By Sellers or Buyer, upon and effective as of the
date of written notice to the other, pursuant to the termination
provisions of Section 9.02; or
(e) By Sellers, upon and effective as of the date of written
notice to Buyer, pursuant to the termination provisions of Section
9.03.
13. Miscellaneous.
13.01 Amendments; Waivers. This Agreement cannot be changed or
terminated orally and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the party hereto sought to be charged
with such waiver or consent. No waiver of any term or provision hereof shall be
construed as a further or continuing waiver of such term or provision or any
other term or provision. Any condition to the performance of any party hereto
which may legally be waived at or prior to the Closing may be waived in writing
at any time by the party or parties entitled to the benefit thereof.
13.02 Entire Agreement. This Agreement sets forth the entire
understanding and agreement of the parties and supersedes any and all prior
agreements, memoranda, arrangements and understandings relating to the subject
matter hereof other than the Confidentiality Agreement referred to in Section
5.02(a). No representation, warranty, promise, inducement or statement of
intention has been made by any party which is not contained in this Agreement,
and no party shall be bound by, or be liable for, any alleged representation,
promise, inducement or statement of intention not contained herein or therein.
13.03 Cablevision Name. The parties agree that the Sellers and their
respective affiliates shall retain the right to use the names "Cablevision,"
"Cablevision Systems," "Optimum," "Optimum Cable" or any and all derivations
thereof or any name which may include any of such terms, and after the Closing,
Buyer shall remove or delete the names "Cablevision," "Cablevision Systems,"
"Optimum," "Optimum Cable," "Optimum TV" or any and all derivations thereof or
any name which may include any of such terms from the Acquired Assets as soon as
reasonably practicable but in any event by the 60th day following the Closing.
From and after the 60th day following the Closing, Sellers and their respective
affiliates shall retain the sole and exclusive right to use the names
-29-
<PAGE>
"Cablevision," "Cablevision Systems," "Optimum," "Optimum Cable" or any and all
derivations thereof or any name which may include any of such terms.
13.04 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto; provided, however, that Buyer
may assign its rights under this Agreement to one or more Subsidiaries of Buyer
with respect to which Buyer owns at least 66 2/3% of the Voting Stock, without
the prior written consent of the Sellers, provided Buyer remains liable to fully
perform the obligations and terms of this Agreement.
13.05 Construction; Counterparts. The Article and Section headings of
this Agreement are for convenience of reference only and do not form a part
hereof and do not in any way modify, interpret or construe the intentions of the
parties. This Agreement may be executed in one or more counterparts, and all
such counterparts shall constitute one and the same instrument.
13.06 Notices. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given to a party when delivered in
person, faxed (with confirmation) or three business days after such notice is
enclosed in a properly sealed envelope, certified or registered, and deposited
(postage and certification or registration prepaid) in a post office or
collection facility regularly maintained by the United States Postal Service, or
one business day after delivery to a nationally recognized overnight courier
service, and addressed as follows:
If to Sellers: Telerama, Inc.
Cablevision of Cleveland, L.P.
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
copies to: Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
Attention: John P. Mead
If to Buyer: Colin H. Higgin
-30-
<PAGE>
Adelphia Communications Corporation
One North Main Street
Coudersport, Pennsylvania 16915
Telephone: (814) 274-6446
Facsimile: (814) 274-6586
Attention: Deputy General Counsel
copies to: Buchanan Ingersoll P.C.
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania 15219
Telephone: (412) 562-8339
Facsimile: (412) 562-1041
Attention: Bruce I. Booken
Any party may change its address for the purpose of notice by giving notice in
accordance with the provisions of this Section 13.06.
13.07 Expenses of the Parties. Except as otherwise provided herein, all
expenses incurred by or on behalf of the parties hereto in connection with the
authorization, preparation and consummation of this Agreement, including,
without limitation, all fees and expenses of agents, representatives, counsel
and accountants employed by the parties hereto in connection with the
authorization, preparation, execution and consummation of this Agreement shall
be borne solely by the party who shall have incurred the same. Buyer, on the one
hand, and Sellers, on the other hand, agree to share equally the filing fee
payable under the HSR Act and Rules.
13.08 Non-Recourse. No partner, officer, director, shareholder or other
holder of an ownership interest of or in any party to this Agreement shall have
any personal liability in respect of any such party's obligations under this
Agreement by reason of his or its status as such partner, officer, director,
shareholder or other holder.
13.09 Third Party Beneficiary. This Agreement is entered into only for
the benefit of the parties and their respective successors and assigns, and
nothing hereunder shall be deemed to constitute any person a third party
beneficiary to this Agreement.
13.10 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF NEW YORK.
13.11 Press Releases. No press release or other public information
relating to the purchase and sale contemplated in this Agreement shall be made
or disclosed by either party hereto without the consent of the other party;
provided, however, that either party may disclose such information if reasonably
deemed to be required by law by the legal counsel for such party; provided
further that such party shall notify the other as soon as reasonably practicable
prior to the issuance of such press release.
-31-
<PAGE>
13.12 Severability. If any provision of this Agreement is finally
determined to be illegal, void or unenforceable, such determination shall not,
of itself, nullify this Agreement which shall continue in full force and effect
subject to the conditions and provisions hereof.
13.13 Specific Performance. So long as Buyer is not then in breach or
in default of its obligations under this Agreement, Buyer shall be entitled to
require Sellers to specifically perform and consummate the transactions
described herein in accordance with this Agreement in the event of a failure by
Sellers to perform their respective obligations hereunder.
(SIGNATURE PAGE FOLLOWS)
-32-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SELLERS:
TELERAMA, INC.
By: /s/ William J. Bell
Name: William J. Bell
Title: Vice President
CABLEVISION OF CLEVELAND, L.P.
By: Cablevision of Cleveland G.P., Inc.
By: /s/ William J. Bell
Name: William J. Bell
Title: Vice Chairman
BUYER:
ADELPHIA COMMUNICATIONS CORPORATION
By: /s/ James R. Brown
Name: James R. Brown
Title: Vice President
-33-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
SELLERS
State of
Name Type of Entity Organization Qualified
- ----
<S> <C> <C> <C>
Telerama, Inc. Corporation Delaware Ohio
Cablevision of Cleveland, L.P. Limited Partnership Delaware Ohio
-1-
</TABLE>
<PAGE>
EXHIBIT B
SERVICE TERRITORY
-2-
<PAGE>
EXHIBIT C
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Agreement") is dated [Date], and made
by and between Telerama, Inc., a Delaware corporation ("Telerama"), Cablevision
of Cleveland, L.P., a Delaware limited partnership ("Cleveland" and together
with Telerama, the "Sellers" and individually, a "Seller") and Adelphia
Communications Corporation, a Delaware corporation ("Buyer").
R E C I T A L S:
A. The Sellers and Buyer have entered into that certain Asset Purchase
Agreement dated December 8, 1999 (the "Purchase Agreement"), whereby Buyer is
acquiring substantially all of the assets, and assuming certain of the
obligations and liabilities, of the Sellers upon the terms and conditions more
fully set forth therein.
B. In connection with the Purchase Agreement and to more fully
effectuate the transactions contemplated thereunder, the parties hereto are
entering into this Agreement for the assumption by Buyer of the "Assumed
Liabilities," as defined in the Purchase Agreement, pursuant to Section 2.05 of
the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and the Purchase Agreement and for other good and
valuable consideration, the receipt, sufficiency and adequacy of which is hereby
acknowledged, the parties hereto covenant and agree as follows (all capitalized
terms used in this Agreement and not defined herein shall have the same meanings
ascribed to them in the Purchase Agreement):
1. Incorporation of Recitals. The recitals set forth above constitute
an integral part of this Agreement and are incorporated herein by reference.
2. Assumption. As partial consideration for Buyer's receipt of the
Acquired Assets, Buyer hereby assumes and covenants to abide by and agrees to
pay, discharge, perform and fulfill, as and when due or required, all of the
Assumed Liabilities.
3. Sellers Liability. Buyer acknowledges and agrees that the Sellers
shall have no further obligation with respect to the Assumed Liabilities,
whether by contract or otherwise, and that Buyer shall pay, discharge and
perform all of the Assumed Liabilities as and when the same are or shall become
due or required. Buyer shall indemnify each Seller and its partners, officers,
employees, agents, successors and assigns, and, with respect to a Seller's
partners, their respective partners, shareholders, directors, officers,
employees, agents, successors and assigns in accordance with Sections 10.03 and
10.04 of the Purchase Agreement from and against, among other things, the
Assumed Liabilities.
4. Amendments; Waivers. This Agreement cannot be changed or
terminated orally and no waiver of compliance with any provision or condition
hereof and no consent provided for herein shall be effective unless evidenced by
an instrument in writing duly executed by the party
-1-
<PAGE>
hereto sought to be charged with such waiver or consent. No waiver of any term
or provision hereof shall be construed as a further or continuing waiver of such
term or provision or any other term or provision.
5. Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned by any party without the
prior written consent of the other parties hereto.
6. Third Party Beneficiary. This Agreement is entered into only for
the benefit of the parties and their respective successors and assigns, and
nothing hereunder shall be deemed to constitute any person a third party
beneficiary to this Agreement.
7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF
CONFLICTS, OF THE STATE OF NEW YORK.
8. Severability. If any provision of this Agreement is finally
determined to be illegal, void or unenforceable such determination shall not, of
itself, nullify this Agreement which shall continue in full force and effect
subject to the conditions and provisions hereof.
9. Construction; Counterparts. The Section headings of this Agreement
are for convenience of reference only and do not form a part hereof and do not
in any way modify, interpret or construe the intentions of the parties. This
Agreement may be executed in one or more counterparts, and all such counterparts
shall constitute one and the same instrument.
10. Notices. All notices and communications hereunder shall be in
writing and shall be deemed to have been duly given to a party when delivered in
person, faxed (with confirmation) or three business days after such notice is
enclosed in a properly sealed envelope, certified or registered, and deposited
(postage and certification or registration prepaid) in a post office or
collection facility regularly maintained by the United States Postal Service, or
one business day after delivery to a nationally recognized overnight courier
service, and addressed as follows:
If to Seller: Telerama, Inc.
Cablevision of Cleveland, L.P.
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
copies to: Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, New York 11714
Telephone: (516) 803-2300
Facsimile: (516) 803-2577
Attention: General Counsel
-2-
<PAGE>
and
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telephone: (212) 558-4000
Facsimile: (212) 558-3588
Attention: John P. Mead
If to Buyer: Colin H. Higgin
Adelphia Communications Corporation
One North Main Street
Coudersport, Pennsylvania 16915
Telephone: (814) 274-6446
Facsimile: (814) 274-6586
Attention: Deputy General Counsel
Combined copies to: Buchanan Ingersoll P.C.
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania 15219
Telephone: (412) 562-8339
Facsimile: (412) 562-1041
Attention: Bruce I. Booken
Combined Any party may change its address for the purpose of notice by giving
notice in accordance with the provisions of this Section 10.
(SIGNATURE PAGE FOLLOWS)
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLERS:
Telerama, Inc.
By:
Name:
Title:
Cablevision of Cleveland, L.P.
[Name of GP]
By:
Name:
Title:
BUYER:
Adelphia Communications Corporation
By:
Name:
Title:
-4-
<PAGE>
EXHIBIT D
BILL OF SALE AND GENERAL ASSIGNMENT1
-----------------------------------
KNOW ALL PERSONS BY THESE PRESENTS, that Telerama, Inc., a Delaware
corporation ("Telerama"), Cablevision of Cleveland, L.P., a Delaware limited
partnership ("Cleveland" and together with Telerama, the "Sellers" and
individually, a "Seller"), for and in consideration of the Purchase Price (as
hereinafter defined), and other good and valuable consideration to it paid by
Adelphia Communications Corporation a Delaware corporation ("Buyer"), the
receipt, sufficiency and adequacy of which are hereby acknowledged, do hereby
bargain, sell, assign, transfer, convey and deliver unto Buyer, the "Acquired
Assets" as defined in that certain Asset Purchase Agreement made by and between
Sellers and Buyer, dated as of December 8, 1999 (the "Purchase Agreement"),
other than real property held in fee by Seller. Any capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Purchase Agreement.
Except as expressly provided in the Purchase Agreement, each Seller
hereby expressly disclaims any and all warranties or representations made to
Buyer, whether relating to the condition, the operation, the adequacy or
otherwise of the personal property which is part of the Acquired Assets. IN THAT
CONNECTION, EXCEPT AS EXPRESSLY PROVIDED IN THE PURCHASE AGREEMENT, BUYER HEREBY
AGREES THAT IT WILL ACCEPT THE PERSONAL PROPERTY WHICH IS PART OF THE ACQUIRED
ASSETS "AS IS" AND "WHERE IS." EXCEPT AS AFORESAID, NO SELLER MAKES ANY WARRANTY
OR REPRESENTATION WHATSOEVER, EITHER ORAL OR WRITTEN, OR EXPRESS OR IMPLIED, AS
TO MERCHANTABILITY OR THE CONDITION OF THE PERSONAL PROPERTY WHICH IS PART OF
THE ACQUIRED ASSETS OR THE FITNESS OR SUITABILITY THEREOF FOR ANY PARTICULAR OR
GENERAL USE OR PURPOSE EXCEPT AS EXPRESSLY PROVIDED IN THE PURCHASE AGREEMENT.
Each Seller covenants that it will execute and deliver such documents
as may be necessary to evidence and effect the sale, transfer, conveyance and
assignment of the personal property which is part of the Acquired Assets to
Buyer.
This Bill of Sale and General Assignment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, taken
together, shall constitute one and the same instrument.
This Bill of Sale and General Assignment shall be binding upon and
inure to the benefit of Buyer and Seller and their respective successors and
permitted assigns under the Purchase Agreement. This Bill of Sale and General
Assignment may not otherwise be assigned by any party without the prior written
consent of the other party hereto. Further, nothing set forth herein shall be
deemed to constitute any person or entity as a third party beneficiary of this
Bill of Sale and General Assignment.
- --------
1 This form must be reviewed by local counsel.
-1-
<PAGE>
THIS BILL OF SALE AND GENERAL ASSIGNMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, each Seller has caused this Bill of Sale and
General Assignment to be executed and delivered on this [Day] day of [Month],
2000.
SELLERS:
Telerama, Inc.
By:
Name:
Title:
Cablevision of Cleveland, L.P.
[Name of GP]
By:
Name:
Title:
DULY ACKNOWLEDGED AND AGREED TO AS
OF THE DATE FIRST SET FORTH ABOVE:
BUYER:
Adelphia Communications Corporation
By:
Name:
Title:
-2-
<PAGE>
EXHIBIT E
[FORM OF OPINION OF SELLER'S COUNSEL]
[Date]
[Name and Address of Buyer]
Ladies and Gentlemen:
[Introduction]
1. Each Seller is duly organized and validly existing under the laws of
its respective jurisdiction as listed in Schedule I hereto with all requisite
power and authority to conduct its business and operations as presently
conducted.
2. Each Seller has all requisite power and authority to execute, deliver
and perform the Asset Purchase Agreement and all documents contemplated therein
to be executed and delivered by such Seller (collectively, the "Documents"). The
execution, delivery and performance of the Asset Purchase Agreement and the
other Documents have been duly authorized by all necessary action by each
Seller. The Asset Purchase Agreement and the other Documents have each been duly
executed and delivered by Seller and each is the valid and legally binding
obligation of each Seller enforceable against Seller in accordance with their
respective terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
3. After the inquiry described herein, I have no knowledge of any
consents which are required in connection with either Seller's performance of
the Asset Purchase Agreement other than those referred to in the Agreement,
including, without limitation, Schedule 3.02 of the Asset Purchase Agreement.
4. The execution, delivery and performance by each Seller of the Asset
Purchase Agreement and the other Documents do not contravene such Seller's
organizational documents.
5. The instruments of transfer and conveyance delivered by the Sellers to
Buyer at Closing are in form sufficient under Ohio law to effect the transfer of
title to the Acquired Assets in accordance with the Agreement. Based solely on
search reports received from [Lexis Document Services] for UCC liens filed with
the Ohio Secretary of State and the Recorder of [County],
-1-
<PAGE>
[County] and [County] Counties, there are no Encumbrances other than Permitted
Encumbrances on the personal property which is a part of the Acquired Assets.
[Conclusion]
Very truly yours,
[Seller's Counsel]
-2-
<PAGE>
EXHIBIT F
[FORM OF OPINION OF BUYER'S COUNSEL]
[Date]
[Name and Address of Buyer]
Ladies and Gentlemen:
[Introduction]
1. Buyer is a duly organized and validly existing under the law of the
State of Delaware with all requisite corporate power and authority to conduct
its business and operations as presently conducted.
2. Buyer has all requisite power and authority to execute, deliver and
perform the Asset Purchase Agreement and all documents contemplated therein to
be executed and delivered by Seller (collectively, the "Documents"). The
execution, delivery and performance of the Asset Purchase Agreement and the
other Documents have been duly authorized by all necessary action by Buyer. The
Asset Purchase Agreement and the other Documents have each been duly executed
and delivered by Buyer and each is the valid and legally binding obligation of
Buyer enforceable against Buyer in accordance with their respective terms
subject to insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
3. After the inquiry described herein, I have no knowledge of any
consents which are required in connection with Buyer's performance of the Asset
Purchase Agreement other than those referred to in the Agreement, including,
without limitation, Schedule 3.02 of the Asset Purchase Agreement.
4. The execution, delivery and performance by Buyer of the Asset
Purchase Agreement and the other Documents do not contravene Buyer's
organizational documents.
[Conclusion]
Very truly yours,
[Buyer's Counsel]
-1-
<PAGE>
EXHIBIT 10.119
REVOLVING CREDIT AND TERM LOAN AGREEMENT,
dated as of October 5, among
HARRON COMMUNICATIONS CORP.,
THE SUBSIDIARY GUARANTORS
REFERRED TO ON THE SIGNATURE PAGES HEREOF,
FIRST UNION NATIONAL BANK AS AGENT,
FIRST UNION SECURITIES, INC. AS LEAD ARRANGER
AND THE LENDERS
REFERRED TO ON THE SIGNATURE PAGES HEREOF
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
-i-
TABLE OF CONTENTS
<S> <C>
Background of Agreement...........................................................................................................1
Article 1 DEFINITIONS.....................................................................................................1
1.1 Defined Terms...................................................................................................1
1.2 Calculations and Financial Data................................................................................21
Article 2. THE LOANS......................................................................................................21
2.1. Revolving Credit Loans.........................................................................................21
2.1.1 Commitment to Lend.............................................................................................22
2.1.2 Reduction of Commitment........................................................................................22
2.2 Term Loans.....................................................................................................24
2.2.1 Commitment to Lend.............................................................................................24
2.3 The Notes......................................................................................................24
2.4 Manner of Effecting a Borrowing................................................................................25
2.4.1 Borrowing Notice...............................................................................................25
2.4.2 Funding Procedure..............................................................................................25
2.4.3 Obligations Suspended During Default...........................................................................25
2.4.4 Several Obligations to Lend....................................................................................25
2.4.5 Permitted Assumptions by Agent.................................................................................26
2.5 Prepayments and Repayments.....................................................................................27
2.5.1 Voluntary Prepayments of Term Loans or Revolving Credit Loans..................................................27
2.5.2 Mandatory Prepayments of Term Loans or Reductions of Revolving Credit
Commitment in Connection With Certain Dispositions of Assets............................................28
2.5.3 Scheduled Repayments of the Term Loans.........................................................................28
2.5.4 Effect of Other Term Loan Prepayments on Scheduled Repayments of the Term
Loans...................................................................................................28
2.5.5 Prepayments of Revolving Credit Loans In Connection With Commitment
Reductions; Revolving Credit Maturity Date............................................................29
2.5.6 Application of Prepayments and Repayments......................................................................29
2.5.7 Interest and Breakage Costs on LIBOR Loans.....................................................................29
2.5.8 Final Maturity.................................................................................................29
2.6 Interest.......................................................................................................29
2.6.1 Interest Rate Options..........................................................................................29
2.6.2 Calculation and Payment of Interest............................................................................29
2.6.3 Applicable Margin..............................................................................................30
2.6.4 Manner of Election of Interest Rate and Interest Period........................................................31
2.6.5 Certain Limitations............................................................................................31
2.6.6 Default Rate...................................................................................................32
2.7 Additional Provisions Respecting Rates and Costs...............................................................32
2.7.1 Mandatory Suspension and Conversion of LIBOR Loans.............................................................32
2.7.2 Regulatory Changes; Increased Costs............................................................................33
2.7.3 Capital Requirements...........................................................................................34
2.7.4 Funding Losses.................................................................................................34
2.7.5 Determinations.................................................................................................34
2.7.6 Change of Lending Office.......................................................................................35
2.7.7 Replacement of Lenders.........................................................................................35
2.7.8 Flexibility Respecting Source of Funds.........................................................................35
2.8 Fees...........................................................................................................36
2.8.1 Commitment Fees................................................................................................36
2.8.2 Other Fees.....................................................................................................36
2.9 Payments to the Agent..........................................................................................36
2.9.1 Method of Payment..............................................................................................36
2.9.2 Pro Rata Application...........................................................................................37
2.9.3 Permitted Assumptions by Agent.................................................................................37
2.10 Taxes..........................................................................................................37
2.10.1 Taxes Payable by the Borrower..................................................................................38
2.10.2 Reimbursement of Taxes Payable by any Lender or the Agent......................................................38
2.10.3 Exemption from U.S. Withholding Taxes..........................................................................38
Article 3 SUBSIDIARY GUARANTEES..........................................................................................39
3.1 Guaranty of Payment............................................................................................39
3.1.1 Guaranty.......................................................................................................39
3.1.2 Limitation.....................................................................................................40
3.2 Obligations of Subsidiary Guarantors Absolute, Etc.............................................................40
3.3 Continuing Guaranty............................................................................................41
3.4 Joint and Several Liability....................................................................................41
3.5 Waivers........................................................................................................41
3.5.1 In General.....................................................................................................41
3.5.2 Subrogation....................................................................................................41
3.6 Additional Subsidiary Guarantors...............................................................................42
3.7 Termination of Guaranty........................................................................................42
3.7.1 Termination of Guaranty In General.............................................................................42
3.7.2 Termination of Guaranty Obligations of Sold Subsidiary Guarantors..............................................42
3.8 No Election; Enforcement.......................................................................................42
CONDITIONS OF INITIAL FUNDING....................................................................................................43
4.1 Conditions to Initial Funding..................................................................................43
4.1.1 Secretary's Certificate........................................................................................43
4.1.2 Organizational Documents.......................................................................................43
4.1.3 Good Standing Certificates.....................................................................................43
4.1.4 The Notes......................................................................................................43
4.1.5 Officer's Compliance Certificate...............................................................................43
4.1.6 Lien Searches..................................................................................................43
4.1.7 Pledge Agreement...............................................................................................44
4.1.9 Insurance......................................................................................................44
4.1.10 [intentionally omitted]........................................................................................44
4.1.11 Opinion of Counsel.............................................................................................44
4.1.12 Consents and Approvals.........................................................................................44
4.1.13 [intentionally omitted]........................................................................................44
4.1.16 ...............................................................................................................45
4.1.17 [..............................................................................................................45
4.1.20 Absence of Material Litigation.................................................................................45
4.1.21 Absence of Default; Truth of Representations...................................................................45
4.1.22 Additional Information.........................................................................................45
4.2 Conditions to Each Loan........................................................................................45
4.2.1 Conditions. .................................................................................................45
4.2.2 Methods of Satisfying Certain Conditions.......................................................................46
Article 5 REPRESENTATIONS AND WARRANTIES.................................................................................46
5.1 Representations of Borrower and Subsidiaries...................................................................46
5.1.1 Organization; Qualification....................................................................................46
5.1.2 Stock Ownership................................................................................................46
5.1.4 Power and Authority............................................................................................47
5.1.5 No Violation of Agreements.....................................................................................47
5.1.6 Recording, Enforceability and Consent..........................................................................47
5.1.7 Litigation.....................................................................................................48
5.1.8 No Burdensome Agreements; Material Agreements..................................................................48
5.1.9 Condition of Property..........................................................................................48
5.1.10 Licenses.......................................................................................................48
5.1.11 Title to Properties; Liens.....................................................................................49
5.1.13 Business.......................................................................................................49
5.1.14 Compliance with Law............................................................................................49
5.1.15 Absence of Default.............................................................................................50
5.1.16 Financial Statements; Projections; Material Adverse Change.....................................................50
5.1.17 Tax Returns and Payments.......................................................................................50
5.1.18 Indebtedness...................................................................................................50
5.1.19 Federal Reserve Regulations....................................................................................50
5.1.20 Investment Company Act.........................................................................................50
5.1.21 Public Utility Holding Company Act.............................................................................51
5.1.22 Compliance with ERISA..........................................................................................51
5.1.23 Disclosure.....................................................................................................52
5.1.24 Environmental Compliance.......................................................................................52
5.1.25 Year 2000......................................................................................................53
6.1 Financial Data.................................................................................................54
6.1.1 Financial Information..........................................................................................54
6.1.2 Quarterly Financial Statements.................................................................................54
6.1.3 Annual Financial Statements....................................................................................55
6.1.4 Certain Certificates to be Delivered With All Financial Statements.............................................55
6.1.5 Annual Business Plan...........................................................................................55
6.2 Ongoing Reporting Requirements.................................................................................56
6.2.1 Financial Reports..............................................................................................56
6.2.2 ERISA Information..............................................................................................56
6.2.3 Notice of Defaults, Material Adverse Change, Etc...............................................................56
6.2.4 Changes Affecting Security.....................................................................................56
6.2.5 Conditions Affecting Franchises................................................................................57
6.2.7 Certain Environmental Matters..................................................................................57
6.2.8 Litigation.....................................................................................................57
6.2.9 Miscellaneous..................................................................................................57
6.3 Disclosure.....................................................................................................57
Article 7 FINANCIAL COVENANTS............................................................................................58
7.1 Interest Coverage Ratio........................................................................................58
7.2 Debt Service Coverage Ratio....................................................................................58
7.3 Leverage Ratio.................................................................................................58
7.4 Fixed Charges Coverage Ratio...................................................................................59
7.5 Rebuild Capital Expenditure Limit..............................................................................59
Article 8 GENERAL AFFIRMATIVE COVENANTS..................................................................................59
8.1 Existence......................................................................................................59
8.2 Legal Requirements; Maintenance of Properties..................................................................60
8.3 Payment of Taxes and Claims....................................................................................60
8.4 Insurance......................................................................................................60
8.4.1 Type of Insurance..............................................................................................60
8.4.2 Application of Proceeds........................................................................................61
8.4.3 Evidence of Insurance..........................................................................................61
8.5 Interest Rate Protection Agreements............................................................................61
8.6 Inspection.....................................................................................................61
8.7 Exchange of Notes..............................................................................................62
8.8 Consistent Action..............................................................................................62
8.9 FCC and PUC Filings............................................................................................62
8.10 Purpose........................................................................................................62
8.11 [intentionally omitted]........................................................................................62
8.12 Additional Subsidiary Guarantors; Certain Obligations Respecting Subsidiary Guarantors.........................62
8.12.1 Joinder of Additional Subsidiary Guarantors....................................................................62
8.12.2 Subsidiaries to be Direct Wholly-Owned.........................................................................63
8.13 [intentionally omitted]........................................................................................63
8.14 [intentionally omitted]........................................................................................63
8.15 Disconnect, Etc................................................................................................63
8.16 Further Assurances.............................................................................................63
Article 9 GENERAL NEGATIVE COVENANTS.....................................................................................64
9.1 Indebtedness...................................................................................................64
9.1.1 Limitations on Indebtedness....................................................................................64
9.1.2 No Default.....................................................................................................64
9.2 Liens..........................................................................................................64
9.2.1 Limitation on Liens............................................................................................65
9.2.2 Sharing of Liens...............................................................................................66
9.3 Modification of Certain Documents..............................................................................66
9.4 Investments and Acquisitions...................................................................................66
9.5 Restricted Payments............................................................................................69
9.6 Transactions with Affiliates...................................................................................69
9.7 Sales or Other Dispositions of Assets, Etc.....................................................................69
9.8 Management; Control............................................................................................71
9.9 [intentionally omitted]........................................................................................71
9.10 Stock Issuance.................................................................................................71
9.11 Compliance with Federal Reserve Regulations....................................................................72
9.12 Limitations on Restrictive Covenants...........................................................................72
9.13 Environmental Matters..........................................................................................72
9.14 ERISA..........................................................................................................72
9.15 Type of Business...............................................................................................73
Article 10 EVENTS OF DEFAULT..............................................................................................74
10.1 Events of Default..............................................................................................74
10.1.1 Failure to Pay Principal.......................................................................................74
10.1.2 Failure to Pay Interest, Fees and Other Amounts................................................................74
10.1.3 Cross-Default..................................................................................................74
10.1.4 Representations and Warranties Untrue..........................................................................75
10.1.5 Covenant Defaults..............................................................................................75
10.1.6 Invalidity or Noncompliance With Loan Documents................................................................75
10.1.7 Judgment.......................................................................................................75
10.1.8 Insolvency, Bankruptcy, Etc....................................................................................75
10.1.9 Revocation of Franchises.......................................................................................76
10.1.10 Material Adverse Effect........................................................................................77
10.1.11 Change of Control..............................................................................................77
10.2 Acceleration; Remedies.........................................................................................77
10.2.1 Acceleration; General Remedies.................................................................................77
10.2.2 Equitable Remedies.............................................................................................77
10.2.3 Appointment of Receiver........................................................................................77
10.2.4 Remedies Cumulative............................................................................................78
10.2.5 Special Provisions Respecting FCC Licenses and Other Franchises................................................78
Article 11 AGENT..........................................................................................................80
11.1 Authority......................................................................................................80
11.2 Expenses; Indemnification......................................................................................80
11.3 Exculpatory Provisions.........................................................................................80
11.4 Investigation by Lenders.......................................................................................81
11.5 Amendments, Waivers and Consents...............................................................................81
11.6 Action Upon Defaults...........................................................................................82
11.6.1 Acceleration...................................................................................................82
11.6.2 Collateral.....................................................................................................82
11.7 Instructions...................................................................................................82
11.8 Resignation; Termination.......................................................................................82
11.9 Sharing........................................................................................................83
11.10 Other Relationships............................................................................................83
Article 12 MISCELLANEOUS..................................................................................................84
12.1 Notices........................................................................................................84
12.2 Duration; Survival.............................................................................................84
12.3 No Implied Waiver..............................................................................................84
12.4 Entire Agreement and Amendments................................................................................85
12.4.1 Entire Agreement...............................................................................................85
12.4.2 Amendments; Waivers............................................................................................85
12.5 Successors and Assigns.........................................................................................86
12.5.1 Assignments by the Borrower....................................................................................86
12.5.2 Participation..................................................................................................86
12.5.3 Assignments by Lenders.........................................................................................87
12.5.4 Procedures Respecting Assignment...............................................................................87
12.5.5 Assignments to Federal Reserve Bank............................................................................88
12.6 Descriptive Headings...........................................................................................88
12.7 Governing Law..................................................................................................88
12.8 Holidays.......................................................................................................88
12.9 Counterparts...................................................................................................88
12.10 Maximum Lawful Interest Rate...................................................................................88
12.11 Set-off........................................................................................................89
12.12 Severability...................................................................................................89
12.13 Non-Merger of Remedies.........................................................................................89
12.14 Payment and Reimbursement of Costs and Expenses; Indemnification...............................................90
12.15 Certain Matters Respecting Secured Obligations.................................................................91
12.15.1 Limitation on Amount...........................................................................................92
12.15.2 Termination....................................................................................................93
12.16 Consent to Jurisdiction, Service and Venue; Waiver of Jury Trial...............................................93
</TABLE>
<PAGE>
-36-
PHADMIN\264331\8
PHADMIN\264331\8
REVOLVING CREDIT AND TERM LOAN AGREEMENT
REVOLVING CREDIT AND TERM LOAN AGREEMENT dated as of October
5, 1999, among: HARRON COMMUNICATIONS CORP., a New York corporation (the
"Borrower"); each of the Subsidiaries of the Borrower identified under the
caption "SUBSIDIARY GUARANTORS" on the signature pages hereto or which, pursuant
to Section 8.12 hereof, shall become a "Subsidiary Guarantor" hereunder
(individually, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
Guarantors"); each of the lenders identified under the caption "LENDERS" on the
signature pages hereto (including, without limitation, First Union National Bank
in such capacity) or which, pursuant to Section 12.5 hereof, shall become a
"Lender" hereunder (individually, a "Lender" and, collectively, the "Lenders");
and FIRST UNION NATIONAL BANK, a national banking association, as agent for the
Lenders (in such capacity, together with its successors in such capacity, the
"Agent"). First Union Securities, Inc. served as Lead Arranger for the
transaction contemplated hereby.
Background of Agreement
The Borrower and the Subsidiary Guarantors are engaged as an
integrated group in the business of providing cable television and related
telecommunications services and rely upon the Borrower to obtain financing for
their group.
The Borrower and the Subsidiary Guarantors have requested that
the Lenders provide a credit facility in an aggregate principal amount not to
exceed Three Hundred and Seventy-Five Million Dollars ($375,000,000.00), which
would be guaranteed by the Subsidiary Guarantors and secured by the equity of
the Borrower and the Subsidiary Guarantors. The Agent and the Lenders are
willing to provide the credit on the terms and conditions set forth in this
Revolving Credit and Term Loan Agreement. The Borrower and Subsidiary Guarantors
acknowledge that the Lenders would not provide the financing hereunder but for
the joint and several obligations of such entities, as well as the other credit
support provided pursuant to this agreement.
NOW, THEREFORE, it is agreed:
<PAGE>
Article 1
DEFINITIONS
1.1 Defined Terms. Unless the context otherwise requires, as used in this
Agreement, the following terms shall have the meanings specified in this
Section. Further, unless the context otherwise requires, references to the
plural include the singular, references to the singular include the plural, and
all gender references are interchangeable and deemed to refer to the appropriate
gender.
Accommodation Restricted Payment: a Restricted
Payment made on the Closing Date in
an amount no greater than the amount transferred by Adelphia to pay off certain
former Indebtedness of the Borrower but in any event an amount no greater than
$303,000,000.
Accumulated Funding Deficiency: any accumulated
funding deficiency as defined in
Section 412(a) of the Code and Section 302(a) of ERISA and any successor
sections thereto.
Acquisition: any transaction or series of
transactions by means of which (a) a
Person (the "Acquiror") acquires any going business or all or substantially all
the assets of any other Person or division thereof whether through purchase of
assets or stock, merger or otherwise or (b) any Person becomes a Subsidiary of
the Acquiror.
Acquisition-Margin Adjustment Date: the meaning
specified in Subsection 2.6.3.
Adelphia: Adelphia Communications Corporation or any
entity that is wholly-owned,
directly or indirectly, and controlled by Adelphia Communications Corporation
and which on the Closing Date is the owner of the stock of the Borrower.
Adelphia Communications Corporation: Adelphia
Communications Corporation, a Delaware
corporation.
Additional Lender Debt: the meaning specified in
Section 12.15.
Additional Secured Credit Limit: the meaning
specified in Section 12.15.
Affiliate: with reference to any Person, a spouse of
such Person, any relative (by
blood, adoption or marriage) of such Person within the third degree, any
director or officer of such Person, any other entity of which such Person is a
partner, member, director, officer or employee, and any other individual or
entity directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person. For purposes of this definition
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities or by contract or otherwise provided, however, that, in any
event, any Person that owns directly or indirectly capital securities having 20%
or more of the ordinary voting power for the election of the directors or other
governing body of a corporation or 20% or more of the partnership or other
ownership interests in any other Person (other than as a limited partner of such
Person) will be deemed to control such corporation or other Person.
After-Tax Operating Cash Flow: for any period, the
result of
(a) Pre-Tax Operating Cash Flow,
minus
(b) the following (to the extent not otherwise deducted from adjusted
Pre-Tax Operating Cash Flow) for such period:
(i) provision for taxes ; and
(ii) the sum of the decrease, if any, in deferred income tax liabilities
and the increase, if any, in deferred income tax assets.
Agent: the meaning specified in the preamble to this
Agreement.
Agreement: this Revolving Credit and Term Loan
Agreement, as the same may be further amended, modified and/or supplemented from
time to time.
Annualized After-Tax Operating Cash Flow: as of any
date a financial covenant is being tested, the product of (a) After-Tax
Operating Cash Flow for the two consecutive fiscal quarters of the Borrower
ending on, or most recently ended prior to, such date multiplied by (b) two.
Annualized Pre-Tax Operating Cash Flow: as of any
date a financial covenant is being tested, the product of (a) Pre-Tax Operating
Cash Flow for the two consecutive fiscal quarters of the Borrower ending on, or
most recently ended prior to, such date multiplied by (b) two.
Applicable Margin: the meaning specified in
Subsection 2.6.3.
Asbestos-Containing Material: any material
containing more than 1% asbestos.
Assignment and Acceptance: the meaning specified in
Subsection 12.5.3.
Assumption Agreement: the meaning specified in
Section 8.12.
Bank Tax: any Tax based on or measured by net
income, any franchise Tax and any doing business Tax (including any gross
receipts Tax in the nature of a doing business Tax), or any tax measured by any
similar standard, imposed upon any Lender or the Agent by any jurisdiction (or
any political subdivision thereof) in which such Lender or the Agent is located
and/or doing business.
Base Rate: the higher of (a) the rate of interest
publicly announced by the Agent from time to time at its principal office as its
prime commercial lending rate (which rate is not necessarily the lowest rate
charged by the Agent to its borrowers) or (b) the Federal Funds Rate plus 1/2%.
Base Rate Loan: any Loan bearing interest at the
Base Rate plus Applicable Margin.
Basic Subscribers: with respect to any cable
television system, (a) all dwelling units, including separate units within an
apartment building, hotel, motel, condominium, cooperative or similar building,
in respect of which the Borrower or any Subsidiary is paid the applicable
monthly price for basic services offered by such cable television system in
accordance with standard basic rates generally charged by the Borrower or such
Subsidiary in respect of such cable television system and (b) all Equivalent
Basic Subscribers in such cable television system.
Borrower: the meaning specified in the preamble to
this Agreement.
Borrower Required Payment: the meaning specified in
Subsection 2.9.3.
Business Day: a day other than a Saturday, Sunday or
day on which commercial banks are required or permitted to close in
Philadelphia, Pennsylvania, provided, however, when used with respect to any
LIBOR Loans, a Eurodollar Business Day.
Business Plan: for any fiscal year of the Borrower,
a detailed budget by cable system setting forth the amounts budgeted on a
monthly basis for revenues and operating expenses by category, Pre-Tax Operating
Cash Flow, number of basic and pay service subscribers and subscriber rates,
along with a comparison to the preceding year's total revenues and operating
expenses by category including a separate summary of budgeted monthly Capital
Expenditures and Rebuild Capital Expenditures by project for each cable system.
CAA: the Clean Air Act (42 U.S.C.A. SS 7401 to
7642), as amended from time to time, and all rules, regulations and guidance
issued, promulgated or adopted in connection therewith.
Capital Expenditures: expenditures to acquire or
construct fixed or capital assets (within the meaning of GAAP), including, but
not limited to, the purchase, construction or rehabilitation of equipment or
other physical assets or the expansion or improvement of any cable television
system or the addition of capacity or versatility to such a system (including
renewals, improvements, replacements and incurrence of Capital Lease
Obligations, but excluding Acquisitions).
Capital Lease: a lease with respect to which the
lessee is required to recognize the acquisition of an asset and the incurrence
of a liability in accordance with GAAP.
Capital Lease Obligation: with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder which would
in accordance with GAAP appear on a balance sheet of such lessee in respect of
such Capital Lease or otherwise be disclosed in a note to such balance sheet.
Capital Security: means (a) any share, membership,
partnership or other percentage interest, unit of participation, membership
interests or limited liability company interests in any limited liability
company or in each case other equivalent (however designated) of a corporate
equity security or other equity interest in a Person; and
(b) any debt security or other evidence
of Indebtedness which is convertible into or exchangeable for, or any option,
warrant or other right to acquire, any Capital Security of any type referred to
in clause (a) of this definition.
Cash Flow Percentage: the meaning specified in
Subsection 10.1.9.
CERCLA: the Comprehensive Environmental Response,
Compensation, and Liability Act of
1980 (42 U.S.C.A. SS 9601 to 9675), as amended from time to time, and all rules,
regulations and guidance issued, promulgated or adopted in connection therewith.
Change of Control:
(a) the failure of Adelphia to own,
directly 100% of the Capital Securities (of the type described in clause (a) of
the definition of Capital Securities) of the Borrower under ordinary
circumstances (not dependant on any contingency) having voting power, or
(b) the failure of the Rigas Family to
control, directly or indirectly, more than 50% of the total number of votes that
holders of Capital Securities of Adelphia Communications Corporation (of the
type described in clause (a) of the definition of Capital Securities) are then
entitled to vote (which, on the Closing Date, consist of Class "A" common stock
and Class "B" common stock of Adelphia Communications Corporation).
Closing Date: October 5, 1999.
COBRA: the Consolidated Omnibus Budget
Reconciliation Act of 1985 and any amendments thereto.
Code: the Internal Revenue Code of 1986, as amended,
or its predecessor or successor, as applicable, and any Treasury regulations,
revenue rulings or technical information releases issued thereunder.
Collateral: at any time means any and all of the
property in which the Agent (for the benefit of itself and the Lenders) is
granted, or is purported to be granted, a security interest under any Loan
Document. It is the intent of the parties that the Agent, for itself and on
behalf of the Lenders, shall be granted a security interest in substantially all
of the stock and other equity of the Borrower and the Subsidiaries.
Commitment: either of the Revolving Credit
Commitment or the Term Loan Commitment.
Commitment Fee: the meaning specified in
Subsection 2.8.1.
Consolidated: with respect to any Person and any
specified Subsidiaries, refers to the method of consolidation of financial
statements of such Person and such Subsidiaries and of particular items in such
financial statements in accordance with GAAP.
CWA: the Clean Water Act (33 U.S.C.A. S 1251 to
1387), as amended from time to time, and all rules, regulations and guidance
issued, promulgated or adopted in connection therewith.
Debt Service Coverage Ratio: as at any date a
financial covenant is being tested, the ratio of (a) Annualized After-Tax
Operating Cash Flow to (b) Pro Forma Debt Service.
Default: any condition or event which, with notice
or passage of time or both, would become an Event of Default.
Default Rate: the meaning specified in
Subsection 2.6.6.
Eligible Institution: any commercial bank, savings
and loan or savings bank organized under the laws of the United States or any
state thereof and having combined capital and surplus in excess of One Billion
Dollars ($1,000,000,000) or any branch located in the United States of a foreign
commercial bank, savings and loan or savings bank organized under the laws of
another country, which bank or savings and loan has combined capital and surplus
in excess of One Billion Dollars ($1,000,000,000).
Employee Pension Plan: any Plan other than a
Multiemployer Plan which (a) is maintained by the Borrower or any ERISA
Affiliate and (b) is subject to Part 3 of Title I of ERISA.
Environmental Laws: any national, state or local
law or regulation (including, without limitation, CERCLA, RCRA, CWA, CAA, EPCRA
and OSHA) enacted in connection with or relating to the protection or regulation
of the environment or public or employee health and safety, including, without
limitation, those laws, statutes, and regulations regulating the disposal,
removal, production, storing, refining, handling, transferring, processing, or
transporting of Hazardous Substances, and all rules, regulations and guidance
issued, promulgated or adopted in connection with such statutes by any
governmental authority and any orders, decrees or judgments issued by any court
of competent jurisdiction or administrative body in connection with any of the
foregoing.
EPCRA: the Emergency Planning Community
Right-to-Know Act of 1986 (42 U.S.C.A. SS 11001 to 11050) as amended from time
to time, and all rules, regulations and guidance issued, promulgated or adopted
in connection therewith.
Equivalent Basic Subscribers: with respect to each
subscriber (such as a hotel, a motel, a condominium, an apartment, a cooperative
and any other similar development) that purchases bulk basic subscription
services offered in a cable television system of the Borrower or any Subsidiary
the number of subscribers (including additional outlets) obtained by dividing
the monthly basic revenues of the Borrower or such Subsidiary from such bulk
subscriber's account by the average monthly basic subscription price for
individual Basic Subscribers in such cable television system.
ERISA: the Employee Retirement Income Security Act
of 1974, as amended, and any regulations issued thereunder by the Department of
Labor or PBGC.
ERISA Affiliate: (a) any corporation included with
the Borrower or any Subsidiary in a controlled group of corporations within the
meaning of Section 414(b) of the Code, (b) or any trade or business (whether or
not incorporated) which is under common control with the Borrower or any
Subsidiary within the meaning of Section 414(c) of the Code, and (c) any member
of an affiliated service group of which the Borrower or any Subsidiary is a
member within the meaning of Section 414(m) of the Code.
Eurodollar Business Day: a day on which the relevant
London international financial markets are open for the transaction of business
contemplated in this Agreement and which is also other than a Saturday, Sunday
or other day on which commercial banks are required or permitted to close in
Philadelphia, Pennsylvania.
Event of Default: the meaning specified in Section
10.1.
FCC: the Federal Communications Commission or any
governmental body succeeding to the functions of such commission.
FCC License: any broadcasting, microwave, or other
communications license, permit, certificate of compliance, franchise, approval
or authorization granted or issued by the FCC for control, ownership,
acquisition, construction or operation of a Permitted Business.
Federal Funds Rate: 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 on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next Business Day as so published on the next succeeding Business Day, and (b)
if such rate is not so published for any day, the Federal Funds Rate for such
day shall be the average rate charged to the Agent on such day on such
transactions as determined by the Agent.
First Union National Bank: First Union National Bank
and its successors and assigns.
Fixed Charges: as at any date a financial covenant
is being tested, the sum of the following for the Borrower and its Subsidiaries:
(a) Pro Forma Debt Service;
(b) Restricted Payments (other than the
Accommodation Restricted Payment made on the
Closing Date) made during the four (4)
fiscal quarters ended on, or most recently
prior to, such date;
(c) Capital Expenditures excluding those Capital
Expenditures which are certified by the
Borrower to be Rebuild Capital Expenditures
made in accordance with Section 7.5 below,
for the four fiscal quarters ended on, or
most recently prior to, the date of testing
the applicable financial covenant.
Fixed Charges Coverage Ratio: as of any date a
financial covenant is being tested, the ratio of (a) Annualized After-Tax
Operating Cash Flow to (b) Fixed Charges.
Franchise: a franchise, permit or license
(including, without limitation, an FCC License), designation or certificate
granted by the United States or any other country, territory or state or a city,
town, county or other municipality, PUC or any other regulatory authority
pursuant to which a Person has the right to own, control, acquire, construct or
operate a Permitted Business.
GAAP: generally accepted accounting principles
consistently applied, which, as
applied to the Borrower shall be consistent with those applied in the
preparation of the financial statements referred to in Subsection 4.1.15. If
modifications to such principles or the application thereof are required by
changes to generally accepted accounting principles but only if such changes
would not affect compliance with the financial covenants herein, the Borrower or
relevant Person or Persons may incorporate the modifications but only after the
Borrower shall have delivered to each Lender a statement describing in
reasonable detail the modifications and the effect of such modifications and no
Lender shall have objected to such modifications within ten (10) days of receipt
of such notice.
Guaranty: as applied to any Person, any direct or
indirect liability, contingent or
otherwise, of such Person with respect to any indebtedness, lease, dividend or
other obligation of another Person, including, but not limited to, any such
obligation directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business) or discounted or sold
with recourse by such Person, or in respect of which such Person is otherwise
directly or indirectly liable, including, but not limited to, any such
obligation in effect guaranteed by such Person through any agreement (contingent
or otherwise) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of such
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), or to maintain the solvency or other financial
condition of the obligor of such obligation, or to make payment for any
products, materials or supplies or for any transportation or services regardless
of the non-delivery or nonfurnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected against loss in
respect thereof.
Hazardous Substances: any and all pollutants,
contaminants, toxic or hazardous
wastes or any other substances that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, migration, or filtration
of which is or shall be restricted, prohibited or penalized by any Environmental
Law (including, without limitation, petroleum products, asbestos,
Asbestos-Containing Materials, urea formaldehyde foam insulation and
polychlorinated biphenyls and substances defined as Hazardous Substances,
Pollutants or Contaminants).
Homes Passed: dwelling units, including separate
units within an apartment building,
condominium, cooperative, or similar building passed by an operational portion
of a cable television system of the Borrower or any Subsidiary.
Indebtedness: with respect to any Person (without
duplication):
(a) all principal indebtedness of such Person for borrowed money and
non-current interest and fees
relating thereto;
(b) all obligations of such Person for the deferred purchase
price of property or services (not payable and paid on
ordinary trade terms) excluding equity based incentives for
employees such as phantom stock ;
(c) all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments;
(d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property);
(e) all Capital Lease Obligations of such Person;
(f) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit or similar
facilities;
(g) all obligations of such Person to purchase, redeem, retire,
defease or otherwise acquire for value any capital stock of
such Person or any warrants, rights or options to acquire such
capital stock, which obligations shall be valued, in the case
of redeemable preferred stock, at the greater of its voluntary
or involuntary liquidation preference plus accrued and unpaid
dividends and, in the case of other such obligations, at the
amount that, in light of all the facts and circumstances
existing at the time of determination, can reasonably be
expected to become payable;
(h) a Guaranty of such Person;
(i) all Indebtedness referred to in clauses (a) through (h) above
secured by (or which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such
Indebtedness; and
(j) all payments required by such Person under non-compete agreements.
Indemnitees: the meaning specified in Section 12.14.
Interest Coverage Ratio: as at any date a financial
covenant is tested, the ratio of
(a) Annualized After-Tax Operating Cash Flow to (b) Projected Interest Expense.
Interest Expense: for any period, the sum of (a) the
amount of interest accrued on,
or with respect to, Indebtedness of the Borrower, and the Subsidiaries, on a
Consolidated basis, for such period, including without limitation imputed
interest on Capitalized Leases and imputed or accreted interest in respect of
deep discount or zero coupon obligations, plus (b) the net amount payable under
all Interest Rate Protection Agreements in respect of such period (or minus the
net amount receivable under Interest Rate Protection Agreements in respect of
such period).
Interest Period: with respect to any LIBOR Loan,
(a) initially, the period
commencing on the borrowing or conversion date, as the case may be, and ending
one, two, three or six months thereafter or, if a one-year LIBOR Rate is
available by the Lenders, ending one year thereafter, as selected by the
Borrower pursuant to Subsection 2.6.4 and (b) thereafter, each period commencing
on the day after the last day of the preceding Interest Period and ending one,
two, three or six months thereafter or, if available, one year thereafter, as
selected by the Borrower pursuant to Subsection 2.6.4 provided, however, if any
such Interest Period would otherwise end on a day which is not a Eurodollar
Business Day, such Interest Period shall be extended to the next succeeding
Eurodollar 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 Eurodollar Business Day and
provided, further, if any such Interest Period begins on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period (as may be the case with an Interest Period commencing at the
end of a calendar month) the Interest Period shall end on the last Eurodollar
Business Day of the relevant calendar month.
Interest Rate Protection Agreement: an interest rate
swap, cap or collar agreement
or similar arrangement between any Person and a financial institution providing
for the transfer or mitigation of interest risks either generally or under
specific contingencies.
Investment: as applied to any Person (the
"Investor"), any direct or indirect
purchase or other acquisition by the Investor of stock or other securities of
any other Person, or any direct or indirect loan, advance, or capital
contribution by the Investor to any other Person, including all Indebtedness and
accounts receivable from such other Person which are not current assets or did
not arise from sales to such other Person in the ordinary course of business.
The "amount" of any Investment shall mean the sum of the following (without
duplication): the amount of cash paid for or contributed to such Investment; the
fair market value of any equity or other assets constituting consideration for
or contributed to such Investment; and any commitment to pay, contribute, incur,
or become liable for any of the foregoing.
Knowledge: an individual will be deemed to have
"knowledge" of a particular fact or
other matter if such individual is actually aware of such fact or other matter
or, in view of his position or responsibilities, could reasonably be expected to
discover or otherwise become aware of such fact or other matter. An entity will
be deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director, officer, partner, executor, trustee, or
key management-level employee of such entity (or in any similar capacity) has,
or at any time had, knowledge of such fact or other matter.
Lenders: the meaning specified in the preamble to
this Agreement.
Lending Office: means, with respect to any Lender
and for any Type of Loan the
lending office of such Lender (or of an affiliate of such Lender) designated by
such Lender for such Type of Loan from time to time.
Leverage Ratio: as at any date a financial covenant
is being tested, the ratio of
(a) Total Debt on such date to (b) Annualized Pre-Tax Operating Cash Flow.
LIBOR Loan: any Loan bearing interest at the LIBOR
Rate plus Applicable Margin.
LIBOR Rate: the rate per annum (rounded upwards if
necessary to the nearest
one-one-hundredth of one percent (1/100%)) determined by the Agent to be equal
to the quotient of (a) the rate of interest per annum (rounded upwards if
necessary to the nearest one-sixteenth of one percent) at which deposits of U.S.
Dollars for periods equal to the Interest Period designated by the Borrower and
in amounts substantially similar to the outstanding principal amount of the
LIBOR Loan during such Interest Period are available to the Agent from prime
banks in the London Interbank Eurocurrency Market on or about 11:00 a.m. London
time two (2) Eurodollar Business Days prior to the first day of the relevant
Interest Period, divided by (b) a number equal to 1.00 minus the LIBOR Reserve
Percentage for portions of the LIBOR Loan for the relevant Interest Period.
LIBOR Reserve Percentage: for any LIBOR Loans, the
maximum rate at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained during the relevant Interest Period under Regulation D (and/or other
similar regulation) of the Board of Governors of the Federal Reserve System
against "Eurocurrency Liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Percentage shall
reflect any other reserves required to be maintained by reason of any Regulatory
Change against (a) any category of liabilities which includes deposits by
reference to which LIBOR Rate is to be determined as provided in the definition
of "LIBOR Rate" or (b) any category of extensions of credit or other assets
which include loans the interest rate of which is based on the LIBOR Rate.
Lien: with respect to any Person, any mortgage,
lien, pledge, adverse claim, charge,
security interest or other encumbrance in or on any property or asset of such
Person, or any interest or title of any vendor, lessor, lender or other secured
party to or of such Person under any conditional sale or other title retention
agreement or Capital Lease with respect to, any property or asset of such
Person.
Loans: advances made to the Borrower pursuant to the
terms of this Agreement which
shall either be Revolving Credit Loans or Term Loans.
Loan Documents: this Agreement, the Notes, the
Pledge Agreement, the Parent Pledge
Agreement, (for purposes of security only) any Interest Rate Protection
Agreements which the Borrower or any Subsidiary, on the one hand, and the Agent
or any Lender, on the other hand, enter into pursuant to the terms of this
Agreement, and any and all agreements, documents and instruments executed,
delivered or filed pursuant to this Agreement, in each case as amended, modified
or supplemented from time to time pursuant to the provisions hereof and thereof.
Loan Party: collectively, Adelphia, the Borrower,
the Subsidiaries, and each other
party to any Loan Document (other than the Lenders and the Agent), together with
their successors and permitted assigns, if any.
Material Adverse Effect: any material adverse
effect on:
(a) the business, condition (financial or otherwise), operations,
properties or prospects of the Borrower
or the Borrower and its Subsidiaries, taken as a whole,
(b) the ability of any Loan Party to perform its respective obligations
under the Loan Documents,
(c) the binding nature, validity or enforceability of any of the Loan
Documents as an obligation of any
Loan Party which is a party thereto, or
(d) the validity, perfection, priority or enforceability of the
Liens granted to the Agent for the benefit of itself and the
Lenders pursuant to the Loan Documents.
Maturity Date: the later of the Revolving Credit
Maturity Date or the Term Maturity Date.
Multiemployer Plan: means a multiemployer pension
plan as defined in Section 3(37)
of ERISA to which Borrower, or any ERISA Affiliate is or has been required to
contribute.
Net Income: as applied to the Borrower and the
Subsidiaries, for any period, the net
income (or net loss) of the Borrower and its Subsidiaries for such period
determined in accordance with GAAP.
Net Proceeds: means, for any sale, lease, transfer
or other disposition of any
asset, or for any sale or issuance of any security, by any Person, the aggregate
amount of consideration received by such Person for such asset or security,
after deducting therefrom (a) the amount of such proceeds required to be applied
to repay Indebtedness secured by any asset so disposed of, other than
Indebtedness to the Lenders under the Loan Documents (b) brokerage commissions,
legal fees, finders' fees and other similar fees and commissions and related
expenses actually incurred by such Person in connection with such transaction,
(c) taxes clearly identified as being payable in connection with or as a result
of such transaction and (d) other out-of-pocket costs actually incurred in
connection therewith by such Person, in the case of each of clauses (a), (b),
(c) and (d) above to the extent, but only to the extent, that the amounts so
deducted are, at the time of receipt of such proceeds, paid to a Person that is
not an Affiliate of such Person (or, if paid to such an Affiliate, to the extent
the terms of such payment are no more favorable to such Affiliate than such
terms would be in an arm's-length transaction) or, if applicable held in reserve
to make payments described in clauses (b) and (c) above when the same shall
become due, and are properly attributable to such transaction or to the asset or
security that is the subject thereof.
Notes: the meaning specified in Section 2.3.
Obligations: all payment and performance obligations
of every kind, nature and
description of the Borrower and each other Loan Party to the Agent or any Lender
under, arising out of, or in connection with, this Agreement and the other Loan
Documents and all obligations under the letters of credit and other debt
instruments referred to in paragraph (c) below (including, in each case, any
interest, fees, indemnities and other charges that would accrue but for the
filing of a bankruptcy action, whether or not such claim is allowed in such
bankruptcy action), whether such obligations are direct or indirect, absolute or
contingent, due or not due, contractual or tortious, liquidated or unliquidated,
arising by operation of law or otherwise, now existing or hereafter arising,
including, without limitation (and without duplication), the following:
(a) principal of, premium, if any, on and interest on the Loans
and the Notes;
(b) any and all other fees, indemnities, costs, obligations and
liabilities of the Borrower or any Subsidiary (whether in its
capacity as Subsidiary Guarantor or otherwise) and each and
every other Loan Party from time to time owing to the Agent,
any Lender, any holder of the Notes or other Indemnitee or any
successors, agents, nominees or assigns of the foregoing under
or in respect of this Agreement and each other Loan Document
(including, without limitation, any Interest Rate Protection
Agreement required by Section 8.5 below which is entered into
with any Lender or any Affiliate of a Lender); and
(c) subject to Section 12.15 below, all obligations of the
Borrower or any Subsidiary (whether in its capacity as
Subsidiary Guarantor or otherwise) owing to any Lender under
letters of credit or other debt instruments issued by any
Lender as permitted under the terms of this Agreement.
Officer's Compliance Certificate: a certificate in
substantially the form of Exhibit
D attached hereto or in such other form as the Agent and the Borrower shall
agree upon, signed by the chief financial officer of the Borrower as to: (a) the
truth of representations and warranties of the Loan Parties in the Loan
Documents; (b) the absence of any Default or Event of Default; (c) compliance
with the financial covenants set forth herein including the calculations
relating thereto; and (d) such other information as is required by this
Agreement.
OSHA: the Occupational Safety and Health Act
(29 U.S.C.A. SS 651-678), as amended
from time to time, and all rules, regulations and guidance issued, promulgated
or adopted in connection therewith.
Other Secured Obligations: the meaning specified in
Section 12.15.
PBGC: Pension Benefit Guaranty Corporation, or any
governmental agency or
instrumentality succeeding to the functions thereof.
Parent Pledge Agreement: the meaning specified in
Subsection 4.1.8.
Permitted Businesses: owning, operating, managing
and maintaining domestic cable
television systems and communications businesses related thereto.
Permitted Lien: the meaning specified in
Section 9.2.
Person: a corporation, an association, a limited
liability company, a partnership,
an organization, a business, an individual, a government or political
subdivision thereof, a governmental agency or other entity.
Plan: an "Employee Pension Benefit Plan" (as
defined in Section 3(2) of ERISA) which
is currently maintained, or to which contributions are currently being made, by
the Borrower, any Subsidiary, or any ERISA Affiliate of the foregoing (or any
predecessor thereof).
Pledge Agreement: the meaning specified in
Subsection 4.1.7.
Pre-Tax Operating Cash Flow: for any period, the
result of:
(a) the Net Income of the Borrower and the Subsidiaries (on a
Consolidated basis) for the relevant period, provided, that
such amount shall be adjusted to exclude (to the extent
otherwise included therein and without duplication):
(i) [intentionally omitted]
(ii) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve
was made out of income accrued during such period and
except for normal accruals and reversals in the
ordinary course of business;
(iii) any write-up or write-down of any asset;
(iv) any net gain from the collection of the proceeds of life insurance
policies;
(v) any gain or loss arising from the acquisition of any securities or
Indebtedness of the Borrower;
(vi) any investment or interest income;
(vii) any deferred credit representing the excess of equity
in a Person at the date of acquisition over the cost
of the investment in such Person;
(viii) any aggregate net gain (or loss) during such period
arising from the sale, exchange or other disposition
of capital assets (such term to include all fixed
assets, whether tangible or intangible, all inventory
sold in conjunction with the disposition of fixed
assets, and all securities) other than any sale,
exchange or other disposition in the ordinary course
of business and all taxes clearly identified as being
payable by the Borrower or applicable Subsidiary as a
result of any such sale, exchange or other
disposition;
(ix) all extraordinary items;
(x) [intentionally omitted];
(xi) any net income that is attributable to or derived from an entity or
other issuer that is not a
Subsidiary of Borrower; and
(xii) all non-recurring items properly identified as such on Borrower's
financial statements and reports;
plus (b) the following (to the extent deducted in
such computation of adjusted Net Income) for
such period:
(i) depreciation expense;
(ii) amortization expense;
(iii) Interest Expense;
(iv) other non-cash charges to income;
(v) [intentionally omitted];
(vi) [intentionally omitted];
(vii) [intentionally omitted]; and
(viii) provision for taxes, if applicable.
Pro Forma Debt Service: as at any date a financial
covenant is being tested (the
"test date"), the sum of the following:
(a) the aggregate amount of scheduled payments or scheduled
prepayments of principal due on, or with respect to, Indebtedness of the
Borrower and its Subsidiaries for the four fiscal quarters beginning on the
first day of the fiscal quarter immediately following the test date, including,
without limitation, the amount by which the outstanding principal amount of the
Revolving Credit Loans as at the beginning of such period exceeds the Revolving
Credit Commitment as at the end of such period and scheduled principal payments
on Capital Leases payable during such period; and
(b) Projected Interest Expense.
Projected Interest Expense: as at any date a financial covenant is being tested
(the "test date"), Interest Expense for the four fiscal quarters beginning on
the first day of the fiscal quarter immediately following the test date. For
purposes of calculating Projected Interest Expense, it shall be assumed (a) the
rate of interest on debt that bears interest at a fixed rate for the entire
length of the period shall be calculated at that rate for the period and (b)
other Indebtedness shall at all times during such period be deemed to accrue
interest at a rate equal to the rate of interest in effect on such Indebtedness
on the test date (i.e., LIBOR Loans shall continue to bear interest at the
applicable LIBOR Rate plus the Applicable Margin on the test date and Base Rate
Loans shall continue to bear interest at the Base Rate plus Applicable Margin on
the test date) and (c) Indebtedness outstanding at the beginning of the period
will remain outstanding during the entire period except that any scheduled
payments or prepayments of Indebtedness shall be paid when due.
PUC: any state or local regulatory agency or body
that exercises jurisdiction over
the ownership, construction or operation of Permitted Businesses.
Quarterly Payment Date: the last Business Day of
each March, June, September and
December.
RCRA: the Resource Conservation and Recovery Act of
1976 (42 U.S.C.A.ss.ss.6901 to
6991; a/k/a the Solid Waste Disposal Act), as amended, and all rules,
regulations and guidance issued, promulgated or adopted in connection therewith.
Rebuild Capital Expenditures: certain Capital
Expenditures incurred for the purpose
of substantially upgrading or rebuilding the cable systems. To the extent that
they do not exceed the amount specified in Section 7.5 below and the Borrower
provides the necessary certification, they may be deducted from the calculation
of Fixed Charges as provided for in the definition of "Fixed Charges".
Release: a release, spill, emission, leaking,
pumping, emptying, escaping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Hazardous Substances through or in the air, soil, surface water,
groundwater or property.
Regulatory Change: with respect to any Lender, any
change or implementation after
the Closing Date in United States federal, state or foreign laws or regulations,
including, without limitation, the issuance of any final regulations or
guidelines, or the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks, including any such Lender,
of or under any United States federal or state, or any foreign, laws or
regulations (whether or not having the force of law) or by any court or
governmental or monetary authority charged with the interpretation or
administration thereof provided, however, that any change in, or the
implementation of, any Bank Tax shall not constitute a Regulatory Change
hereunder.
Remedial Action: actions necessary to comply with
any Environmental Law with respect
to (a) clean up, removal, treatment or handling Hazardous Substances in the
indoor or outdoor environment; (b) prevention of Releases or threats of Releases
or minimization of further Releases of Hazardous Substances so they do not
migrate or endanger or threaten to endanger public or employee health or safety
or welfare or the indoor or outdoor environment; or (c) performance of
pre-remedial studies and investigations and post-remedial monitoring and care.
Reorganization: any reorganization as defined in
Section 4241(a) of ERISA.
Reportable Event: with respect to any Employee
Pension Plan, an event described in
Section 4043(b) of ERISA.
Requisite Lenders: at any time, Lenders having 51%
or more of the aggregate unpaid
principal amount of the Loans or, if no such principal amount is then
outstanding, Lenders having 51% or more of the Revolving Credit Commitment.
Restricted Payment:
(a) any dividend or other distribution, direct or indirect, on account of any
shares of any class of stock or ownership interest of the Borrower or any
Subsidiary, now or hereafter outstanding, except a dividend payable solely in
shares of stock of the Borrower or such Subsidiary, as the case may be, and
except for dividends payable exclusively to the Borrower or one or more
Subsidiaries;
(b) any redemption, retirement, purchase or other acquisition, direct or
indirect, of any shares of any class of stock or ownership interest of the
Borrower or any Subsidiary, now or hereafter outstanding, or of any warrants,
rights or options to acquire any such shares or interests, except to the extent
that the consideration therefor consists solely of shares of stock of the
Borrower or any Subsidiary, as the case may be or consideration therefor is paid
exclusively to the Borrower or any Subsidiary;
(c) any sinking fund, other prepayment or installment payment on account of
any shares of stock or
ownership interests of the Borrower or any Subsidiary;
(d) any other payment, loan or advance to a shareholder of the Borrower or any
Subsidiary whether in the capacity of such Person as a shareholder or otherwise,
except (i) payments to the Borrower or another Subsidiary, (ii) salaries and
other compensation, the payment of which is not otherwise restricted under the
Loan Documents, paid in the ordinary course of business consistent with
historical practices and (iii) stock bonuses paid to Persons pursuant to any
stock bonus plan of the Borrower or any Subsidiary so long as such transaction
shall not effect a Change of Control; and
(e) any forgiveness or release without adequate consideration by the Borrower or
any Subsidiary of any Indebtedness or other obligation owing to the Borrower or
such Subsidiary by a Person, other than the Borrower or a Subsidiary that is a
shareholder of the Borrower or such Subsidiary or an Affiliate of any such
shareholder.
Revolving Credit Commitment: the meaning specified
in Subsection 2.1.1.
Revolving Credit Loan: the meaning specified in
Subsection 2.1.1.
Revolving Credit Maturity Date: December 31, 2006 or
such earlier date as the
Revolving Credit Commitment shall terminate in its entirety pursuant to the
terms of this Agreement.
Rigas Family: means John J. Rigas, Timothy J. Rigas,
Michael J. Rigas, James P.
Rigas, Ellen K. Rigas, or any of their respective spouses, estates, or lineal
descendants, or any trust created for the direct and sole benefit of any such
Persons or, while and to the extent they are serving in such capacity, the
executors, administrators or personal representatives of such Persons.
SMATV: satellite master antenna television.
Subscriber Certificate: a certificate in
substantially the form attached hereto as
Exhibit E containing certain information respecting the subscribers to the cable
operations of the Borrower and the Subsidiaries for each fiscal quarter.
Subsidiary: with respect to any Person (the
"Parent"), (a) any corporation of which
more than 50% of the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by the
Parent, by the Parent and one or more of its other Subsidiaries or by one or
more of the Parent's other Subsidiaries, (b) any partnership, joint venture or
other association of which more than 50% of the equity interests having the
power to vote to direct or control the management of such partnership, joint
venture or other association is at the time owned or controlled by the Parent,
by the Parent and one or more of the other Subsidiaries or by one or more of the
Parent's other Subsidiaries or (c) any other Person that is Consolidated with
the Parent.
Subsidiary Guarantors: the meaning specified in the
preamble to this Agreement.
Tax: any federal, state, local or foreign tax,
assessment or other governmental
charge or levy (including any withholding tax) upon a Person or upon its assets,
revenues, income or profits.
Term Loan: the meaning specified in
Subsection 2.2.1.
Term Loan Commitment: the meaning specified in
Subsection 2.2.1.
Term Loan Maturity Date: June 30, 2007 or such
earlier date as the Term Loans shall
be repaid in full.
Total Debt: the aggregate amount of all Indebtedness
of the Borrower and the
Subsidiaries, on a Consolidated basis.
Type: with respect to any Loan, means a
classification of that Loan as a Base Rate
Loan or a LIBOR Loan with a certain Interest Period. By way of example, a LIBOR
Loan with a three month Interest Period ending June 30, 2000 shall be a
different Type of Loan than a LIBOR Loan with a two month Interest Period ending
May 15, 2000.
Undesignated Obligations: the meaning specified in
Subsection 12.15.
United States Person: the meaning specified in
Subsection 2.10.1.
U.S. Dollars and $: lawful money of the United
States of America.
Withdrawal Liability: any withdrawal liability as
defined in Section 4201 of ERISA.
1.2 Calculations and Financial Data.
Except as otherwise provided in this Agreement,
calculations under this Agreement
shall be subject to the following:
1.2.1 Except as expressly provided otherwise, calculations made pursuant to
this Agreement and financial data delivered hereunder and terms referred
to herein shall be prepared and interpreted both as to classification of items
and as to amounts in accordance with GAAP.
1.2.2 It shall be assumed that any Indebtedness constituting Guaranties will
require payments of principal in the amounts as called for in the underlying
obligation which is the subject of such Guaranty subject to any express
limitations set forth in such Guaranty (it being understood that neither the
Borrower nor any Subsidiary may incur any Guaranties except as specifically
permitted under this Agreement).
1.2.3 [intentionally omitted]
1.2.4 If the Borrower or any of the Subsidiaries makes an Acquisition permitted
by the terms of this Agreement, for purposes of the calculations contemplated
hereby, there shall be added to the net income, cash flow and other financial
data of the Borrower and the Subsidiaries, on a Consolidated basis, for the
fiscal quarter in which such Acquisition occurs and for each of the three
preceding fiscal quarters, the net income, cash flow and other financial data of
the acquired system or entity for such period (determined with the prior
approval of the Agent on a pro forma basis). If there occurs any disposition of
any system or entity by the Borrower or any Subsidiary, for purposes of the
calculations contemplated hereby, there shall be deducted from net income, cash
flow and other financial data of the Borrower and the Subsidiaries, on a
Consolidated basis, for the fiscal quarter in which such disposition occurs and
the preceding three fiscal quarters, the net income, cash flow and other
financial data of the system or entity so disposed of for such period
(determined with the prior approval of the Agent on a pro forma basis)
1.2.5 Financial calculations made pursuant to this Agreement shall exclude taxes
paid on non-operating income.
Article 2
THE LOANS
2.1 Revolving Credit Loans
2.1.1 Commitment to Lend. Subject to and upon the terms and conditions set forth
in this Agreement, the Lenders shall make advances to the Borrower until the
Revolving Credit Maturity Date in an aggregate amount not to exceed at any time
outstanding Three Hundred Million Dollars ($300,000,000) (as the same may be
reduced pursuant to the terms of this Agreement, the "Revolving Credit
Commitment"); provided however, that (a) the aggregate amount of the Revolving
Credit Commitment available for borrowing at any time shall not exceed the
amount of the Revolving Credit Commitment at that time less the amount of any
outstanding Revolving Credit Loans; and (b) the amount and percentage of the
Revolving Credit Commitment which each Lender is obligated to lend shall not
exceed at any time the amount or percentage set forth opposite the name of such
Lender on Schedule 2.1 attached hereto (as supplemented and amended by giving
effect to the assignments contemplated in Section 12.5). (Any Lender's share of
the Revolving Credit Commitment is sometimes referred to in this Agreement as
such Lender's Revolving Credit Commitment). Within the foregoing limits, and
subject to the terms and conditions set forth in this Agreement until the
Revolving Credit Maturity Date, the Borrower may borrow under this Subsection
2.1.1, repay or prepay such advances, and reborrow under this Subsection 2.1.1.
The amounts loaned to the Borrower pursuant to this Subsection 2.1.1 are
collectively referred to as the "Revolving Credit Loans".
2.1.2 Reduction of Commitment.
(a) Scheduled Reductions in Commitment. The Revolving Credit Commitment shall be
automatically reduced on each March 31, June 30, September 30 and December 31 of
each year commencing on March 31, 2000 and ending on the Revolving Credit
Maturity Date in accordance with the following schedule:
<TABLE>
<CAPTION>
Total Quarterly
Percentage Reduction (in
Date of of Total Dollars) Assuming
Commitment Commitment No Other Commitment
Reduction Reduced Reductions
<S> <C> <C> <C>
3/31/00 1.250% $ 3,750,000
6/30/00 1.250% $ 3,750,000
9/30/00 1.250% $ 3,750,000
12/31/00 1.250% $ 3,750,000
3/31/01 2.500% $ 7,500,000
6/30/01 2.500% $ 7,500,000
9/30/01 2.500% $ 7,500,000
12/31/01 2.500% $ 7,500,000
3/31/02 3.125% $ 9,375,000
6/30/02 3.125% $ 9,375,000
9/30/02 3.125% $ 9,375,000
12/31/02 3.125% $ 9,375,000
3/31/03 3.750% $11,250,000
6/30/03 3.750% $11,250,000
9/30/03 3.750% $11,250,000
12/31/03 3.750% $11,250,000
3/31/04 4.375% $13,125,000
6/30/04 4.375% $13,125,000
9/30/04 4.375% $13,125,000
12/31/04 4.375% $13,125,000
3/31/05 5.000% $15,000,000
6/30/05 5.000% $15,000,000
9/30/05 5.000% $15,000,000
12/31/05 5.000% $15,000,000
3/31/06 5.000% $15,000,000
6/30/06 5.000% $15,000,000
9/30/06 5.000% $15,000,000
12/31/06 5.000% $15,000,000
100.000% $300,000,000
</TABLE>
(b) Mandatory Reductions In Connection With Dispositions. The Revolving Credit
Commitment shall be further reduced at such times and in such amounts as is set
forth in Subsection 2.5.2 below (concerning prepayments made from, and
reductions in the amount of Revolving Credit Commitment relating to, Net
Proceeds of certain dispositions).
(c) Voluntary Reductions. The Borrower shall have the right at any time and from
time to time upon five (5) Business Days' prior written notice to the Agent to
permanently reduce in whole multiples of Five Million Dollars ($5,000,000) or
terminate the Revolving Credit Commitment, without penalty or premium (except
that if any such voluntary reduction in the Revolving Credit Commitment would
require the prepayment of any LIBOR Loan (pursuant to Subsection 2.5.5) prior to
the last day of the applicable Interest Period, it shall be accompanied by all
amounts due under Subsection 2.7.4 below).
(d) Relationship with Scheduled Reductions. Any reductions in the amount of the
Revolving Credit Commitment in connection with Net Proceeds of dispositions
pursuant to paragraph (b) above and any voluntary reductions in the amount of
the Revolving Credit Commitment pursuant to paragraph (c) above shall be applied
to each quarterly reduction amount pursuant to paragraph (a) above on a pro rata
basis.
(e) Prepayment of Commitment Fees. At any time that the amount of the Revolving
Credit Commitment is reduced pursuant to this Subsection 2.1.2, the Borrower
shall pay to the Agent for the account of each Lender all accrued Commitment
Fees as of the date of the Commitment reduction on the amount so reduced.
2.2 Term Loans.
2.2.1 Commitment to Lend. Upon the terms and subject to the conditions of this
Agreement, each Lender agrees to make Term Loans to the Borrower on the Closing
Date (collectively and together with all Loans into which such original advances
may be converted, "the Term Loans") in an aggregate principal amount not to
exceed Seventy-Five Million Dollars ($75,000,000) (the "Term Loan Commitment"),
provided, however, the amount and percentage of the Term Loan Commitment that
any Lender is obligated to lend shall not exceed the amount or percentage set
forth opposite the name of such Lender on Schedule 2.1 attached hereto. Any
Lender's share of the Term Loan Commitment is sometimes referred to herein as
such Lender's Term Loan Commitment. The Borrower shall not be permitted to
reborrow any amount of the Term Loans once repaid.
2.3 The Notes.
The aggregate amount of each Lender's share of the Commitment
and Loans shall be evidenced by a note to be issued by the Borrower to such
Lender in substantially the form attached hereto as Exhibit A (any such note, in
each case as the same may be amended, modified or supplemented from time to time
in accordance with the terms hereof and together with each replacement thereof,
a "Note"), the principal and unpaid interest of which, and all unpaid fees and
other sums of any nature due under or in connection with which, (to the extent
not due and payable before) shall be due and payable on the applicable Maturity
Date.
2.4 Manner of Effecting a Borrowing.
2.4.1 Borrowing Notice Each borrowing of a Base Rate Loan shall be in the
minimum amount of Two Million Dollars ($2,000,000) and integral multiples of
Five Hundred Thousand Dollars ($500,000) in excess of such minimum amount and
each borrowing of a LIBOR Loan shall be in a minimum amount of Three Million
Dollars ($3,000,000) and integral multiples of Five Hundred Thousand Dollars
($500,000) in excess of such minimum amount. To effect a borrowing, the Borrower
shall give the Agent written notice in the form annexed to this Agreement as
Exhibit B or in such other form as the Agent and the Borrower may agree upon,
specifying the amount and date of each intended borrowing, the manner in which
the same shall be disbursed, which notice (a) in the case of any Base Rate Loan,
shall be given no later than 10:00 a.m. (Philadelphia, Pennsylvania time) on the
date of such borrowing, and (b) in the case of any LIBOR Loan, shall be given no
later than 12:00 noon (Philadelphia, Pennsylvania time) three (3) Business Days
prior to the date of such borrowing and shall specify the Interest Period with
respect to such borrowing. Each such notice shall have attached thereto a
certificate showing pro forma compliance with the financial covenants set forth
in Article 7 below after giving effect to the Loans thereby requested.
2.4.2 Funding Procedure. The Agent in turn shall give prompt written or
telephonic notice (confirmed in writing) to each Lender of its pro rata share of
the requested Loan, the interest rate and the scheduled date of the funding.
After receipt of such notice, each Lender shall make such arrangements as are
necessary to assure that its pro rata share of the funding shall be immediately
available (in U.S. Dollars) to the Agent no later than 1:00 p.m. Philadelphia,
Pennsylvania time, on the date on which the funding is to occur. After receipt
of the funds, subject to the satisfaction of the conditions precedent set forth
in Sections 4.2 and 4.1, and subject to the other conditions set forth herein,
the Agent shall disburse the amount of such borrowing in accordance with
instructions in the Borrower's borrowing notice.
2.4.3 Obligations Suspended During Default. The Lenders shall not be
obligated to comply with a borrowing notice if there shall then exist an Event
of Default or a Default.
2.4.4 Several Obligations to Lend. Each Lender is severally bound by this
Agreement, but there shall be no joint obligation under this Agreement. The
failure of any Lender to make any Loan to be made by it on the date specified
for the Loans shall not relieve any other Lender of its obligation to make its
Loan on such date.
2.4.5 Permitted Assumptions by Agent.
(a) Unless the Agent shall have received notice from a Lender prior to 12:00
noon (Philadelphia time) on the date of any Loan that such Lender will not make
available to the Agent such Lender's ratable portion of such Loan, the Agent may
assume that such Lender has made or will make such portion available to the
Agent on the date of such Loan. The Agent may in its sole discretion and in
reliance upon such assumption make available to the Borrower on such date a
corresponding amount. If a Lender has not or does not make available to the
Agent the full amount on the day of the advance, the Agent may advance such
corresponding amount and such Lender agrees to repay to the Agent on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid by such Lender to the Agent at the Federal Funds Rate provided, however,
that if such Lender shall fail to make available to the Agent the full amount of
such Lender's share of the advance within two (2) Business Days of the date it
shall have received notice from the Agent that its share of the advance has not
been received, interest shall accrue (from such second Business Day after notice
is received) at a rate equal to the rate payable by the Borrower on the
corresponding Loan.
(b) If such Lender shall reimburse the Agent for an amount advanced by the Agent
pursuant to the preceding paragraph (a), such amount shall constitute such
Lender's portion of the applicable Loans for purposes of this Agreement. If such
Lender does not reimburse such corresponding amount immediately upon the Agent's
demand therefor, the Agent shall notify the Borrower and the Borrower shall
immediately pay such corresponding amount to the Agent, with interest at the
applicable rate hereunder. The failure of any Lender to fund its portion of any
Loans shall not relieve any other Lender of its obligation, if any, hereunder to
fund its respective portion of the Loans on the funding date, but no Lender
shall be responsible for any such failure of any other Lender.
(c) If the Agent advances any funds pursuant to this Subsection 2.4.5 in respect
of another Lender's Commitment and whether or not the relevant Lender thereafter
reimburses the Agent, any contractual interest payable on such amount by the
Borrower hereunder for the period commencing on the date such amount was made
available by the Agent until the date the relevant Lender reimbursed the Agent
shall be payable to the Agent and not such Lender and, in addition, such Lender
shall pay the Agent the amounts referred to in paragraph (a) above and for any
costs, losses or expenses incurred therewith as well as a $200 fee to compensate
the Agent for its efforts in connection therewith.
(d) In the event that, at any time (other than during a period when a Default or
Event of Default has occurred and is continuing) a Lender for any reason fails
or refuses to fund its portion of a Loan, then, until such time as such Lender
has funded its portion of such Loan (which late funding shall not absolve such
Lender from any liability it may have), such non-funding Lender shall not have
the right to vote regarding any issue on which voting is required or advisable
under this Agreement or any other Loan Document, and the amount of the
Commitment or Loans of such Lender shall not be counted as outstanding for
purposes of determining "Requisite Lender" hereunder.
(e) Without prejudice to the survival of any other remedies hereunder, if any
Lender fails to make available to the Agent the full amount of such Lender's
share of the advance within two (2) Business Days of the date it shall have
received notice from the Agent that its share of the advance has not been
received, the Borrower or the Agent may require that such Lender transfer all of
its right, title and interest under this Agreement, such Lender's Note and each
other Loan Document to any Eligible Institution identified by the Borrower (with
the consent of the Agent (which consent shall not be unreasonably withheld)) or
by the Agent, subject to the following: (i) such proposed transferee shall agree
to assume all of the obligations of the transferor Lender for consideration
equal to the outstanding principal amount of such transferor Lender's Loans,
together with interest thereon to the date of such transfer, and (ii)
satisfactory arrangements shall be made for payment to such transferor Lender of
all other amounts payable hereunder to such Lender on or prior to the date of
such transfer (including any fees accrued hereunder, except any amounts that
would be payable under Subsection 2.7.4 as a result of assigning rights and
obligations in respect of any LIBOR Loans on a day other than the last day of
the applicable Interest Period, which amounts shall be forfeited by the
transferor). In the event that any transfer is made pursuant to this paragraph
(e), the Agent shall be entitled to a processing and recording fee of $3,500
payable in equal share by the transferor and the transferee.
(f) The provisions of this Subsection 2.4.5 shall in no way serve to limit or
modify a Lender's obligation to fund Loans to the Borrower as otherwise provided
in this Agreement.
2.5 Prepayments and Repayments.
2.5.1 Voluntary Prepayments of Term Loans or Revolving Credit Loans. Except as
specifically set forth in this Agreement, the Borrower shall be permitted to
prepay the Loans at any time without penalty or premium subject to the
following:
(a) The Borrower shall provide the Agent with written notice (or telephonic
notice confirmed in writing) no later than 10:00 a.m. (Philadelphia,
Pennsylvania time) on the date of a proposed prepayment of any Base Rate Loan
and at least three (3) Business Days prior written notice (or telephonic notice
confirmed in writing) of its intention to prepay any LIBOR Loan, in each case
specifying the amount and date of such prepayment, provided, however, that the
Borrower shall provide at least five (5) days prior written notice (or
telephonic notice confirmed in writing) of its intention to prepay any Term
Loan. The notice shall specify whether the prepayment is of Term Loans,
Revolving Credit Loans or both and, if both, the amount of each being prepaid.
(b) Each prepayment of some, but not all, of the Base Rate Loans shall be in a
minimum amount equal to Two Million Dollars ($2,000,000) and integral multiples
of Five Hundred Thousand Dollars ($500,000) in excess of such minimum amount and
each prepayment of some, but not all, of the LIBOR Loans shall be in a minimum
amount equal to Three Million Dollars ($3,000,000) and integral multiples of
Five Hundred Thousand Dollars ($500,000) in excess of such minimum amount.
2.5.2 Mandatory Prepayments of Term Loans or Reductions of Revolving Credit
Commitment in Connection With Certain Dispositions of Assets.
(a) In the event that any of the Net Proceeds of any sale or disposition of
assets (including, without limitation, capital stock) by the Borrower or any
Subsidiary made pursuant to clause (vi) of Section 9.7 below have not been
reinvested, pursuant to Acquisitions described in clause (i) of Subsection 9.4.1
in Permitted Businesses in a manner not prohibited by the terms of this
Agreement within the one-year period following such sale or disposition, and
such non-invested Net Proceeds, together with the non-invested Net Proceeds of
all previous such sales or dispositions commencing on the Closing Date, exceed
$3,000,000, the Borrower shall, within 30 days following the end of such
one-year period, prepay the Loans or reduce the amount of the Revolving Credit
Commitment in an amount equal to such excess as set forth in paragraph (b)
below.
(b) At least five (5) Business Days prior to the date that a prepayment (and/or
Commitment reduction) pursuant to this Subsection 2.5.2 is to occur, the
Borrower shall notify the Lenders as to whether the amount shall be applied to
installments of the Term Loans or to permanently reduce the amount of the
Revolving Credit Commitment (in which case any prepayments required by
Subsection 2.5.5 shall be made) or both (and, if both, how much is to be applied
to the Term Loans and how much to reduce the Commitments).
2.5.3 Scheduled Repayments of the Term Loans. The Borrower shall pay to the
Agent for the account of the Lenders, the principal amount of the Term Loans in
three (3) equal installments of Twenty-Five Million Dollars ($25,000,000) each
(subject to any prepayments in accordance with the terms of this Agreement) on
December 31, 2006, March 31, 2007 and June 30, 2007. Notwithstanding anything
else provided herein, all outstanding amounts of principal on the Term Loans,
together with all interest and fees related thereto, if not due and payable
before, shall be due and payable on the Term Loan Maturity Date.
2.5.4 Effect of Other Term Loan Prepayments on Scheduled Repayments of the Term
Loans. Any mandatory prepayments of Term Loans in connection with dispositions
of assets pursuant to Subsection 2.5.2 above and any voluntary prepayments of
Term Loans pursuant to Subsection 2.5.1 above shall first be applied to interest
on the Term Loans and fees hereunder and then to reduce the amounts due on June
30, 2007 pursuant to the preceding Subsection 2.5.3 until the total amount due
on such date is repaid and then shall be applied to reduce amounts due on March
31, 2007 pursuant to the preceding Subsection 2.5.3 until the total amount due
on such date is repaid and then shall be applied to reduce amounts due on
December 31, 2006.
2.5.5 Prepayments of Revolving Credit Loans In Connection With Commitment
Reductions; Revolving Credit Maturity Date. The amount of the Revolving Credit
Loans may not, at any time, exceed the amount of the Revolving Credit
Commitment. Therefore, upon the effective date of each reduction in the
Revolving Credit Commitment (whether scheduled, mandatory or voluntary), the
Borrower shall pay to the Agent for the benefit of the Lenders the principal
amount of the Revolving Credit Loans to the extent, if any, that the aggregate
principal amount of the Revolving Credit Loans then outstanding exceeds the
amount of the Revolving Credit Commitment as so reduced. Notwithstanding
anything else provided herein, all outstanding amounts of principal on the
Revolving Credit Loans, together with all interest thereon and fees related
thereto, if not due and payable before, shall be due and payable on the
Revolving Credit Maturity Date.
2.5.6 Application of Prepayments and Repayments. Unless otherwise provided in
this Agreement, repayments and prepayments shall be applied first to costs,
indemnities and fees (to the extent then payable) then to interest (to the
extent then payable) and then to principal with respect to Base Rate Loans, and
then to principal with respect to LIBOR Loans and among such LIBOR Loans first
to such Loans with the earliest expiring Interest Periods and thereafter to such
LIBOR Loans in chronological order of the expiration of their Interest Periods.
2.5.7 Interest and Breakage Costs on LIBOR Loans. The Borrower shall,
concurrently with any prepayment of any LIBOR Loans, pay the full amount of all
interest accrued on such Loans and, if on a day other than the last day of the
applicable Interest Period, pay such amounts as are required by Subsection 2.7.4
below.
2.5.8 Final Maturity Any payments in respect of principal, interest, fees,
indemnities or other amounts payable hereunder or under any of the other Loan
Documents, if not due and payable before, shall be due and payable on the
Maturity Date.
2.6 Interest
2.6.1 Interest Rate Options. The Loans shall bear interest, at the Borrower's
option (subject to the limitations and conditions set forth herein), at (a) the
Base Rate plus Applicable Margin or (b) the LIBOR Rate plus Applicable Margin.
2.6.2 Calculation and Payment of Interest. Interest on Base Rate Loans shall be
payable quarterly on each Quarterly Payment Date, beginning with the first
Quarterly Payment Date after the Closing Date. Interest on LIBOR Loans shall be
payable on the last day of each Interest Period, provided that if the applicable
Interest Period is six (6) months or longer, interest shall be payable on the
ninetieth (90th) day of the Interest Period (and, in the case of a one-year
Interest Period, also on the 180th day and the 270th day of the Interest Period)
and on the last day of the Interest Period. In addition to the foregoing,
interest on all LIBOR Loans shall be due and payable upon repayment or
prepayment of such Loans. Interest on all LIBOR Loans shall be computed on the
basis of a 360 day year, and interest on all Base Rate Loans shall be computed
on the basis of a 365 day year unless the Base Rate is based on the Federal
Funds Rate, in which case it shall be computed on the basis of a 360 day year.
2.6.3 Applicable Margin. The term "Applicable Margin" when used herein with
respect to the rate of interest to be charged on Revolving Credit Loans shall
mean, at any time, the respective percentage set forth below under the caption
for the specified kind of Loan opposite the applicable Leverage Ratio:
<TABLE>
<CAPTION>
Base LIBOR
Leverage Ratio Rate Rate
greater than or
<S> <C> <C>
equal to 6.0 to 1 1.000% 2.250%
less than 6.0 to 1
but greater than or
equal to 5.5 to 1 0.875% 2.125%
less than 5.5 to 1
but greater than or
equal to 5.0 to 1 0.625% 1.875%
less than 5.0 to 1
but greater than or
equal to 4.5 to 1 0.375% 1.625%
less than 4.5 to 1.0
but greater than or
equal to 4.0 to 1 0.125% 1.375%
less than 4.0 to 1 0.000% 1.250%
</TABLE>
The term "Applicable Margin" when used herein with respect to the rate of
interest to be charged on any Term Loan shall mean, at any time, an amount equal
to the sum of (a) the percentage set forth above for such kind of Loan at the
relevant Leverage Ratio plus (b) one half of one percent (.50%).
For purposes of determining the Applicable Margin, the Leverage Ratio shall be
determined initially on the basis of the certificate provided for in Subsection
4.1.5 and subsequently on the basis of the most recent Officer's Compliance
Certificate delivered pursuant to Subsection 6.1.4(a) below or pursuant to the
following paragraph of this Subsection 2.6.3. Any change in the Applicable
Margin as a result of a change in the Leverage Ratio shall be effective as of
the second (2nd) Business Day after the day on which the Officer's Compliance
Certificate delivered pursuant to Subsection 6.1.4(a) below or the following
paragraph of this Subsection 2.6.3 that indicates such change in the Leverage
Ratio is delivered to the Agent provided, however, if the financial statements
or such Officer's Compliance Certificate are not delivered at the time specified
in Section 6.1 below or in the following paragraph, then the Applicable Margin
for any given kind of Loan shall, in the event that said statements and
Officer's Compliance Certificate are not delivered within two (2) Business Days
of receipt of notice from the Agent, be the highest rate set forth above for
such kind of Loan during any period that the Borrower is delinquent in the
delivery of such financial statements.
On any date that the Borrower incurs Indebtedness to make any
Acquisitions in an aggregate amount equal to or greater than $10,000,000 (an
"Acquisition-Margin Adjustment Date") the Borrower shall deliver to the Agent an
Officer's Compliance Certificate setting forth the pro forma Leverage Ratio as
of such date after giving effect to such Indebtedness for Acquisitions (i.e.,
using the amount of Annualized Pre-Tax Operating Cash Flow set forth on the most
recent Officer's Compliance Certificate (adjusted to give pro forma effect to
the Acquisition in the manner permitted by Section 1.2.4) and comparing it to
the Total Debt as at the date of the incurrence of such Indebtedness for
Acquisitions after giving effect thereto).
2.6.4 Manner of Election of Interest Rate and Interest Period. Unless otherwise
elected by the Borrower, the Loans shall bear interest at the Base Rate plus
Applicable Margin. The Borrower may, upon three (3) Business Days' prior written
notice to the Agent in the form of Exhibit C to this Agreement, and subject to
and upon the terms and conditions set forth in this Agreement, elect to borrow
money as, or convert outstanding Loans to, LIBOR Loans. Any such election may be
made with respect to a principal amount designated in such notice equal to at
least Three Million Dollars ($3,000,000) and integral multiples of Five Hundred
Thousand Dollars ($500,000) in excess of such minimum, for an Interest Period
designated by the Borrower in its notice.
2.6.5 Certain Limitations. The right of the Borrower to elect a certain Type
of Loan shall be limited as follows:
(a) The Borrower may not convert any Loan to a LIBOR Loan if at the time of such
conversion or election there shall exist a Default or an Event of Default.
(b) If a LIBOR Rate is elected, such interest rate shall remain in effect for
the Interest Period selected and such interest rate shall not otherwise be
converted to another interest rate prior to the expiration of the Interest
Period except as otherwise required by this Agreement.
(c) LIBOR Loans shall, commencing on the last day of the applicable Interest
Period, bear interest at the Base Rate plus the Applicable Margin unless prior
thereto the Agent shall have received a timely notice pursuant to this Section
2.6 that an elective rate based on the LIBOR Rate plus Applicable Margin shall
be effective commencing on such date with respect to any or all of such
principal.
(d) The Borrower may not elect a LIBOR Rate for any Interest Period if the
effect of such election, (as could reasonably be determined by the Borrower at
the time of such election) would be to require the Borrower to make a repayment
or prepayment of a LIBOR Loan prior to the end of the relevant Interest Period.
Without limiting the generality of the foregoing, no Interest Period may be
elected for Revolving Credit Loans that would end later than the Revolving
Credit Maturity Date and no Interest Period may be elected for Term Loans that
would end later than the Term Loan Maturity Date.
(e) The Borrower may not elect a LIBOR Rate if such election would require the
Agent to administer concurrently more than eight (8) Types of Loans.
2.6.6 Default Rate. Anything in this Agreement to the contrary notwithstanding,
but subject to the terms of Section 12.10 below, during the existence of any
payment default hereunder or under any other Loan Documents, the Loans shall
bear interest at a rate equal to the sum of two percent (2%) per annum plus the
interest rate(s) otherwise in effect hereunder (the "Default Rate").
2.7 Additional Provisions Respecting Rates and Costs
2.7.1 Mandatory Suspension and Conversion of LIBOR Loans. Each Lender's
obligations to make, continue or convert into LIBOR Loans (or, as applicable,
LIBOR Loans with a certain Interest Period) shall be suspended, and all such
Lender's outstanding Loans of such Type shall be converted into Base Rate Loans
on the last day of their applicable Interest Periods (or, if earlier, in the
case of clause (c) below, on the last day such Lender may lawfully continue to
maintain Loans of such Type or, in the case of clause (d) below, on the day
determined by such Lender to be the last Business Day before the effective date
of the applicable restriction), and all pending requests for the making or
continuation of or conversion into Loans of such Type by such Lender shall be
deemed requests for Base Rate Loans, if:
(a) on or prior to the determination of an interest rate for a LIBOR Loan for
any Interest Period, the Agent determines that for any reason appropriate
information is not available to it for purposes of determining the LIBOR Rate
for such Interest Period;
(b) such Lender determines that the LIBOR Rate as determined by the Agent for
such Interest Period would not accurately reflect the cost to any Lender of
making, continuing or converting into a LIBOR Loan for such Interest Period;
(c) at any time, such Lender determines that any Regulatory Change makes it
unlawful or impracticable for any Lenders to make, continue or convert into a
LIBOR Loan or a LIBOR Loan of a certain Interest Period, or to comply with its
obligations hereunder in respect thereof; or
(d) such Lender determines that, by reason of any Regulatory Change, such Lender
is restricted, directly or indirectly, in the amount that it may hold of (i) a
category of liabilities that includes deposits by reference to which, or on the
basis of which, the interest rate applicable to LIBOR Loans of such Type is
directly or indirectly determined or (ii) the category of assets that includes
LIBOR Loans of such Type.
If, as a result of this Subsection 2.7.1, any Loan of any Lender that would
otherwise be made or maintained as or converted into a LIBOR Loan for any
Interest Period is instead made or maintained as or converted into a Base Rate
Loan, then, unless the corresponding Loan of each of the other Lenders is also
to be made or maintained as or converted into a Base Rate Loan, such Loan shall
be treated as being a LIBOR Loan for such Interest Period for all purposes of
this Agreement (including the timing, application and proration among the
Lenders of interest payments, conversions and prepayments) except for the
calculation of the interest rate borne by such Loan. The Agent shall promptly
notify the Borrower and each Lender of the existence or occurrence of any
condition or circumstance specified clause (a) above, and each Lender shall
promptly notify the Borrower and the Agent of the existence, occurrence or
termination of any condition or circumstance specified in clause (b), (c) or (d)
above applicable to such Lender's Loans, but the failure by the Agent or such
Lender to give any such notice shall not affect such Lender's rights hereunder.
Notwithstanding the foregoing, LIBOR Loans for a one year Interest Period are
governed by the terms of Section 2.6 and shall be available only as specified
therein.
2.7.2 Regulatory Changes; Increased Costs. If in the determination of any Lender
(a) any Regulatory Change shall directly or indirectly (i) reduce the amount of
any sum received or receivable by such Lender on any Loan, (ii) impose a cost on
such Lender or any Affiliate of such Lender that is attributable to the making
or maintaining of, or such Lender's commitment to make, any Loan, (iii) require
such Lender or any Affiliate of the Lender to make any payment on, or calculated
by reference to, the gross amount of any amount received by the Lender under any
Loan Document or (iv) reduce, or have the effect of reducing, the rate of return
on any capital of the Lender or any Affiliate of the Lender that the Lender or
such Affiliate is required to maintain on account of any Loan or the Lender's
commitment to make any Loan and (b) such reduction, increased cost or payment
shall not be fully compensated for by an adjustment in the applicable rates of
interest payable under the Loan Documents, then, upon written request of such
Lender, the Borrower shall pay to such Lender such additional amounts as the
Lender determines will, together with any adjustment in the applicable rates of
interest payable hereunder, fully compensate it for such reduction, increased
cost or payment. Such additional amounts shall be payable, in the case of those
applicable to prior periods, within 15 Business Days after request by the Lender
for such payment and, in the case of those applicable to future periods, on the
date specified in such request. The Lender will promptly notify the Borrower of
any determination made by it referred to above, but the failure to give such
notice shall not affect the Lender's right to such compensation; provided,
however, that the Borrower shall not be required to pay such additional amounts
in respect of any Regulatory Change for any period ending prior to the date that
is 90 days prior to the giving of the notice of the determination of such
additional amounts (unless such period shall have commenced after the date that
such Lender notified the Borrower of the possibility that additional amounts may
be payable as a result of such Regulatory Change but was unable at that time to
specify the amount due), except if such Regulatory Change shall have been
imposed retroactively.
2.7.3 Capital Requirements. If, in the determination of any Lender, such Lender
or any Affiliate of such Lender is required, as a result of a Regulatory Change,
to maintain capital on account of any Loan or such Lender's commitment to make
any Loan, then, upon request by such Lender, the Borrower shall from time to
time thereafter pay to such Lender such additional amounts as such Lender
determines will fully compensate for any reduction in the rate of return on the
capital that such Lender or such Affiliate is so required to maintain on account
of such Loan or commitment suffered as a result of such capital requirement.
Such additional amounts shall be payable, in the case of those applicable to
prior periods, within 15 Business Days after request by such Lender for such
payment and, in the case of those relating to future periods, on the dates
specified in such request; provided, however, that, except if a Regulatory
Change shall have been imposed retroactively, the Borrower shall not be required
to pay additional amounts in respect of any Regulatory Change for any period
ending prior to the date that is 90 days prior to the giving of the notice of
the determination of such additional amounts (unless such period shall have
commenced after the date that such Lender notified the Borrower of the
possibility that additional amounts may be payable as a result of such
Regulatory Change but was unable at that time to specify the amount due), except
if such Regulatory Change shall have been imposed retroactively.
2.7.4 Funding Losses. The Borrower shall pay to each Lender, from time to time,
upon request, such amount as the Lender determines is necessary to compensate it
for any loss, cost or expense, including, without limitation, loss of the
Applicable Margin incurred by it as a result of (a) any payment, prepayment
(whether voluntary, mandatory or scheduled) or conversion of a LIBOR Loan on a
date other than the last day of an Interest Period for such LIBOR Loan or (b) a
LIBOR Loan for any reason not being made or converted, or any payment of
principal thereof or interest thereof not being made, on the date therefor
determined in accordance with the applicable provisions of this Agreement.
2.7.5 Determinations. In making the determinations contemplated by this Section
2.7, the relevant Lender may make such estimates, assumptions, allocations and
the like that such Lender in good faith determines to be appropriate, and the
Lender's selection thereof in accordance with this Section 2.7, and the
determinations made by the Lender on the basis thereof, shall be final, binding
and conclusive upon the Borrower, absent manifest error. Each Lender shall
furnish to the Borrower, at the time of any request for compensation under this
Section 2.7 upon request, a certificate outlining in reasonable detail the
computation of any amounts claimed by it under this Section 2.7 and the
assumptions underlying such computations, which shall include a statement of an
officer of such Lender certifying that such request for compensation is being
made pursuant to a policy adopted by such Lender to seek such compensation
generally from customers similar to the Borrower and having similar provisions
in agreements with such Lender.
2.7.6 Change of Lending Office. If an event occurs with respect to a Lending
Office of any Lender that makes operable the provisions of Subsection 2.7.1 or
requires a payment under Subsection 2.7.2 or 2.7.3, such Lender shall, if
requested by the Borrower, use reasonable efforts to designate another Lending
Office, the designation of which will reduce the amount the Borrower is so
obligated to pay, eliminate such operability or reduce the amount such Lender is
so entitled to claim, provided, however, that such designation would not, in the
sole and absolute discretion of such Lender, be disadvantageous to such Lender
in any manner or contrary to such Lender's policies. Except as set forth in this
Subsection 2.7.6, any Lender may designate any lending office as its Lending
Office for each Type of Loan.
2.7.7 Replacement of Lenders. If any Lender requests compensation pursuant to
Subsection 2.7.2 or 2.7.3, or such Lender's obligation to make or continue, or
to convert Loans into LIBOR Loan shall be suspended pursuant to Subsection 2.7.1
(other than clause (a) of Subsection 2.7.1), the Borrower, upon three Business
Days' notice, may require that such Lender transfer all of its right, title and
interest under this Agreement, such Lender's Notes and the other Loan Documents
to any Eligible Institution identified by the Borrower with the consent of the
Agent (which consent shall not be unreasonably withheld), subject to the
following: (a) such proposed transferee shall agree to assume all of the
obligations of such Lender for consideration equal to the outstanding principal
amount of such Lender's Loans, together with interest thereon to the date of
such transfer, and satisfactory arrangements are made for payment to such Lender
of all other amounts payable hereunder to such Lender on or prior to the date of
such transfer (including any fees accrued hereunder and any amounts that would
be payable under Section 2.7.4 as if all of such Lender's Loans were being
prepaid in full on such date) and (b) if such Lender being replaced has
requested compensation pursuant to Subsection 2.7.2 or 2.7.3, such proposed
transferee's aggregate requested compensation, if any, pursuant to Subsection
2.7.2 or 2.7.3 with respect to such replaced Lender's Loans is lower than that
of the Lender replaced. Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements of the Borrower contained in this
Section 2.7 and in Section 12.14 (without duplication of any payments made to
such Lender by the Borrower or the proposed transferee) shall survive for the
benefit of any Lender replaced under this Subsection 2.7.7 with respect to the
time prior to such replacement.
2.7.8 Flexibility Respecting Source of Funds. Although each Lender may elect to
purchase in the London Inter-Bank Eurocurrency Market one or more Eurodollar
deposits in order to fund or maintain its funding of its pro rata share of the
principal amount of the LIBOR Loans during the Interest Period in question, it
is acknowledged that the provisions of this Agreement relating to such funding
are included only for the purpose of determining the rate of interest to be paid
and any other amounts owing under this Agreement in connection with such
election, and each Lender shall be entitled to fund and maintain its funding of
all or any part of that portion of the principal amount of the Loans in any
manner it sees fit, but all such determinations shall be made as if each Lender
had actually funded and maintained such LIBOR Loans through the purchase of
Eurodollar deposits in an amount equal to the principal amount of such LIBOR
Loans having a maturity corresponding to such Interest Period.
2.8 Fees.
2.8.1 Commitment Fees. The Borrower shall pay to the Agent for the account of
the Lenders (based on their proportionate share of the Revolving Credit
Commitment) quarterly on each Quarterly Payment Date and at any time there shall
be a reduction in the amount of the Revolving Credit Commitment and on the
Revolving Credit Maturity Date, a non-refundable commitment fee (the "Commitment
Fee") (calculated on the basis of a 365/366 day year for the actual days
elapsed) equal to the product of three-eighths of one percent (3/8%) times the
average daily unborrowed portion of the amount of the Revolving Credit
Commitment during the period ended on such Quarterly Payment Date or such
Commitment reduction date or Revolving Credit Maturity Date, as the case may be,
provided, however, at any time that the Leverage Ratio is less than or equal to
4.5 to 1, the Commitment Fee shall be based on a rate equal to one-quarter of
one percent (1/4%) (rather than three-eighths of one percent). For purposes of
determining the Commitment Fee, the Leverage Ratio shall be determined initially
on the basis of the certificate provided for in Subsection 4.1.5 and
subsequently on the basis of the most recent financial statements delivered
pursuant to Section 6.1 below and the Officer's Compliance Certificate delivered
in connection therewith or delivered on an Acquisition-Margin Adjustment Date
pursuant to Section 2.6.3 above. Any change in the Commitment Fee rate as a
result of a change in the Leverage Ratio shall be effective as of the second
(2nd) Business Day after the day on which an Officer's Compliance Certificate id
delivered to the Agent pursuant to either Section 6.1 below or 2.6.3 above that
indicates such change in the Leverage Ratio provided, however, if the financial
statements and Officer's Compliance Certificate are not delivered at the time
specified in Section 6.1 below or the Officer's Compliance Certificate is not
delivered pursuant to Section 2.6.3 above, then the Commitment Fee, from and
after two days after receipt of notice from the Agent, shall be three-eighths of
one percent (3/8%) during any period that the Borrower is delinquent in the
delivery of such financial statements (regardless what the Leverage Ratio
actually is during that period).
2.8.2 Other Fees. The Borrower shall pay to the Agent for the account of the
Agent or for the account of the Lenders, as the case may be, such other fees as
may be agreed upon in separate writings signed by the Borrower.
2.9 Payments to the Agent.
2.9.1 Method of Payment. All payments on account of principal and interest on
the Loans, the Commitment Fees, and all other amounts otherwise payable by the
Borrower to the Agent or to the Lenders under this Agreement, shall be made to
the Agent in U.S. Dollars which are immediately available by noon,
(Philadelphia, Pennsylvania time), on the due date for such payment, at Agent's
principal office (which as of the date hereof is at 1339 Chestnut Street,
Philadelphia, PA 19101) specifying amount and date of payment, re: Harron
Communications Corp. (and if by wire transfer, in accordance with the
instructions on the signature page to this Agreement executed by First Union
National Bank), or to such other accounts or Persons or at such other place as
the Agent may direct in writing. The Borrower hereby authorizes the Lenders
(after receipt of notice from the Agent to do so) to (i) apply to the aforesaid
payments, up to the amount of such payments, any portion of the balance of any
account maintained by the Borrower for the purpose of facilitating said
payments, and/or (ii) cause the aforesaid payments to be made, if not paid by
the Borrower when due, by drawing under the loan facilities provided under this
Agreement if available; notwithstanding the foregoing, any amounts not paid when
due shall bear interest at the Default Rate, subject to the following sentence.
The failure by the Borrower to make a payment by noon shall not constitute an
Event of Default if such payment is made on the due date; however, any payment
made after such time on such due date shall be deemed made on the next Business
Day for the purpose of interest and reimbursement calculations.
2.9.2 Pro Rata Application. Except as otherwise set forth in this Agreement,
payments made to the Agent for the account of the Lenders shall be deemed to be
made to the Lenders in proportion to their respective shares of the applicable
amount due. The Agent shall promptly remit to each Lender its pro rata share of
such payment in immediately available funds, except that all reimbursement
payments in respect of losses, out-of-pocket expenses, funding losses or like
matters shall be retained by the Agent or remitted to the Lenders according to
their respective appropriate entitlement to such reimbursement and all amounts
payable to the Agent as reimbursement of costs or expenses or otherwise payable
hereunder may be deducted before making any payments to the Lenders. The Agent
shall incur no liability for allocations which it reasonably determines to be
made in accordance with the terms of this Agreement, absent gross negligence or
willful misconduct as determined by a court of competent jurisdiction.
2.9.3 Permitted Assumptions by Agent. Unless the Agent shall have been notified
by the Borrower in writing prior to the date on which the Borrower is scheduled
to make a payment to the Agent for the account of one or more of the Lenders
(such payment being the "Borrower Required Payment"), which notice shall be
effective upon receipt, that the Borrower does not intend to make the Borrower
Required Payment to the Agent, the Agent may assume that the Borrower Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make such amount available to the Lenders entitled thereto on
such date. If the Borrower has not in fact made the Borrower Required Payment to
the Agent, the recipient(s) of such payment shall, on demand, repay to the Agent
the amount so made available together with interest in respect of each day
during the period commencing on the date such amount was so made available by
the Agent until the date the Agent recovers such amount at a rate per annum
equal to the Federal Funds Rate for such day (as determined by the Agent)
provided, however, that if such Lender shall fail to repay to the Agent the
amount so made available within two (2) Business Days after the date it shall
have received notice from the Agent that the original demand for payment was not
satisfied, interest shall accrue (from such second Business Day after notice is
received) at a rate equal to the rate payable by the Borrower on the
corresponding Loan (but not the Default Rate).
2.10 Taxes.
2.10.1 Taxes Payable by the Borrower. If any Tax is required to be withheld or
deducted from, or is otherwise payable by the Borrower in connection with, any
payment due hereunder to any Lender or the Agent that is not a "United States
Person" (as such term is defined in Section 7701(a)(30) of the Code) the
Borrower (i) shall, if required, withhold or deduct the amount of such Tax from
such payment and, in any case, pay such Tax to the appropriate taxing authority
in accordance with applicable law and (ii) except in the case of any Bank Tax,
shall pay to such Lender or the Agent such additional amounts as may be
necessary so that the net amount received by such Lender or the Agent with
respect to such payment, after withholding or deducting all Taxes (other than
Bank Taxes) required to be withheld or deducted, is equal to the full amount
payable hereunder. If any Tax is withheld or deducted from, or is otherwise
payable by the Borrower in connection with, any payment due to any such Lender
or the Agent hereunder, the Borrower shall furnish to such Lender or the Agent
the original or a certified copy of a receipt for such Tax from the applicable
taxing authority within 30 days after the date of such payment (or, if such
receipt shall not have been made available by such taxing authority within such
time, the Borrower shall use reasonable efforts to promptly obtain and furnish
such receipt). If the Borrower fails to pay any Taxes, other than Bank Taxes,
when due to the appropriate taxing authority or fails to remit to any such
Lender or the Agent the required receipts, the Borrower shall indemnify such
Lender or the Agent for any such Taxes, interest, penalties or additions to such
Tax that may become payable by such Lender or the Agent as a result of any such
failure.
2.10.2 Reimbursement of Taxes Payable by any Lender or the Agent. The Borrower
shall, promptly upon request by any Lender or the Agent that is not a United
States Person for the payment thereof, pay to any such Lender or the Agent an
amount equal to (a) all Taxes (other than Bank Taxes and without duplication of
amounts paid pursuant to the preceding Subsection 2.10.1) payable by such Lender
or the Agent with respect to any payment due to such Lender or the Agent
hereunder and (b) all Taxes (other than Bank Taxes) payable by such Lender or
the Agent as a result of payments made by the Borrower (whether made to a taxing
authority or to such Lender or the Agent) pursuant to Subsection 2.10.1 or this
Subsection 2.10.2.
2.10.3 Exemption from U.S. Withholding Taxes.
(a) Each Lender that is not a United States Person shall submit to the Borrower
and the Agent, on or before the fifth day prior to the first Quarterly Payment
Date occurring after the Closing Date (or, in the case of a Person that is not a
United States Person and that became a Lender by assignment, promptly upon such
assignment), two duly completed and signed copies of either (i) a Form 1001 of
the United States Internal Revenue Service entitling such Lender to a complete
exemption from withholding on all amounts to be received by such Lender pursuant
to this Agreement and the Loans or a Form 4224 of the United States Internal
Revenue Service relating to all amounts to be received by such Lender pursuant
to this Agreement and the Loans or (ii) in the case of any Lender (or Person
that becomes a Lender by assignment) that is exempt from United States Federal
withholding tax pursuant to Sections 871(b) or 881(c) of the Code, Form W-8 of
the United States Internal Revenue Service. Each such Lender shall, from time to
time after submitting any such Form, submit to the Borrower and the Agent such
additional duly completed and signed copies of one or another such Forms (or any
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may be (x) requested in writing by the Borrower or
the Agent and (y) appropriate under the circumstances and under then current
United States law or regulations to avoid or reduce United States withholding
taxes on payments in respect of all amounts to be received by such Lender
pursuant to this Agreement or the Loans. Upon the request of the Borrower or the
Agent, each Lender that is a United States Person shall submit to the Borrower
and the Agent a certificate to the effect that it is a United States Person.
(b) If any Lender determines that it is unable to submit to the Borrower or the
Agent any form or certificate that such Lender is obligated to submit pursuant
to the preceding paragraph, or that it is required to withdraw or cancel any
such form or certificate, or that any such form or certificate previously
submitted has otherwise become ineffective or inaccurate, such Lender shall
promptly notify the Borrower and the Agent of such fact.
(c) Notwithstanding anything to the contrary contained herein, the Borrower
shall not be required to pay any additional amount in respect of United States
withholding taxes pursuant to Subsection 2.10.1 above to any Lender that (i) is
not, on the date this Agreement is first executed by such Lender (or, in the
case of a Person that became a Lender by assignment, on the date of such
assignment), either (x) entitled to submit Form W-8 or Form 1001 of the United
States Internal Revenue Service (or any successor form as shall be adopted from
time to time by the relevant United States taxing authorities) entitling such
Lender to a complete exemption from withholding on all amounts to be received by
such Lender pursuant to this Agreement and the Loans or Form 4224 of the United
States Internal Revenue Service (or any successor form as shall be adopted from
time to time by the relevant United States taxing authorities) relating to all
amounts to be received by such Lender pursuant to this Agreement and the Loans
or (y) a United States Person, (ii) is no longer entitled or, in the case of a
Lender that is no longer a United States Person, is not entitled, to submit
either such Form (or any successor form as shall be adopted from time to time by
the relevant United States taxing authorities) as a result of any change in
circumstances or other event other than a Regulatory Change or (iii) with
respect to any affected interest payments, fails to fulfill its requirements set
forth in this Section 2.10 (other than as a result of a Regulatory Change).
<PAGE>
Article 3
SUBSIDIARY GUARANTEES
3.1 Guaranty of Payment.
3.1.1 Guaranty. The Subsidiary Guarantors hereby jointly and severally,
irrevocably and unconditionally, guaranty to the Agent for its benefit and for
the benefit of the Lenders, that the Obligations (whether now existing or
hereafter arising) shall be paid in full when due and payable, whether at the
stated or accelerated maturity thereof or upon any mandatory or scheduled
prepayment or otherwise. The Subsidiary Guarantors hereby further jointly and
severally agree that if the Borrower shall fail to pay in full when due (whether
at the stated or accelerated maturity thereof or upon any mandatory or
prepayment or otherwise) any of the Obligations, the Subsidiary Guarantors will
promptly pay the same, without any demand or notice whatsoever. This guaranty is
a guaranty of payment and not merely a guaranty of collection.
3.1.2 Limitation. Notwithstanding the definition of "Obligations" herein, the
liability of each Subsidiary Guarantor hereunder is limited to an amount equal
to (x) the lowest amount that would render this guaranty void, voidable or
unenforceable against such Subsidiary Guarantor's creditors or creditors'
representatives under any applicable fraudulent conveyance, fraudulent transfer
or similar act or under Section 544 or 548 of the Bankruptcy Code of 1978, as
amended, minus (y) $1.00 (one U.S. Dollar).
3.2 Obligations of Subsidiary Guarantors Absolute, Etc. The obligations of the
Subsidiary Guarantors hereunder shall be absolute and unconditional. Each
Subsidiary Guarantor, jointly and severally, guarantees that the Obligations
will be paid strictly in accordance with the terms of the agreement, instrument
or document giving rise to such Obligations, regardless of any law, regulation
or order now or hereafter in effect in any jurisdiction affecting any such terms
or the rights of the Agent or the Lenders with respect thereto. The liability of
the Subsidiary Guarantors hereunder shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any Loan Document;
(b) any increase or decrease in the amount of the Obligations or any change
in the time, manner or place of payment of the Obligations;
(c) any amendment or modification of or supplement to any Loan Document, or any
furnishing or acceptance of any security, or any release of any security or the
release of any Person's obligations (including without limitation, any
Subsidiary Guarantor or the Borrower) with respect to the Obligations;
(d) any waiver, consent, extension, indulgence or other action or inaction under
or in respect of any Loan Document or any exercise or nonexercise of any right,
remedy, power or privilege under or in respect of any Loan Document;
(e) any counterclaim, setoff, recoupment or defense based upon any claim
any Subsidiary Guarantor or the Borrower may have against the Agent or any
Lender;
(f) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar proceeding with respect to the Borrower, any
Affiliate of the Borrower or any Subsidiary Guarantor or their respective
properties or creditors;
(g) any invalidity or unenforceability, in whole or in part, of any term
hereof or of any Loan Document;
(h) any failure on the part of any Loan Party for any reason to perform or
comply with any term of the Loan Documents; or
(i) any other occurrence whatsoever, whether similar or dissimilar to the
foregoing.
3.3 Continuing Guaranty. This guaranty and suretyship is an absolute,
unconditional, present and continuing guaranty and suretyship of payment and is
in no way conditional or contingent; it shall remain in full force and effect
until terminated pursuant to Section 3.7 below.
3.4 Joint and Several Liability. Each and every representation, warranty,
covenant and agreement made by the Subsidiary Guarantors, or any of them, under
this Agreement shall be and constitute joint and several obligations of all of
the Subsidiary Guarantors, whether or not so expressly stated herein.
3.5 Waivers.
3.5.1 In General. Each Subsidiary Guarantor hereby waives, to the fullest extent
permitted by applicable law, (a) all presentments, demands for performance,
notice of non-performance, protests, notices of protests and notices of dishonor
in connection with the Obligations or any agreement relating thereto; (b) notice
of acceptance of this Agreement; (c) any requirement of diligence or promptness
on the part of the Agent or the Lenders in the enforcement of its/their rights
hereunder or under the other Loan Documents; (d) any enforcement of any present
or future agreement or instrument relating directly or indirectly to the
Obligations; (e) notice of any of the matters referred to in Section 3.2 above;
(f) notices of every kind and description which may be required to be given by
any statute or rule of law; and (g) any defense of any kind which it may now or
hereafter have with respect to its liability under this Agreement. Without
limiting the foregoing, neither the Lenders nor the Agent shall be required to
make any demand upon, or to pursue or exhaust any rights or remedies against the
Borrower, any other Subsidiary Guarantor or any other Person, or against any
Collateral. No failure on the part of the Agent or any Lender to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
3.5.2 Subrogation. Each Subsidiary Guarantor hereby agrees that it will not
enforce or otherwise exercise or claim or assert any rights of subrogation or
contribution against any Person with respect to the Obligations or any security
therefor unless and until all the Obligations are indefeasibly paid in full.
3.6 Additional Subsidiary Guarantors. Subsidiary Guarantors shall at all times
constitute all of the Subsidiaries. Any Person which becomes a Subsidiary after
the date hereof shall become a Subsidiary Guarantor hereunder, and Borrower
shall cause such Person to signify its acceptance of the terms hereof in the
manner set forth in Section 8.12 below.
3.7 Termination of Guaranty.
3.7.1 Termination of Guaranty In General. At such time as (a) the Lenders have
no obligations to make further fundings to the Borrower under the terms of this
Agreement and (b) all the Obligations have been indefeasibly paid and/or
performed in full, then the guaranty provided for in this Article 3 shall
terminate, provided, however, that (i) all indemnities of the Subsidiary
Guarantors or the Borrower contained in this Agreement or any Loan Document
shall survive and remain operative and in full force and effect regardless of
the termination of any other provisions of this Agreement and (ii) the guaranty
provided for in this Article 3 shall be reinstated if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by the Agent
or any Lender upon the insolvency, bankruptcy or reorganization of the Borrower
or any Subsidiary Guarantor or otherwise, all as though such payment had not
been made.
3.7.2 Termination of Guaranty Obligations of Sold Subsidiary Guarantors.
Effective upon the closing of a sale by the Borrower or any Subsidiary of all
the outstanding capital stock of any Subsidiary Guarantor hereunder (any
Subsidiary Guarantor being so sold is hereinafter the "Sold Subsidiary
Guarantor") in conformity with the provisions of Section 9.7 below (other than
to another Subsidiary or the Borrower), and receipt by the Agent of a
certification to such effect from the chief financial officer of the Borrower,
the obligations of that Sold Subsidiary Guarantor hereunder shall terminate.
However, all the obligations of the other Subsidiary Guarantors hereunder shall
remain in full force and effect. Each Lender hereby authorizes and directs the
Agent to execute such release agreements and other documents and take such other
action as shall be necessary or desirable in the opinion of the Agent to carry
out the purposes of this Subsection 3.7.2.
3.8 No Election; Enforcement. Without limiting the generality of the provisions
set forth in Article 10 below, the Agent (acting for the benefit of itself
and/or the Lenders) shall have the right to seek recourse against any one or
more of the Subsidiary Guarantors to the fullest extent provided herein. No
election to proceed in one form of action or proceeding or against any party, or
against any Collateral, or on any obligation, shall constitute a waiver of the
Agent's right to proceed in any other form of action or proceeding or against
other parties. The Agent may proceed to protect and enforce the guaranty
provided in this Article 3 by suit or suits or proceedings in equity, at law or
in bankruptcy against any or all of the Subsidiary Guarantors in one action or
in as many different actions or forums as the Agent shall determine.
Article 4
CONDITIONS OF INITIAL FUNDING
4.1 Conditions to Initial Funding.
The obligation of the Lenders to make the initial
Loans under this Agreement is subject to the fulfillment of the conditions
specified in Subsections 4.1.1 through 4.1.22, in each case to the satisfaction
of the Agent and, to the extent specified below, to each Lender, except that,
unless any Lender objects in the form of written notice delivered to the Agent
prior to the Closing Date , if it is impracticable for the Borrower to deliver
any of the following items on or before the Closing Date, the Borrower may have
(i) an additional 30 days after the Closing Date to satisfy the following
conditions: Subsection 4.1.1 (Secretary's Certificate), Subsection 4.1.2
(Organizational Documents), Subsection 4.1.3 (Good Standing Certificates) and
Subsection 4.1.6 (Lien Searches) and (ii) an additional 60 days after the
Closing Date to satisfy the following conditions: Subsection 4.1.11(b)
(Additional Opinions).
4.1.1 Secretary's Certificate. The Borrower shall have delivered, or caused
to be delivered, a certificate of the Secretary or an Assistant Secretary of
each of Adelphia, the Borrower and the Subsidiaries, with specimen signatures of
the authorized signatories to the Loan Documents;
4.1.2 Organizational Documents. The Borrower shall have delivered, or caused to
be delivered, copies (which may be attached to a Secretary's certificate) of the
certificate of incorporation or other formation document, as applicable, of each
Loan Party, in each case certified, as of a recent date, by the Secretary of
State or other appropriate official of the jurisdiction of formation of such
Loan Party, together with any bylaws, partnership agreements, shareholder
agreements or similar organizational documents of the Loan Parties;
4.1.3 Good Standing Certificates. The Borrower shall have delivered, or caused
to be delivered, a good standing or subsistence certificate issued as of a
recent date (a) for Adelphia, the Borrower and each Subsidiary issued by the
Secretary of State or other appropriate official of the jurisdiction of
formation of each such Person and (b) with respect to the Borrower, by the
Secretary of State or other appropriate official of each jurisdiction where the
Borrower is required to qualify to do business;
4.1.4 The Notes. The Borrower shall have delivered duly executed Notes
payable to each of the Lenders reflecting the amount of such Lender's
Commitment.
4.1.5 Officer's Compliance Certificate. The Borrower shall have delivered an
Officer's Compliance Certificate dated as of the Closing Date which certificate
shall specify, among other things, the Leverage Ratio after giving effect to the
Loans to be made on the Closing Date;
4.1.6 Lien Searches. Borrower shall have delivered to the Agent a sample of
Uniform Commercial Code and tax lien searches of the Borrower and each
Subsidiary as of a recent date, in such form and with such content as are
acceptable to the Agent, which sample shall be a subset of all relevant search
locations to be agreeable to the Agent;
4.1.7 Pledge Agreement. The Borrower shall have executed and delivered to the
Agent a Pledge Agreement in substantially the form annexed to this Agreement as
Exhibit F (as the same may be amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof, the "Pledge Agreement")
together with the stock certificates, assignment powers, Uniform Commercial Code
financing statements and other items required thereunder;
4.1.8 Parent Pledge Agreement. Adelphia shall have executed and delivered to the
Agent a Pledge Agreement in substantially the form annexed to this Agreement as
Exhibit G (as the same may be amended, modified or supplemented from time to
time in accordance with the terms hereof and thereof, the "Parent Pledge
Agreement") together with the stock certificates, assignment powers, Uniform
Commercial Code financing statements and other items required thereunder;
4.1.9 Insurance. The Borrower shall have delivered a schedule of insurance
coverage and such insurance certificates and endorsements as are required by
Section 8.4 of this Agreement or as are required by any other Loan Document;
4.1.10 [intentionally omitted]
4.1.11 Opinion of Counsel. (a) Basic Opinions. The Borrower shall have
delivered favorable opinions of counsel to each of the Loan Parties as to the
transactions contemplated hereby addressed to the Agent and the Lenders and
dated as of the Closing Date;
Additional Opinions. The Borrower shall have
delivered favorable opinions of counsel to each of the Loan Parties as to
certain FCC matters and issues not covered by the opinions referred to in
paragraph (a) above.
4.1.12 Consents and Approvals. All corporate, governmental, judicial and third
party consents and approvals (including without limitation any requisite FCC or
PUC approvals) necessary in connection with this Agreement and the other Loan
Documents and the related transactions shall have been obtained and become final
orders, as applicable, and shall remain in full force and effect and copies
thereof shall have been delivered to the Agent; 4.1.13 [intentionally omitted]
4.1.14 Financial Statements.
(a) The Borrower shall have delivered or caused to be delivered an audited
Consolidated balance sheet, income statement, statement of shareholders' equity,
and statement of cash flows of the Borrower and its Subsidiaries, as at the end
of and for the fiscal year ended December 31, 1998 setting forth the
corresponding figures for the previous fiscal year in comparative form certified
(without any qualification, modification or exception) by Deloitte & Touche LLP
or other independent certified public accountants selected by the Borrower and
satisfactory to the Agent;
4.1.15 [intentionally omitted]
4.1.16 [intentionally omitted]
4.1.17 [intentionally omitted]
4.1.18 [intentionally omitted]
4.1.19 [intentionally omitted]
4.1.20 Absence of Material Litigation. There shall be no material actions,
suits, protests, reconsideration or proceedings pending, or to the knowledge of
the Borrower, threatened, against or affecting the Borrower or any Subsidiary
before any court or before any governmental or administrative body or agency,
including without limitation the FCC or any PUC;
4.1.21 Absence of Default; Truth of Representations. The Borrower shall have
delivered a certificate (or shall include in the Officer's Compliance
Certificate) of a duly authorized officer confirming that (i) each of the
conditions set forth in clause (a) and clause (c) of Section 4.2.1 below shall
have been satisfied and (ii) there is no Default or Event of Default that has
occurred and is continuing; and
4.1.22 Additional Information. The Agent shall have received such additional
information and material as the Agent may reasonably request, including such
additional agreements or certifications executed by the Borrower or any other
Loan Party as the Agent may reasonably request.
4.2 Conditions to Each Loan.
4.2.1 Conditions. The obligation of the Lenders to make any Loan, including the
Loan on the Closing Date, is subject to fulfillment of each of the following
conditions, in each case, unless otherwise specified, to the satisfaction of the
Agent:
(a) Absence of Default. There shall not, either prior to or after giving
effect to each such Loan, exist an Event of Default or a Default;
(b) Borrowing Notice. The Agent shall have received a borrowing notice as
required by Section 2.4 above and, if the Loan is requested on an
Acquisition-Margin Adjustment Date, the Officer's Compliance Certificate
referred to in Subsection 2.6.3; and
(c) Truth of Representations. The representations and warranties of the Borrower
and each other Loan Party made in this Agreement and each other Loan Document
shall be true and correct as of the date each such Loan is made (both
immediately prior to and after giving effect to said Loan) as if made on and as
of such date, except to the extent that changes in the facts and conditions on
which such representations and warranties are based do not result from an act or
omission that constitutes a breach of any covenant set forth in this Agreement
or in any other Loan Document and have been disclosed to Lenders in writing (and
no Lender shall have objected thereto).
4.2.2 Methods of Satisfying Certain Conditions. The request for, and acceptance
of, any Loan by the Borrower shall be deemed a representation and warranty by
the Borrower that the conditions specified in paragraphs (a) and (c) of the
preceding Subsection 4.2.1 have been satisfied.
Article 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations of Borrower and Subsidiaries.
In order to induce the Lenders to enter into this
Agreement and to make the Loans
contemplated hereunder, the Borrower and the Subsidiaries (whether in their
capacity as Subsidiary Guarantors or otherwise), jointly and severally hereby
make the following representations and warranties, which representations and
warranties shall survive the execution and delivery of this Agreement, the Notes
and the other Loan Documents and shall not be affected or waived by any
inspection or examination made by or on behalf of the Agent or the Lenders:
5.1.1 Organization; Qualification.
(a) Each of the Loan Parties is duly organized, validly existing and in good
standing under the laws of its state of formation. The corporate Loan Parties
each has perpetual existence. Each of the Loan Parties has the power and
authority and all material governmental authorizations needed to own its
property and assets and to transact the business in which it is engaged or
presently proposes to engage. The Borrower and each Subsidiary is qualified to
do business in each state or jurisdiction where the failure to so qualify could
have a Material Adverse Effect.
(b) Schedule 5.1.1 attached hereto correctly sets forth, as of the Closing Date,
for the Borrower and each of its Subsidiaries and with respect to each such
entity: (i) its state of formation and (ii) whether it is a corporation, a
partnership or a limited partnership.
5.1.2 Stock Ownership. All of the capital stock of the Borrower is owned by
Adelphia. Schedule 5.1.2 attached hereto correctly lists, as of the Closing
Date, as to the Borrower and each Subsidiary (a) its name, (b) the classes of
stock issued by such Person and the principal characteristics of each such class
(other than common), (c) the names of each of the shareholders and the number
and percentage of the issued and outstanding shares of each class of equity
owned by each of the holders of such shares (and certificate numbers by which
such interests are designated). All of the outstanding shares of capital stock
or other equity of the Borrower and each Subsidiary are validly issued, fully
paid and nonassessable. All shares of capital stock of the Borrower or any
Subsidiary indicated in said Schedule 5.1.2 as owned by a certain Person are so
owned beneficially and of record by such Person, free and clear of any Lien,
except for the Lien created pursuant to the Loan Documents and Schedule 5.1.2
also correctly lists as to the Borrower and each Subsidiary any options,
warrants or other securities issued by the Borrower or such Subsidiary and the
identity of each holder of any such option, warrant or other security.
5.1.3 [intentionally omitted]
5.1.4 Power and Authority. Each of the Loan Parties has the corporate or other
power to execute, deliver and carry out the terms and provisions of each of the
Loan Documents to which it is a party, and each such Person has taken all
necessary corporate or other action (including, without limitation, obtaining
any consent of stockholders or partners required by law or by their respective
organizational documents) to authorize the execution, delivery and performance
of the Loan Documents to which each is a party. This Agreement constitutes, and
each of the other Loan Documents when delivered hereunder by the Borrower and/or
other Loan Parties, as applicable, will constitute, the authorized, valid and
legally binding obligations of such Persons, enforceable against each of said
Persons in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
principles of equity.
5.1.5 No Violation of Agreements. Neither the Borrower nor any Subsidiary is in
default under the provisions of any agreement, indenture, Franchise, license,
permit, mortgage or deed of trust to which it is a party, which default could
result in a Material Adverse Effect. The execution and delivery of the Loan
Documents, the consummation of the transactions contemplated by the Loan
Documents and compliance with the terms and provisions of the Loan Documents,
will not (a) violate any provision of law or any injunction or any applicable
regulation, order, writ, judgment or decree of any court or governmental
department, commission, board, bureau, agency or instrumentality applicable to
the Borrower or any other Loan Party, or (b) conflict or will be inconsistent
with, or will result in any breach of, any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to impose) any Lien, other than the Liens
created under the Loan Documents or other Permitted Liens, upon any of the
property or assets of the Borrower or any other Loan Party, pursuant to the
terms of any agreement, indenture, Franchise, license, permit, mortgage or deed
of trust to which any such Person is a party or by which any such Person may be
bound, or to which any such Person may be subject, or (c) violate any of the
provisions of the articles of incorporation, bylaws or other organizational
document of any such Person.
5.1.6 Recording, Enforceability and Consent
(a) The UCC-1 financing statements have been duly filed in the jurisdictions
listed on Schedule 5.1.6 attached hereto, and the stock certificates listed on
Schedule 5.1.6 attached hereto have been delivered to the Agent. No further
action, including, without limitation, any filing or recording of any document
or the obtaining of any consent, is necessary in order to establish, perfect and
maintain the Lenders' first priority security interests in the equity of the
Borrower and the Subsidiaries purported to be created by the Pledge Agreement
and the Parent Pledge Agreement pursuant to the Uniform Commercial Code as in
effect in all relevant jurisdictions, except for the periodic filing of
continuation statements with respect to such UCC-1 financing statements.
(b) Without limiting the generality of the foregoing, no consent, approval or
authorization of any Person, or recording, filing, registration, notice or other
similar action with or to any Person, is required in order to insure the
legality, validity, binding effect or enforceability of any of the Loan
Documents or the security interests provided thereunder as against all Persons,
except filings as may be required in connection with a foreclosure or other
remedial action after an Event of Default as contemplated in Subsection 10.2.5 .
(c) Each of the Borrower and the Subsidiaries is the owner of all real property
(subject to no Liens) or has a valid leasehold interest in all property on which
each of the headends used by the Borrower or such Subsidiary is located.
5.1.7 Litigation. There are no actions, suits, protests, reconsideration or
proceedings pending, or to the knowledge of the Borrower, threatened, against or
affecting any Loan Party before any court or before any governmental or
administrative body or agency, including without limitation the FCC or any PUC,
wherein unfavorable decisions, rulings or findings individually or in the
aggregate could have a Material Adverse Effect.
5.1.8 No Burdensome Agreements; Material Agreements. (a) Neither the Borrower
nor any Subsidiary is a party to or subject to any agreement or instrument or
subject to any corporate or other restrictions which, assuming compliance by
such Persons with the terms of such agreements or instruments, could have a
Material Adverse Effect.
5.1.9 Condition of Property. All of the material property, equipment and systems
of the Borrower and the Subsidiaries are in good repair, working order and
condition, ordinary wear and tear excepted.
5.1.10 Licenses.
(a) Each of the Borrower and the Subsidiaries has duly secured all licenses,
approvals and Franchises from, and has filed all registrations, applications,
reports and other documents with, and has paid all franchise, license, royalty
and other fees to, the FCC, the United States Copyright Office, the Register of
Copyrights, the Copyright Royalty Tribunal and each PUC required in connection
with their respective businesses as currently conducted, in each case (except
with respect to securing and preserving the Franchises as to which the following
paragraph (b) controls) where the failure to do any of the foregoing could have
a Material Adverse Effect.
(b) Each of the Borrower and the Subsidiaries has all necessary Franchises
required to conduct its business as presently conducted or as contemplated by
this Agreement.
(c) The following statements shall be true on the Closing Date and shall be true
thereafter, subject to the limitation that (after the Closing Date) the Borrower
and the Subsidiaries may allow certain Franchises to terminate so long as any
such termination individually or all such terminations in the aggregate could
neither result in a Material Adverse Effect nor cause a Default to exist under
this Agreement:
(i) The Borrower and the Subsidiaries hold the Franchises necessary to
conduct its business as presently conducted;
(ii) A such Franchises are valid and in full force and effect; no
event has occurred and no condition exists which could (x)
result in the revocation or termination of any such Franchise,
or (y) materially and adversely affect any rights of Borrower
or applicable Subsidiary under any such Franchise; and
(iii) the Borrower has no reason to believe, and no knowledge, that
its Franchises will not be renewed in the ordinary course.
(d) Each of the Borrower and the Subsidiaries has duly filed all cable
television registration statements and other filings which are required to be
filed by such Person under the Communications Act of 1934, as amended, and other
relevant communications law, and is in material compliance with such law,
including, without limitation, the rules and regulations of the FCC.
5.1.11 Title to Properties; Liens. Except Permitted Liens referred to in
paragraphs (a) through (h) and paragraph (j) of Subsection 9.2.1, each of the
Borrower and the Subsidiaries has good and marketable title to its properties
and assets, including the properties and assets reflected in the financial
statements referred to in Subsection 4.1.15 (except properties and assets
disposed of since the date thereof in the ordinary course of business), and none
of such properties or assets is subject to any Liens.
5.1.12 [intentionally omitted]
5.1.13 Business. The Borrower and each Subsidiary is engaged in Permitted
Businesses and no other business.
5.1.14 Compliance with Law. The Borrower, each Subsidiary and all officers,
directors and other agents acting on behalf of such Persons are in material
compliance with all applicable law.
5.1.15 Absence of Default. There exists no Default or Event of Default.
5.1.16 Financial Statements; Projections; Material Adverse Change.
All financial statements delivered pursuant to Subsection
4.1.14 have been prepared in accordance with GAAP applied on a consistent basis
throughout the period specified and present fairly in all material respects the
financial position of the subject Persons. None of the Borrower or any of its
Consolidated Subsidiaries has on the date hereof any material non-ordinary
course of business, contingent liabilities, liabilities for taxes (other than
those not yet due and payable), 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 said balance sheets (including the
footnotes thereof) as at said dates. Since the date of such financial statements
no event or condition has occurred which could result in a Material Adverse
Effect. In any certificates delivered to the Lenders or the Agent after the date
of this Agreement which certify the truth and accuracy of the representations,
or at any time that these representations shall be deemed restated, this
representation shall be deemed to apply to financial statements which the
Borrower has most recently delivered to the Lenders either pursuant to
Subsection 6.1.2 or Subsection 6.1.3, as the case may be, as of the time of such
certification.
5.1.17 Tax Returns and Payments. All tax returns required by law to be filed, or
proper extensions filed, by or in respect of the Borrower or any Subsidiary or
any Person that may file a joint return with any of the foregoing have been
filed. All taxes, assessments and other governmental charges levied upon the
Borrower, any Subsidiary or any Person that may file a joint return with any of
the foregoing or any properties, assets, income or franchises of any of the
foregoing which are due and payable have been paid, other than those presently
payable without penalty or interest. Neither the Borrower nor any Subsidiary is
a party to any tax sharing or tax allocation agreement.
5.1.18 Indebtedness. Schedule 5.1.18 correctly describes as of the Closing Date
all Indebtedness of the Borrower and the Subsidiaries outstanding or for which
any such Person has commitments. Neither the Borrower nor any Subsidiary is in
default beyond any applicable grace period with respect to any Indebtedness or
any instrument or agreement relating to such Indebtedness.
5.1.19 Federal Reserve Regulations. No Indebtedness that is required to be, or
will be, reduced or retired from the proceeds of the Loans was incurred for the
purpose of purchasing or carrying any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R.
221, as amended), and no proceeds of the Loans will be used to purchase or
acquire any such margin stock.
5.1.20 Investment Company Act. Neither the Borrower nor any Subsidiary is an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
5.1.21 Public Utility Holding Company Act. Neither Adelphia, the Borrower nor
any Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
5.1.22 Compliance with ERISA.
(a) The Borrower will provide such information regarding its Plans as any
Lender may reasonably request.
(b) Each Plan which the Borrower, any Subsidiary or any ERISA Affiliate of any
such Person sponsors and which is intended to be qualified within the meaning of
Section 401(a) of the Code is, as most recently amended, the subject of a
favorable determination by the Internal Revenue Service with respect to its
qualification under Section 401(a) of the Code or an application for such
determination within the applicable remedial amendment period has been filed.
Upon request, the Borrower will furnish the Agent with a copy of the most recent
actuarial report for each Employee Pension Plan, and each such report is
accurate in all material respects.
(c) The Borrower, each Subsidiary and each ERISA Affiliate of the foregoing have
operated each Plan in all material respects in compliance with the requirements
of the Code and ERISA and the terms of each such Plan.
(d) (1) No transaction has occurred with respect to any Plan in connection with
which the Borrower or any Subsidiary could be subject to either a material civil
penalty assessed pursuant to Section 502(i) of ERISA or a material tax penalty
imposed pursuant to Section 4975 of the Code, (2) there is no Accumulated
Funding Deficiency with respect to any Employee Pension Plan, whether or not
waived, or an unfulfilled obligation to contribute to any Multiemployer Plan or
withdrawal from any Multiemployer Plan, (3) no Employee Pension Plan has been
terminated under conditions which resulted or could result in any material
liability to the PBGC, (4) no material liability to the PBGC has been or is
expected to be incurred by the Borrower or any Subsidiary or any ERISA Affiliate
of the foregoing with respect to any Plan except for required premium payments
to the PBGC, (5) there has been (a) since January 1, 1993 no Reportable Event
with respect to any Employee Pension Plan (except to the extent that the PBGC
has waived such reporting requirement with respect to any such event), and (b)
no event or condition which presents a material risk of termination of any
Employee Pension Plan by the PBGC, in either case involving conditions which
could result in any liability to the PBGC, (6) neither the Borrower, nor any
Subsidiary, nor any ERISA Affiliate of the foregoing has incurred or anticipates
incurring Withdrawal Liability with respect to any Multiemployer Plan, (7) no
Multiemployer Plan is in Reorganization to the knowledge of Borrower, any
Subsidiary or any ERISA Affiliate, (8) the Borrower, each Subsidiary and each
ERISA Affiliate of the foregoing has complied in all material respects with the
continuation coverage requirements applicable to group health plans as set forth
in requirements of COBRA, and (9) there is no unfunded benefit liability as
defined in section 4001(a)(18) of ERISA in respect of any Employee Pension Plan,
(10) there is no outstanding material violation of the Code or ERISA with
respect to the filing of applicable reports, documents and notices regarding any
employee benefit plan as defined in Section 3(3) of ERISA which is maintained by
Borrower, any Subsidiary or any ERISA Affiliate of the foregoing with the
Secretary of Labor, the Secretary of the Treasury, the PBGC or any other
governmental entity or the furnishing of such documents to the participants or
beneficiaries of any such employee benefit plan, and (11) neither Borrower nor
any Subsidiary nor any ERISA Affiliate of the foregoing has any unfunded
liabilities of unfunded and uninsured "employee welfare benefit plans," as
defined in Section 3(1) of ERISA.
(e) No liability (whether or not such liability is being litigated) has been
asserted against the Borrower, any Subsidiary or any ERISA Affiliate of the
foregoing in connection with any Employee Pension Plan or any Multiemployer Plan
by the PBGC other than for required premium payments to the PBGC, by a trustee
appointed pursuant to Section 4042(b) or (c) of ERISA, or by a sponsor or an
agent of a sponsor of a Multiemployer Plan (other than for required
nondelinquent contributions to such Multiemployer Plan), and no Lien has been
attached and no Person has threatened to attach a Lien on any of the Borrower's,
or any Subsidiary's or any ERISA Affiliate's property as a result of failure to
comply with ERISA or as a result of the termination of any Employee Pension
Plan.
(f) None of Borrower, each Subsidiary and each ERISA Affiliate has terminated
any Plan in the last ten years in a manner which could result in liability to
the PBGC with respect to any benefit liability. All assets under each such
terminated Plan have been distributed in accordance with ERISA, and all
liabilities with respect to participants and beneficiaries under any such
terminated Plan have been satisfied.
5.1.23 Disclosure. Neither this Agreement nor any other Loan Document contains
any untrue statement of a material fact or, except for facts or circumstances
relating to the cable television industry generally, omits to state a material
fact necessary in order to make the statements contained in this Agreement and
in such other Loan Documents not misleading in light of the circumstances under
which such statements were made.
5.1.24 Environmental Compliance. Except for such conditions (i) as to which
neither the Borrower nor any Subsidiary has Knowledge and (ii) which in the
aggregate (for all conditions referred to in this Subsection 5.1.24
collectively) would not cost more than Five Million Dollars ($5,000,000) to
perform the necessary Remedial Action(s) and pay any and all fines, penalties,
liabilities, damages, judgments, losses, suits, interests, costs and expenses
(including court costs and attorneys', consultants', and experts' fees) related
thereto,
(a) None of the real property owned and/or occupied by the Borrower or any
Subsidiary as set forth on Schedule 5.1.24 has (i) ever been used by previous
owners and/or operators, or (ii) ever been used by the Borrower or any
Subsidiary, to treat, produce, store, handle, transfer, process, transport or
dispose of any Hazardous Substances except in the normal course of the business
activities of the Borrower or applicable Subsidiary and in conformity with
Environmental Law;
(b) There is no condition which exists on the real property owned and/or
occupied by the Borrower or any Subsidiary which requires Remedial Action and
there is not, nor has there ever been, a Release or threat of Release of any
Hazardous Substance except in the normal course of the business activities of
the Borrower or applicable Subsidiary and in conformity with Environmental Law;
(c) Neither the Borrower nor any Subsidiary has been notified of, or has
Knowledge of any notification having been filed with regard to, a Release on,
into, about or beneath any real property owned and/or occupied by the Borrower
or any Subsidiary or for which the Borrower or any Subsidiary may be held
liable;
(d) either the Borrower nor any Subsidiary has received a summons, citation,
notice of violation, administrative order, directive, letter or other written
communication, written or oral, from any judicial or administrative body or
governmental or quasi-governmental authority concerning any intentional or
unintentional action or omission related to the generation, storage,
transportation, handling, transfer, disposal or treatment of Hazardous
Substances in violation of any Environmental Law or related to any Release or
threat of Release of Hazardous Substances;
(e) There are no "friable" (as that term is defined in regulations under the
Federal Clean Air Act) asbestos or Asbestos-Containing Materials which have not
been removed, repaired, encapsulated and/or maintained in accordance with
accepted guidelines promulgated by the United States Environmental Protection
Agency (and any other governmental authorities having jurisdiction) existing in
any real property owned and/or occupied by the Borrower or any Subsidiary and
the Borrower has complied with all applicable OSHA requirements relating to
asbestos;
(f) No equipment containing polychlorinated biphenyls, including electrical
transformers, are located on any real property owned and/or occupied by the
Borrower or any Subsidiary in levels which exceed those permitted by any and all
governmental authorities with jurisdiction over such premises and which are not
properly labeled in accordance with requisite standards;
(g) And except as set forth on Schedule 5.1.24 attached hereto, there are no
tanks on any real property owned and/or occupied by the Borrower or any
Subsidiary that have been used for the storage of petroleum products or any
other Hazardous Substance, nor to the knowledge of the Borrower, except as set
forth on said Schedule 5.1.24, have any such tanks been located on such property
at any time; and
(h) Each of the tanks referred to on Schedule 5.1.24 have been registered,
maintained, improved and tested to the extent required by, and in accordance
with, any applicable Environmental Laws and there is no evidence of leakage from
any such tanks.
5.1.25 Year 2000 The Borrower and each of the Subsidiaries have reviewed the
areas within their business and operations which could be adversely affected by
a computer failure to recognize the change in century at the year 2000, and, if
there are any such areas, have developed or are developing plans to address on a
timely basis, the risk associated therewith such that it could not result in a
Material Adverse Effect.
Article 6
FINANCIAL REPORTS AND INFORMATION
Each of the Borrower and the Subsidiaries shall comply with each of the
following covenants from the Closing Date and thereafter so long as any Loan or
any other amounts due under the Loan Documents remain unpaid or the Lenders have
a commitment to lend hereunder:
6.1 Financial Data.
6.1.1 Financial Information. The Borrower and each Subsidiary will keep its
books of account and financial statements in accordance with GAAP, reported on
the basis of a fiscal year ending December 31. Each of the Borrower and the
Subsidiaries will keep at all times books of record and account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs.
6.1.2 Quarterly Financial Statements. As soon as practicable and in any event
within sixty (60) days after the close of each of the first three quarters of
each fiscal year of Borrower, the Borrower shall deliver to each Lender the
following:
(a) a balance sheet, income statement, statement of shareholders' equity
and statement of cash flows for the Borrower and its Subsidiaries, on
a Consolidated basis;
(b) [intentionally omitted]
(c) [intentionally omitted]
(d) [intentionally omitted]
(e) a consolidating balance sheet and income statement of the Borrower and
its subsidiaries,
in each case, as at the end of and for (i) the period beginning at the end of
the previous fiscal year and ending with the last day of the fiscal quarter most
recently ended, and (ii) the period beginning at the end of the previous fiscal
quarter and ending with the last day of the fiscal quarter most recently ended,
setting forth in comparative form the corresponding figures for the appropriate
periods of the preceding fiscal year, all in reasonable detail and certified by
the chief financial officer of the Borrower to fairly present the financial
condition and results of operations for the Persons and for the periods
indicated, subject to normal recurring year-end audit adjustments in each case,
in accordance with GAAP.
6.1.3 Annual Financial Statements.
(a) Audited Statements . As soon as practicable and in any event within one
hundred twenty (120) days after the close of each fiscal year of the Borrower,
the Borrower shall deliver to each Lender an audited balance sheet, income
statement, statement of shareholders' equity, and statement of cash flows of the
Borrower and its Subsidiaries, on a Consolidated basis, as at the end of and for
the fiscal year just closed, setting forth the corresponding figures for the
previous fiscal year in comparative form, all in reasonable detail, and
certified (without any qualification, modification or exception) by Deloitte &
Touche LLP or other independent certified public accountants selected by the
Borrower and reasonably satisfactory to the Agent. Notwithstanding the
foregoing, for the fiscal year ended December 31, 1999, the Borrower shall
deliver audited financial statements only for the period beginning on the
Closing Date and shall deliver management-prepared statements for the entire
fiscal year.
(b) Other Annual Statements. Concurrent with the delivery of the financial
statements referred to in the preceding paragraph (a), the Borrower shall
deliver to each Lender a consolidating balance sheet and income statement of the
Borrower and its Subsidiaries as at the end of and for the fiscal year just
closed, setting forth the corresponding figures for the previous fiscal year in
comparative form, all in reasonable detail and certified by the chief financial
officer of the Borrower to fairly present the financial condition and results of
operations for the Persons and for the periods indicated, in each case in
accordance with GAAP.
6.1.4 Certain Certificates to be Delivered With All Financial Statements. As
soon as practicable after the close of each fiscal quarter and each fiscal year
of the Borrower, and in any event no later than the date on which financial
statements are required to be delivered for each such quarter or year, as
provided in Subsections 6.1.2 and 6.1.3 above, the Borrower shall deliver to
each Lender each of the following:
(a) an Officer's Compliance Certificate with respect to the fiscal year or
quarter covered by the companion financial statements, and specifying the
financial computations evidencing the determinations set forth therein as well
as the relevant Applicable Margin; and
(b) a Subscriber Certificate as of the end of and for such fiscal quarter.
6.1.5 Annual Business Plan. As soon as available and in any event no later than
February 1 of each fiscal year of the Borrower, the Borrower shall deliver to
each Lender a Business Plan for such fiscal year.
6.2 Ongoing Reporting Requirements
The Borrower shall, in addition to other reporting
requirements set forth herein,
deliver to the Agent the following information. The Agent shall deliver to each
Lender copies of notices respecting Defaults delivered pursuant to Subsection
6.2.3 below and such other information as it shall deem appropriate, provided,
however, that the Agent shall not be liable to any Lender for the failure to
provide any information received by the Agent.
6.2.1 Financial Reports. Promptly upon receipt, copies of all financial reports
or written recommendations, if any, submitted to the Borrower or any Subsidiary
by its auditors in connection with each annual or interim audit or examination
of its books by such auditors.
6.2.2 ERISA Information.
(a) Upon request of any Lender, (i) a copy of each annual report filed with
respect to each Plan of the Borrower or any Subsidiary with the Internal Revenue
Service, Secretary of Labor or the PBGC; (ii) promptly upon receipt or delivery,
a copy of all material non-routine correspondence with the PBGC, Secretary of
Labor or any representative of the Internal Revenue Service with respect to any
Plan, and (iii) actuarial reports any such Person receives with respect to any
Employee Pension Plan;
(b) Within 30 days after any officer of the Borrower or Subsidiary obtains
knowledge that the Borrower, or any ERISA Affiliate has incurred or anticipates
incurring Withdrawal Liability, or that any material excise taxes have been
assessed against the Borrower, a Subsidiary or ERISA Affiliate, or that any
Multiemployer Plan is in Reorganization or that any Reportable Event has
occurred with respect to any Employee Pension Plan except to the extent that the
PBGC has waived such reporting requirement with respect to such event or that
PBGC has instituted or will institute proceedings under Title IV of ERISA to
terminate any Employee Pension Plan or to appoint a trustee to administer any
Employee Pension Plan, a statement setting forth the details respecting such
situation;
(c) Within the time required for notice to the PBGC under Section 302(f)(4)(A)
of ERISA, a notice concerning any lien arising under Section 302(f) of ERISA in
favor of any Plan;
6.2.3 Notice of Defaults, Material Adverse Change, Etc. Promptly, upon knowledge
thereof, notice of (i) any Default or Event of Default or (ii) any event or
condition which is reasonably likely to result in a Material Adverse Effect or
(iii) any changes in facts or circumstances which make the representations and
warranties set forth in this Agreement false or misleading in any material
respect;
6.2.4 Changes Affecting Security. Promptly, upon knowledge thereof, notice of
any event or condition which would require further action on the part of any
Loan Party or any other Person to grant or perfect a security interest in the
capital stock or other equity issued by any Subsidiary or the Borrower
6.2.5 Conditions Affecting Franchises. Promptly upon knowledge thereof, notice
of any (i) refusal or failure by any governmental instrumentality to renew or
extend any Franchise affecting more than 500 Subscribers, or (ii) proposed
abandonment or proposed or actual revocation, expiration, termination or
materially adverse modification (which in the case of such proposed action, in
the reasonable opinion of the Borrower or the applicable Subsidiary and its
regulatory counsel is likely to result in an actual revocation, expiration,
termination or material adverse modification) of any Franchise which affects
more than 500 Subscribers (except the routine, scheduled expiration of
Franchises for which applications for renewal are timely and properly filed with
the appropriate governmental agency unless, at any time with respect thereto, a
competing application of which the Borrower or applicable Subsidiary has
knowledge or petition to deny, or other challenge is filed against any such
renewal application), or (iii) claim, proceeding, arbitration, litigation or
similar action with respect to any Franchise which if resolved adversely could
have a Material Adverse Effect;
6.2.6 [intentionally omitted]
6.2.7 Certain Environmental Matters. Promptly upon receipt thereof, any
non-routine notice from the Environmental Protection Agency or any other federal
or state agency or authority with jurisdiction over environmental matters and
promptly after receiving the same, any environmental investigations, studies,
audits, tests, reviews or other analyses in relation to any site or facility now
or previously owned, operated or leased by any Loan Party. Without limiting the
generality of the requirements set forth in Subsection 6.2.8 below, the Borrower
will give notice of the assertion of any environmental claim by any Person
against, or with respect to the activities of, the Borrower or any of its
Subsidiaries and notice of any alleged violation which is asserted by a Person
that is not an agency or instrumentality of any state or federal government of
or non-compliance with any Environmental Laws or any permits, licenses or
authorizations or which involves or which may reasonably be expected to involve
a Release or threat of Release of Hazardous Substances or Remedial Action, other
than any environmental claim or alleged violation which is asserted by a Person
that is not an agency or instrumentality of any state or federal government and
which, if adversely determined, could not have a Material Adverse Effect;
6.2.8 Litigation. Promptly upon Borrower's knowledge thereof, notice of all
legal or arbitral proceedings, and of all proceedings by or before any
governmental or regulatory authority or agency, and any material development in
respect of such legal or other proceedings affecting the Borrower or any of its
Subsidiaries, except proceedings which, if adversely determined, would not have
a Material Adverse Effect;
6.2.9 Miscellaneous. With reasonable promptness, such other information
respecting the business, operations and financial condition of the Borrower or
any Subsidiary as the Agent or any Lender may from time to time reasonably
request.
6.3 Disclosure.
The Agent and the Lenders are hereby authorized to
show or deliver a copy of any
financial statement or any other information relating to the business,
operations or financial condition of the Borrower or any Loan Party which may be
furnished to the Agent or any Lender or come to their attention pursuant to this
Agreement to any regulatory body or agency having jurisdiction over the Agent or
any Lender, to the Agent's or any Lender's counsel, advisers and auditors, and
to any Person which shall, or has expressed an interest to, succeed to all or
any part of the Agent's or any Lender's interest in the Notes or any Note,
and/or this Agreement. Effective during the existence of an Event of Default,
the Agent and the Lenders and their respective counsel, advisors and auditors
are hereby further authorized to show or deliver a copy of such information to
other Persons in connection with protecting, preserving, exercising or enforcing
any rights of the Agent or the Lenders in, under or related to the Loan
Documents or any Collateral. Except as set forth above in this Section 6.3, the
Agent and the Lenders hereby covenant and agree to use commercially reasonable
efforts to maintain the confidentiality of all information of a non-public
nature submitted to them by the Borrower and other Loan Parties pursuant to the
terms of this Agreement and the other Loan Documents.
Article 7
FINANCIAL COVENANTS
Each of the Borrower and the Subsidiaries shall comply with each of the
following covenants from the Closing Date and thereafter so long as any Loan or
any other amounts due under the Loan Documents remain unpaid or the Lenders have
a commitment to lend hereunder.
7.1 Interest Coverage Ratio.
The Borrower and the Subsidiaries shall maintain an
Interest Coverage Ratio, tested
as of the end of each fiscal quarter of Borrower, equal to or greater than the
applicable ratio set forth below for the period specified:
Period Ratio
Closing Date 1.75 to 1.0
through 6/30/00
7/1/00 and thereafter 2.0 to 1.0
7.2 Debt Service Coverage Ratio.
At all times, the Borrower and the Subsidiaries shall
maintain a Debt Service
Coverage Ratio, tested as of the end of each fiscal quarter of the Borrower, of
at least 1.15:1.
7.3 Leverage Ratio.
The Borrower and the Subsidiaries shall not incur or
permit Indebtedness to exist
that would cause the Leverage Ratio tested as at (a) the end of each fiscal
quarter of Borrower during each period specified below, and (b) the date of each
incurrence of Indebtedness (after giving effect to such proposed incurrence)
during each period specified below, to exceed the applicable ratio for such
period specified below:
Period Ratio
Closing Date through 12/31/99 5.75 to 1.0
1/1/00 through 12/31/00 5.25 to 1.0
1/1/01 through 12/31/01 4.50 to 1.0
1/1/02 and thereafter 4.00 to 1.0
7.4 Fixed Charges Coverage Ratio.
The Borrower and the Subsidiaries shall maintain a
Fixed Charges Coverage Ratio,
tested as of the end of each fiscal quarter of the Borrower, of at least 1.00:1.
7.5 Rebuild Capital Expenditure Limit. The Borrower and its Subsidiaries shall
not incur or pay Rebuild Capital Expenditures in an aggregate amount in excess
of $50,000,000 on a cumulative basis for the period beginning on the Closing
Date and ending on 12/31/01.
There shall be no amounts classified as Rebuild Capital Expenditures after
December 31, 2001.
Article 8
GENERAL AFFIRMATIVE COVENANTS
Each of the Borrower and the Subsidiaries shall comply with each of the
following covenants from the Closing Date and thereafter so long as any Loan or
any other amounts due under the Loan Documents remain unpaid or the Lenders have
a commitment to lend hereunder.
8.1 Existence.
The Borrower will at all times preserve and keep in
full force and effect its
corporate existence and its good standing in all states in which it is formed or
required to qualify to do business. Except for mergers and dispositions
expressly permitted by this Agreement, each Subsidiary will at all times
preserve and keep in full force and effect its corporate or partnership
existence and its good standing in the state of its formation and its good
standing in each other state where the failure of qualify and remain qualified
could have a Material Adverse Effect.
8.2 Legal Requirements; Maintenance of Properties.
Each of the Borrower and the Subsidiaries shall
materially comply with all laws,
ordinances or governmental rules and regulations to which it is subject, and
obtain or maintain all Franchises or other governmental authorizations or
approvals necessary for the ownership of its properties and the conduct of its
businesses and shall comply with FCC and PUC construction, operating and
reporting requirements. Each of the Borrower and the Subsidiaries will maintain
its properties in good repair, working order and condition and make or cause to
be made all appropriate and proper repairs, renewals, replacements, additions
and improvements thereto, and keep all systems and equipment which may now or in
the future be subject to compliance with any material standards or rules imposed
by any governmental agency or authority in compliance in all material respects
with such standards or rules. Each of the Borrower and the Subsidiaries shall
maintain, preserve and protect, and, when necessary, renew, all Franchises to
the extent necessary for the conduct of its businesses and to the extent
necessary to not create a Default. In addition, the Borrower and each Subsidiary
shall maintain, preserve, protect and, when necessary, renew all service marks,
copyrights, trademarks, tradenames and other rights held by any of them and all
agreements to which any of them are parties which are necessary or useful to
conduct the Permitted Businesses except where the failure to do so could not
result in a Material Adverse Effect.
8.3 Payment of Taxes and Claims.
Each of the Borrower and the Subsidiaries will pay
all taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income or profits before any penalty
or interest accrues thereon, and all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums which have become
due and payable and which by law have or might become a Lien upon any of its
properties or assets except where such taxes, assessments or governmental
charges are being contested in good faith by appropriate proceedings and
adequate reserves have been set aside.
8.4 Insurance.
8.4.1 Type of Insurance. Each of the Borrower and the Subsidiaries will maintain
or cause to be maintained with financially sound and reputable insurers,
insurance with respect to the properties and business of the Borrower or such
Subsidiary against loss or damage of the kinds customarily insured against by
entities of established reputation engaged in the same or similar businesses and
similarly situated, of such types and in such amounts as are customarily carried
under similar circumstances by other such Persons and otherwise as is prudent
for Persons engaged in conducting business in the cable television industry and
any other business conducted by the Borrower or such Subsidiary. In addition,
the Borrower and the Subsidiaries shall maintain business interruption insurance
in an amount of $10,000,000 or such other amount as is acceptable to the Agent
and at all times that the Borrower or any Subsidiary shall own or operate an
airplane, it shall maintain liability insurance thereon in an amount equal to at
least $25,000,000. All insurance shall name the Agent as lender loss payee and
additional insured and shall provide for thirty (30) days prior written notice
of any proposed termination.
8.4.2 Application of Proceeds. After the occurrence and during the continuation
of an Event of Default all payments in respect of the types of insurance
provided for in Subsection 8.4.1 above shall be paid directly to the Agent or,
if paid to the Borrower or any Subsidiary, shall be held in trust for, and
immediately delivered to, the Agent, who (in its sole discretion) may (a) return
such amounts as it deems appropriate to the Borrower (who shall distribute such
amounts to the applicable Subsidiaries, as appropriate) for the repair and/or
replacement of property with respect to which the loss was incurred or (b) apply
the same to reduce the Obligations, any excess to be returned to the Borrower
upon payment in full of the Obligations provided, however, if no Event of
Default exists then the Agent shall return such insurance proceeds to the
Borrower.
8.4.3 Evidence of Insurance. Copies of insurance policies or the related
certificates, shall be delivered to the Agent on the Closing Date and annually
at the time of the delivery of the financial statements referred to in
Subsection 6.1.3 above and at the time any new policy of insurance is issued.
8.5 Interest Rate Protection Agreements. Beginning on September 30, 2000 and at
all times thereafter if and when the Leverage Ratio is greater than 4:1 the
Borrower shall obtain and maintain in full force and effect, one or more
Interest Rate Protection Agreements which may be with one or more of the Lenders
(in which case the obligations thereunder will be secured by the Collateral)
and/or with one or more other Eligible Institutions (in which case the
obligations thereunder will be unsecured) which effectively enables the Borrower
(on terms and conditions satisfactory to the Agent) to protect itself against
fluctuations of interest rates as to a notional principal amount equal to at any
time the lesser of (a) One Hundred and Seventy-Five Million Dollars
($175,000,000) or (b) fifty percent (50%) of the outstanding principal amount of
all of the Loans). Neither the Borrower nor any Subsidiary will enter into any
Interest Rate Protection Agreement except in the ordinary course of business to
mitigate fluctuations of interest rates in respect of outstanding Indebtedness.
8.6 Inspection Upon reasonable notice if no Event of Default or Default shall
exist, or at any time with or without notice after the occurrence and during the
continuation of an Event of Default or Default, the Borrower and each Subsidiary
will allow representatives of the Agent or any Lender to visit it at any
reasonable time and inspect any of the properties of the Borrower or such
Subsidiary, as the case may be, to examine the books of account and other
records and files of such Person, to make copies thereof and to discuss the
affairs, business, finances and accounts of such Person with its personnel and
accountants.
8.7 Exchange of Notes.
Upon receipt of a written notice of loss, theft,
destruction or mutilation of any or
all of the Notes (and, if requested by the Borrower, of a letter of indemnity
from the affected Lender or its successors or assigns) and upon surrender for
cancellation such Note(s) if mutilated (in which event no indemnity shall be
requested), the Borrower shall execute and deliver a new Note or Notes of like
tenor in lieu of such lost, stolen, destroyed or mutilated Note(s).
8.8 Consistent Action.
The Borrower and each Subsidiary shall exercise any
and all voting or similar rights
which it holds in any Person in a manner consistent with adherence to the
provisions of this Agreement and the other Loan Documents.
8.9 FCC and PUC Filings.
The Borrower and each Subsidiary will file with the
FCC and each PUC in a timely
fashion copies of the Loan Documents to the extent required under applicable law
and any and all other documents required to be filed by applicable law, and
shall take such other action as is necessary under the rules and regulations of
the applicable PUCs and FCC to effect the purposes of the Loan Documents.
8.10 Purpose.
Proceeds of the Loans shall be used by the Borrower
only for the following purposes:
(a) to finance acquisitions and Capital Expenditures permitted under this
Agreement; (b) to make the Accommodation Restricted Payment and other Restricted
Payments permitted under Section 9.5 below; (c) to make advances or capital
contributions to Subsidiaries; and (d) to provide for working capital needs and
general corporate purposes
8.11 [intentionally omitted]
8.12 Additional Subsidiary Guarantors; Certain Obligations Respecting
Subsidiary Guarantors.
8.12.1 Joinder of Additional Subsidiary Guarantors. (a) Subject to Section 9.7
(respecting dispositions), the Borrower will take such action, and will cause
each of its Subsidiaries to take such action, from time to time as shall be
necessary to ensure that all Subsidiaries on the date of this Agreement continue
to remain Subsidiaries and, thereby, "Subsidiary Guarantors" hereunder. In the
event that the Borrower shall form or acquire any new Subsidiary after the date
hereof, the Borrower will cause such new Subsidiary to become a "Subsidiary"
(and thereby a "Subsidiary Guarantor" hereunder) pursuant to an Assumption
Agreement substantially in the form of Exhibit H hereto (as the same may be
amended, modified or supplemented from time to time in accordance with the
provisions hereof and thereof, an "Assumption Agreement") pursuant to which such
new Subsidiary shall agree to be bound by all provisions of this Agreement the
and the other Loan Documents to the extent that such agreements provide for
rights and obligations of Persons designated as "Subsidiaries", "Subsidiary
Guarantors" or any similar term. Together with the Assumption Agreement for each
new Subsidiary, the Borrower or applicable Subsidiary shall deliver such proof
of corporate action, incumbency of officers, opinions of counsel and other
documents as the Agent shall reasonably request. The Borrower hereby agrees to
immediately pledge to the Agent under the Pledge Agreement (and thereby grant a
security interest for the benefit of the Lenders in) any and all of its
interests in any capital stock or other equity of any Subsidiary of the Borrower
which becomes a "Subsidiary" and a "Subsidiary Guarantor" hereunder pursuant to
this Section 8.12.
8.12.2 Subsidiaries to be Direct Wholly-Owned. Each of the Borrower and the
Subsidiaries will take such action from time to time as shall be necessary to
ensure that each of the Borrower's Subsidiaries is a direct wholly-owned
Subsidiary of the Borrower. Without limiting the generality of the foregoing,
the Borrower shall not sell, transfer or otherwise dispose of any shares of
stock of any Subsidiary nor permit any such Subsidiary to issue any shares of
stock of any class whatsoever to any Person (other than to the Borrower) if any
of the foregoing actions would result in there being Subsidiaries that are not
directly wholly-owned by the Borrower. The Borrower agrees to forthwith deliver
to the Agent pursuant to the Pledge Agreement all certificates evidencing such
shares of stock, accompanied by undated stock powers executed in blank and shall
take such other action as the Agent shall request to perfect the security
interest created therein pursuant to the Pledge Agreement. No Subsidiary shall
create or acquire any additional Subsidiaries.
8.13 [intentionally omitted]
8.14 [intentionally omitted]
8.15 Disconnect, Etc. The Borrower and the Subsidiaries will maintain
policies respecting past due
accounts and disconnect of customers in accordance with historical or industry
practice.
8.16 Further Assurances.
Either prior to or after a Default or an Event of
Default, upon the reasonable
request of the Agent or any Lender, the Borrower and each Subsidiary will duly
execute and deliver or cause to be duly executed and delivered, to the Agent and
the Lenders such further instruments and do or cause to be done such further
acts as may be necessary or proper in the reasonable opinion of the Agent or any
Lender to carry out more effectively the provisions and purposes of this
Agreement and the other Loan Documents.
Article 9
GENERAL NEGATIVE COVENANTS
Each of the Borrower and the Subsidiaries shall comply with each of the
following covenants from the Closing Date and thereafter so long as any Loan or
any other amounts due under the Loan Documents remain unpaid or the Lenders have
a commitment to lend hereunder.
9.1 Indebtedness.
9.1.1 Limitations on Indebtedness. Neither the Borrower nor any Subsidiary will
create, incur, assume, guarantee, permit to exist or otherwise become or remain
directly or indirectly liable with respect to any Indebtedness except as
follows: the Borrower and the Subsidiaries may create, incur, assume, guarantee,
permit to exist or otherwise become or remain directly or indirectly liable for
the following:
(i) obligations under the Loan Documents;
(ii) Indebtedness of a Subsidiary owing to the Borrower or to another
Subsidiary or Indebtedness of the
Borrower to one or more Subsidiaries; and
(iii) other Indebtedness of the Borrower and the
Subsidiaries in an aggregate principal amount not to
exceed at any time outstanding Seven Million Five
Hundred Thousand Dollars ($7,500,000).
9.1.2 No Default. No Indebtedness may be incurred by the Borrower or any
Subsidiary unless immediately before and after giving effect to the incurrence
of such Indebtedness, no Default or Event of Default shall have occurred and be
continuing.
9.2 Liens.
9.2.1 Limitation on Liens. Neither the Borrower nor any Subsidiary will directly
or indirectly, create, incur, assume or permit to exist any Lien on or with
respect to any property or asset (including, without limitation, any document or
instrument in respect of goods or accounts receivable) of the Borrower or any
Subsidiary, except the following (the "Permitted Liens"):
(a) the Liens created in favor of or for the benefit of the Agent and the
Lenders pursuant to the Loan
Documents;
(b) Liens for taxes, assessments or other governmental charges not
yet due or which are being contested in good faith and by
appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Borrower or
Subsidiary, as the case may be, in accordance with GAAP;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due or the
payment of which is not at the time required;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other
types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(e) Liens arising out of judgments or awards with respect to which
Borrower shall be prosecuting an appeal in good faith and in
respect of which a stay of execution shall have been issued
and adequate reserves established;
(f) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or
encumbrances on real property, in each case incidental to, and
not interfering with, the ordinary conduct of the business of
the Borrower or any Subsidiary and in each case not securing
Indebtedness;
(g) [intentionally omitted];
(h) Liens (in addition to those referred to in paragraph (a)
above) securing Indebtedness (not in default) described in
clause (b)(iii) of Subsection 9.1.1 to the extent such
Indebtedness is either purchase money indebtedness or Capital
Lease obligations, provided, however, that such Liens shall
encumber only the property acquired with the proceeds of such
Indebtedness or subject to any such Capital Leases; and
(i) Liens existing on the date hereof listed on Schedule 9.2
attached hereto, and any Liens from time to time on the assets
listed on said Schedule which secure Indebtedness (the "new
Indebtedness") which refinances the existing Indebtedness
secured by the Liens listed on said Schedule provided that
such new Indebtedness is permitted under the terms of Section
9.1 above and provided further that such new Indebtedness is
in a principal amount which is no greater than the principal
amount of the Indebtedness on the date hereof secured by the
Liens listed on said Schedule.
9.2.2 Sharing of Liens. If any property of the Borrower or any Subsidiary,
whether now owned or hereafter acquired, is subjected to any Lien not permitted
by this Section 9.2, the Borrower or applicable Subsidiary will make, or will
cause to be made such provision as can be made, if any, whereby the Obligations
shall be substantially simultaneously secured equally and ratably with all other
obligations secured by such Lien (if not already so secured) and, if such
provision is not made, an equitable lien so equally and ratably securing the
Obligations shall exist on such property to the full extent permitted under
applicable law. Making such effective provisions shall be permitted hereunder,
but shall not cure any then existing violation of this Section 9.2.
9.3 Modification of Certain Documents.
Neither the Borrower nor any Subsidiary shall amend,
modify (including, without
limitation, a modification in the nature of a termination), supplement or seek a
waiver in connection with any of the following agreements without the consent of
the Requisite Lenders if the effect of any such amendment, modification,
supplement or waiver could be adverse to the Borrower or any Subsidiary or the
interests of the Agent or any Lender under the Loan Documents or could cause a
Default to exist hereunder: the articles, bylaws, or other organizational
documents of any Subsidiary or of the Borrower.
9.4 Investments and Acquisitions.
9.4.1 Neither the Borrower nor any Subsidiary shall directly or indirectly, make
or permit to exist or enter into any agreement to make any Investment or make
any Acquisition, except the Borrower or any Subsidiary may:
(a) purchase marketable, direct obligations of the United States of America, its
agencies and instrumentalities maturing within three hundred sixty-five (365)
days of the date of purchase;
(b) purchase commercial paper maturing within two hundred seventy (270) days
from the date of the original issue thereof, issued by corporations, each of
which corporations shall have a net worth of at least $500 million and each of
which corporations conducts a substantial part of its business in the United
States of America, and which commercial paper, at the time of acquisition, has a
published rating of not less than P-1 by Moody's Investors Service, Inc. or A-1
by Standard & Poor's Rating Group;
(c) purchase bankers' acceptances, and certificates of deposit maturing within
three hundred sixty-five (365) days of the date of purchase which are issued by,
or time deposits maintained with, Eligible Institutions and which have the
highest rating by Moody's Investors Service, Inc. or Standard & Poor's Rating
Group;
(d) make loans to the Borrower, and make loans and capital contributions and
make and maintain other Investments in Subsidiaries except as expressly
prohibited by the terms of this Agreement (including, without limitation, those
provisions that require all Subsidiaries of the Borrower to be direct,
wholly-owned Subsidiaries of the Borrower);
(e) [intentionally omitted]
(f) invest in Interest Rate Protection Agreements required or permitted by
Section 8.5 hereof;
(g) maintain operating deposits with banks;
(h) make advances and loans made in the ordinary course to employees and
directors of the Borrower and the Subsidiaries not exceeding an aggregate
principal amount of $500,000 at any one time outstanding for all such advances
and loans;
(i) make Acquisitions in any Permitted Business so long as:
(x) the Acquisition is consummated within one year of a disposition made
under clause (vi) of Section 9.7 below and is made exclusively from
proceeds received from such disposition, or
(y) [intentionally omitted], or
(z) the aggregate consideration delivered in connection with all such
Acquisitions (exclusive of Acquisitions made pursuant to the preceding
clauses (x) and (y)) after the Closing Date does not exceed Fifty
Million Dollars ($50,000,000) and the aggregate consideration delivered
in connection with any single Acquisition or series of related
Acquisitions (exclusive of Acquisitions made pursuant to the preceding
clauses (x) and (y)) does not exceed Ten Million Dollars ($10,000,000)
without the consent of the Requisite Lenders
provided, that Acquisitions financed with a combination of sources referred to
in (x) and (z) above shall be permitted hereunder and, provided, further that in
connection with any Acquisition made pursuant to this clause (i) each of the
following conditions shall be satisfied:
(i) if the Acquisition is of equity rather than assets, then (x)
100% of the equity of the Person shall be acquired pursuant to
a transaction approved by the Board of Directors or other
governing body of the Person to be acquired, (y) all such
equity shall be pledged pursuant to the Pledge Agreement and
(z) the acquired entity shall become a "Subsidiary" and
accordingly a "Subsidiary Guarantor" hereunder pursuant to
Section 8.12 above;
(ii) the Borrower shall have delivered written notice to the
Lenders of the proposed Acquisition within ten
(10) days of signing the applicable acquisition agreement,
and if the purchase price for
such Acquisition is in excess of Ten Million Dollars
($10,000,000) (which may require the
prior consent of the Requisite Lenders) the Borrower shall
also deliver (w) lien search
results, (x) financial statements of the systems or entities
being so acquired for the
preceding three (3) fiscal years (if available), which
financial statements shall be
reasonably satisfactory to the Agent, (y) an Officer's
Compliance Certificate showing pro
forma compliance with the financial covenants set forth in
this Agreement after giving effect
to any borrowing contemplated in connection with such
Acquisition and after giving effect to
the Cash Flow, Indebtedness and other financial attributes of
the system or entity to be
acquired as reflected on its financial statements as if such
system or entity were at all
times during the then current fiscal quarter and the preceding
three fiscal quarters owned by
the Borrower or relevant Subsidiary, and (z) revised
projections, if the proposed Acquisition
would result in a material change (in the opinion of the
Agent) in the projections delivered
on the Closing Date prepared on a basis consistent with those
delivered on the Closing Date;
(iii) no Default or Event of Default shall have occurred before or
after giving effect to the Acquisition (including, without
limitation, in connection with provisions of this Agreement
limiting Indebtedness);
(iv) the representations and warranties set forth in this Agreement
and the other Loan Documents shall be true and correct in all
material respects both before and after giving effect to the
proposed Acquisition;
(v) the Borrower shall have delivered such instruments, stock
powers, third party consents and other items as may be
necessary, or in the reasonable opinion of the Agent
desirable, to create and perfect a valid, first priority
security interest in the capital stock or other equity, if
any, to be acquired pursuant to the proposed Acquisition;
(vi) the Borrower shall have paid to the Agent all fees and
disbursements of counsel to the Agent in
connection with such transaction; and
(vii) the Borrower shall have delivered such other documents and
other items (including, without limitation, legal opinions, if
requested) as the Agent or any Lender may reasonably request;
and
(j) so long as no Default or Event of Default shall exist before or after giving
effect to such Investments, make Investments in Permitted Businesses and/or
programming entities (so long as such Investments are on a non-recourse basis)
in an aggregate amount since the Closing Date not to exceed Two Million Five
Hundred Thousand Dollars ($2,500,000).
9.5 Restricted Payments.
Neither the Borrower nor any Subsidiary will directly
or indirectly, declare, order,
pay, make or set apart any sum or property for any Restricted Payment , except
at any time and from time to
time,
(a) Accommodation Restricted Payment;
(b) [intentionally omitted]; and
(c) if no Default or Event of Default shall then occur and be continuing
(or be created in connection therewith) Restricted Payments may be made
in any fiscal year in an aggregate amount not to exceed One Million
Dollars ($1,000,000) in such fiscal year if, at the time any such
Restricted Payment is made, and as at the end of the fiscal quarter
ended on or most recently prior to, the date such payment is made and
as at the end of the fiscal quarter immediately preceding the
aforementioned fiscal quarter the Leverage Ratio is less than or equal
to 4.0 to 1.0.
9.6 Transactions with Affiliates.
Neither the Borrower nor any Subsidiary will,
directly or indirectly, engage in any
transaction with any Affiliate of the Borrower, on terms that are less favorable
to the Borrower, than those which might be obtained at the time from Persons
which are not affiliated, provided, that the foregoing restrictions shall not
apply to transactions expressly provided for in this Agreement and the other
Loan Documents.
9.7 Sales or Other Dispositions of Assets, Etc
Neither the Borrower nor any Subsidiary will
directly or indirectly: (a) consolidate
with or merge into any other Person; (b) sell, lease, abandon or otherwise
transfer or dispose of any substantial amount of its assets or property, or
sell, lease, abandon or otherwise transfer or dispose of any of its assets or
property of any nature except in the ordinary course of its business; (c) sell,
lease or otherwise transfer, in one or more related transactions, any property
(whether real, personal or mixed) to another Person and thereafter rent or lease
such transferred property or substantially identical property from the same
Person or (d) enter into any agreement to do any transaction prohibited by the
terms of this Section 9.7, except that so long as no Default or Event of Default
shall then exist or be created thereby, the Borrower and the Subsidiaries may
effect the following transactions:
(i) any Subsidiary may merge or consolidate with or into any other
Subsidiary or the Borrower;
(ii) the Borrower may sell, lease or otherwise transfer
assets to any Subsidiary or any Subsidiary may sell,
lease or otherwise transfer assets to the Borrower or
any other Subsidiary;
(iii) the Borrower or a Subsidiary may lease to any third party any fiber
optic or other cable;
(iv) [intentionally omitted];
(v) the Borrower or any Subsidiary may sell or otherwise
dispose of for fair market value any interest in
SMATVs in one or more transactions so long as the
aggregate fair market value of all such SMATVs so
disposed of pursuant to this clause (v) shall not
exceed Five Million Dollars ($5,000,000); and
(vi) the Borrower or a Subsidiary may make any other disposition, so long
the following conditions aresatisfied:
(A) the Borrower shall give each Lender
prior written notice of such
disposition and the principal terms
relating thereto;
(B) unless the Requisite Lenders shall
have otherwise consented in writing,
the Cash Flow Percentage
attributable to the assets to be
sold (or otherwise disposed of)
together with the Cash Flow
Percentage of all other assets sold
(or otherwise disposed of) by the
Borrower or any Subsidiaries
pursuant to this clause (v) (which
shall not include assets sold or
disposed of pursuant to clauses (i)
through (iv)) since the Closing
Date, shall not exceed 25%;
(C) such disposition is either (1) a
sale to any Person for cash in an
amount not less than the fair market
value of the assets sold net of the
liabilities assumed, as determined
in the good faith judgment of the
Board of Directors of the Borrower
or the applicable Subsidiary, or (2)
an exchange, with any Person, of
assets or stock exchanged by the
Borrower or applicable Subsidiary
for assets (or stock of a Person
with assets) comprising one or more
cable television systems or other
Permitted Businesses of equal or
greater value, as determined in the
good faith judgment of the Board of
Directors of the Borrower or the
applicable Subsidiary; and
(D) immediately following such
disposition, the Borrower shall
deliver to the Agent a certificate
stating the date of the disposition,
the consideration received therefor
and a statement that such
disposition was effected in a manner
consistent with the terms of this
Section 9.7,
provided that, in the case of any such sale to or exchange with an
Affiliate, in addition to the requirements set forth above in this
clause (v), at the request of the Agent or any Lender made within
twenty (20) days of receipt of notice referred to in paragraph (A)
above, the Borrower shall furnished to each Lender, within thirty (30)
days of such request of the Agent or Lender or, if later, at least ten
(10) Business Days preceding the proposed date of such sale or
exchange, a fairness opinion with respect to such sale or exchange from
a recognized investment bank or cable television broker, as the case
may be, reasonably satisfactory in form and content to the Agent.
9.8 Management; Control.
Neither the Borrower nor any Subsidiary shall (a)
enter into any management agreement
with any Person that gives such Person the right to manage any business owned by
the Borrower or such Subsidiary, or (b) directly or indirectly pay or accrue to
an entity any sum or property for fees for management or similar services
rendered in connection with the operation of a business.
9.9 [intentionally omitted]
9.10 Stock Issuance.
Neither the Borrower nor any Subsidiary shall issue,
authorize the issuance of, or
obligate itself to issue any shares of its capital stock to any Person if such
issuance (i) would contravene any other provision of this Agreement, including
result in a Change of Control, or (ii) would result in there being capital stock
of Borrower that is not subject to the Parent Pledge Agreement or equity of a
Subsidiary that is not subject to the Pledge Agreement.
9.11 Compliance with Federal Reserve Regulations
Neither the Borrower nor any Subsidiary will directly
or indirectly, take or permit to be taken any action which would result in the
Loans or the carrying out of any of the other transactions contemplated by this
Agreement, being violative of Regulation U (12 C.F.R. 221, as amended) or of
Regulation T (12 C.F.R. 220, as amended) or of Regulation X (12 C.F.R. 224, as
amended) or any other regulation of the Board of Governors of the Federal
Reserve System.
9.12 Limitations on Restrictive Covenants.
Neither the Borrower nor any Subsidiary will enter
into any agreements which provide for, or otherwise place any restriction,
directly or indirectly, on (a) the right or ability of the Borrower or any
Subsidiary to create or suffer to exist any Liens or (b) the right or ability of
any Subsidiary to pay dividends or make other Restricted Payments to the
Borrower or other Subsidiaries.
9.13 Environmental Matters.
Neither the Borrower nor any Subsidiary shall (a)
use or permit any Person to use any of the real property owned or occupied by
the Borrower or any Subsidiary for the purposes of treating, producing,
handling, transferring, processing, transporting, disposing, storing or
otherwise releasing Hazardous Substances, in violation of any Environmental
Laws, or (b) cause or knowingly permit to exist as the result of an intentional
or unintentional action or omission on the part of the Borrower or any
Subsidiary or any other Person who occupies any real property owned or occupied
by the Borrower or any Subsidiary, a Release from, about, under or on any real
property owned or occupied by Borrower or such Subsidiary of any Hazardous
Substance except in the normal course of the business activities of the Borrower
or applicable Subsidiary and in conformity with Environmental Law.
9.14 ERISA.
Each of the Borrower and the Subsidiaries will not,
and will not permit any of its ERISA Affiliates or any employees of Borrower,
the Subsidiaries or any ERISA Affiliate who are fiduciaries with respect to an
employee benefit plan as defined in Section 3(3) of ERISA to, take any of the
following actions or permit any of the following events to occur if such action
or event could cause the Borrower, any Subsidiary or any ERISA Affiliates of any
of the foregoing to be liable for any material tax, penalty, or other liability:
(a) engage in any transaction in connection with which the Borrower, any
Subsidiary or any ERISA Affiliate could be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed
by Section 4975 of the Code;
(b) terminate any Employee Pension Plan in a manner, or take any other
action or fail to take any action, which could result in any liability
of Borrower or any ERISA Affiliate to the PBGC other than required
nondelinquent premium payments;
(c) fail to make full payment when due of all amounts which, under the
provisions of any Plan, the Borrower, any Subsidiary or any ERISA
Affiliate is required to pay as contributions thereto, or permit to
exist any Accumulated Funding Deficiency, whether or not waived, with
respect to any Employee Pension Plan;
(d) fail to comply with the requirements of COBRA;
(e) permit the current value of all vested accrued benefits under each
Employee Pension Plan to exceed the current value of the assets of such
Plan and, except as may be permitted under actuarial funding standards
adopted in accordance with Section 412 of the Code;
(f) withdraw from any Multiemployer Plan, if such withdrawal would result
in the imposition of a material Withdrawal Liability; or
(g) fail to comply with the reporting and disclosure requirements of ERISA
if such failure could result in the assessment of a material civil
penalty by the Secretary of Labor under ss.502(c) of ERISA; or
(h) fail to operate each Plan in all material respects in compliance with
the requirements of the Code and ERISA and the terms of each Plan if
such failure could result in disqualification of such Plan or in
payment of a material monetary sanction to the Internal Revenue Service
under its Closing Agreement Program.
As used in this Section, the term "accrued benefit" has the meaning specified in
Section 3(23) of ERISA, the term "current value" has the meaning specified in
Section 4001(a)(18)(B) of ERISA, and the term "material" shall mean an amount in
excess of $1,000,000.
9.15 Type of Business.
Neither the Borrower nor any Subsidiary will directly
or indirectly enter into any business which is not a Permitted Business.
<PAGE>
Article 10
EVENTS OF DEFAULT
10.1 Events of Default.
"Event of Default" wherever used herein means any one
of the following events (whatever the reason for such Event of Default, whether
it shall be voluntary or involuntary and whether it shall be by action or
inaction, by operation of law, pursuant to a court order or any rule or
regulation of any administrative or governmental instrumentality otherwise):
10.1.1 Failure to Pay Principal. If the Borrower shall fail to make any
payment of the principal of any Loan on the date when the same shall become due
and payable, whether at stated maturity or at a date fixed for any installment
or prepayment thereof or otherwise; or
10.1.2 Failure to Pay Interest, Fees and Other Amounts. If the Borrower shall
fail to make any payment of interest on any Loan or Commitment Fees or any other
amounts owing hereunder (other than principal of the Loans) on the dates when
such interest, Commitment Fees or other amounts shall become due and payable and
such failure continues for more than two (2) Business Days; or
10.1.3 Cross-Default.
(a) If the Borrower or any Subsidiary shall default (as payor or guarantor or
other surety) in the payment of any principal of or premium or interest on or
any other amount due in respect of any Indebtedness (other than the obligations
under the Loan Documents), including, without limitation, any direct or
contingent reimbursement obligations arising on account of the issuance of a
letter of credit, and the underlying obligation with respect to which a default
has occurred aggregates One Million Dollars ($1,000,000) or more or could result
in a required payment of $1,000,000 or more; or if any event shall occur or
condition shall exist which would permit, or shall have caused, the acceleration
of the payment, time for payment or maturity of any of the foregoing
obligations, and such default, event or condition shall continue for more than
the period of grace, if any, specified in the relevant agreement or instrument
and shall not have been waived pursuant thereto or if the Borrower; or if any
Subsidiary shall default (as payor or guarantor or other surety) in the payment
of any principal of or premium or interest on or any other amount due in respect
of any Obligations (other than those previously referred to); or
(b) If the Borrower or any Subsidiary shall default in a payment or performance
of any obligation (except obligations which are covered in Subsections 10.1.1,
10.1.2 or clause (a) of this Subsection 10.1.3) under any contract or agreement,
whether now or hereafter incurred, which default could have a Material Adverse
Effect, and such default shall continue for more than the period of grace, if
any, specified in the contract or agreement, and such default shall not have
been waived pursuant to the terms thereof; or
10.1.4 Representations and Warranties Untrue. If any representation or
warranty made by the Borrower or any other Loan Party in this Agreement or in
any other Loan Document shall be false or misleading in any material respect
when made or deemed made; or
10.1.5 Covenant Defaults.
(a) If there shall occur a default in the due performance or observance of any
term, covenant or agreement to be performed or observed pursuant to any of
Subsection 6.2.3 or 6.2.4, Article 7, Section 8.1, or Section 9.3, 9.7 through
9.12 inclusive, 9.14 or 9.15; or if there shall occur a default in the due
performance or observance of any term, covenant or agreement to be performed or
observed pursuant to any of Section 6.1, Subsection 6.2.5, Section 8.4, 8.9,
8.10, 8.12, 9.1, 9.2, 9.4, 9.5, 9.6 or 9.13 which shall continue unremedied for
a period of fifteen (15) days; or
(b) If there shall occur any default in the due performance or observance of any
term, covenant or agreement to be performed or observed pursuant to the
provisions of this Agreement other than as provided in Subsections 10.1.1,
10.1.2, or 10.1.5(a) and, if capable of being remedied, such default shall
continue unremedied for the earlier to end of the period of thirty (30) days
after notice of the default shall have been given to Borrower or thirty (30)
days after Borrower becomes aware, or should in the exercise of reasonable
diligence have become aware, of such default; or
10.1.6 Invalidity or Noncompliance With Loan Documents. If any of the Loan
Parties shall fail to perform any of its obligations under any of the Loan
Documents (after taking into account any applicable cure period set forth in
such agreements), or if the validity of this Agreement or any of the other Loan
Documents shall have been challenged or disaffirmed by or on behalf of any of
the Loan Parties or if any of the Loan Documents shall cease to be in full force
and effect (other than pursuant to its terms) or if, other than as a direct
result of any action of the Agent or the Lenders, any Liens created or intended
to be created by any of the Loan Documents shall at any time cease to be valid
and perfected subject to no equal or prior Lien except Permitted Liens; or
10.1.7 Judgment. If any judgment or judgments or assessment or assessments for
the payment of money in excess of One Million Dollars ($1,000,000) in the
aggregate shall be rendered against the Borrower and/or any Subsidiaries, and
such judgment or judgments remain unstayed or unsatisfied for a period of thirty
(30) days or more; or
10.1.8 Insolvency, Bankruptcy, Etc. If the Borrower or any Subsidiary of the
Borrower shall suspend or discontinue its business; if the Borrower or any
Subsidiary of the Borrower shall make an assignment for the benefit of creditors
or a composition with creditors, shall generally not be paying its debts as they
mature, shall admit its inability to pay its debts as they mature, shall file a
petition in bankruptcy, shall become insolvent (howsoever such insolvency may be
evidenced), shall be adjudicated insolvent or bankrupt, shall petition or apply
to any tribunal for the appointment of any receiver, custodian, liquidator or
trustee of or for it or any substantial part of its property or assets, shall
commence any proceeding relating to it under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, dissolution or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect; or if there
shall be commenced against the Borrower, or any Subsidiary of the Borrower, any
such proceeding and the same shall not be dismissed within sixty (60) days or an
order, judgment or decree approving the petition in any such proceeding shall be
entered against the Borrower or any Subsidiary of the Borrower; or if the
Borrower or any Subsidiary of the Borrower shall by any act or failure to act
indicate its consent to, approval of or acquiescence in, any such proceeding or
any appointment of any receiver, custodian, liquidator or trustee of or for it
or for any substantial part of its property or assets, or shall suffer the
appointment of any receiver, liquidator or trustee, or shall take any corporate
action for the purpose of effecting any of the foregoing; or if any court of
competent jurisdiction shall assume jurisdiction with respect to any such
proceeding and the same shall not be dismissed within sixty (60) days or if a
receiver or a trustee or other officer or representative of a court or of
creditors, or if any court, governmental office or agency, shall, under color of
legal authority, take and hold possession of any substantial part of the
property or assets of the Borrower or any Subsidiary of the Borrower and shall
not have relinquished possession within sixty (60) days, or if the Borrower or
any Subsidiary of the Borrower shall have concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder, delay or
defraud its creditors, or any of them, or shall have made or suffered a transfer
of any of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law, or if the Borrower or any Subsidiary of the Borrower
shall have made any transfer of its property to or for the benefit of a creditor
which constitutes a preferential transfer under any bankruptcy or similar law,
or if the Borrower or any Subsidiary of the Borrower shall have suffered or
permitted, while insolvent, any creditor to obtain a Lien upon any of its
property through legal proceedings or distraint; or
10.1.9 Revocation of Franchises. If one or more Franchises relating to the cable
television systems of the Borrower and/or any Subsidiary shall be terminated or
revoked such that the Borrower or the applicable Subsidiary is no longer able to
operate such Franchises and retain the revenue received therefrom or the
Borrower or the Subsidiary or the grantors of such Franchises shall fail to
renew such Franchises at the stated expiration (or extension) thereof such that
the Borrower or the Subsidiary is no longer able to operate such Franchises and
retain the revenue received therefrom, and the overall effect (after giving
effect to any Acquisitions or dispositions effected pursuant to the terms
hereof, if any) of all such terminations, revocations and failures to renew in
the aggregate from the Closing Date would be to reduce Pre-Tax Operating Cash
Flow by ten percent (10%) or more. For purposes of this Subsection 10.1.9, the
calculation of the percentage of Pre-Tax Operating Cash Flow attributable to any
Franchise which is terminated, revoked or not renewed (a "Terminated Franchise")
shall be determined as follows. The Pre-Tax Operating Cash Flow generated by the
cable system relating to the Terminated Franchise for the four fiscal quarters
ended on, or most recently prior to, the date of the termination, revocation or
nonrenewal of the Terminated Franchise shall be compared with the entire Cash
Flow generated by the Borrower and the Subsidiaries, on a Consolidated basis,
for the same period (the result being herein referred to as the "Cash Flow
Percentage"). For purposes of this Subsection 10.1.9, the Cash Flow Percentage
for each Terminated Franchise from the Closing Date shall be aggregated with the
Cash Flow Percentage for each other such Terminated Franchise from the Closing
Date for purposes of determining whether the ten percent (10%) figure has been
reached; or
10.1.10 Material Adverse Effect. If there shall exist any event or condition
which could have a Material Adverse Effect; or
10.1.11 Change of Control. If there shall occur a Change of Control.
10.2 Acceleration; Remedies.
10.2.1 Acceleration; General Remedies. Upon the occurrence of any event
described in Subsection 10.1.8, the entire unpaid principal balance of the
Notes, and interest accrued and premium, if any, thereon, and any unpaid accrued
Commitment Fees and all other amounts payable hereunder and under the other Loan
Documents, shall be immediately due and payable by the Borrower and the
Revolving Credit Commitment shall terminate. Such principal and interest,
premium and fees shall thereupon become and be immediately due and payable
without presentation, demand, protest, notice of protest or other notice of
dishonor of any kind, all of which are hereby expressly waived by the Borrower.
Upon the occurrence of any other Event of Default, or at any time thereafter, if
any Event of Default shall then be continuing, the Agent may (and shall if
directed by the Requisite Lenders pursuant to Section 11.6) by written notice to
the Borrower, declare the entire unpaid principal balance of the Notes, and
interest accrued and premium, if any, thereon and any unpaid accrued Commitment
Fees and all other amounts payable hereunder and under the other Loan Documents,
to be immediately due and payable by the Borrower and/or may terminate the
Revolving Credit Commitment. Such principal and interest, premium, fees and
other amounts shall thereupon become and be immediately due and payable, without
presentation, demand, protest, notice of protest or other notice of dishonor or
other notice of any kind, all of which are hereby expressly waived by the
Borrower. In the event of any such acceleration, the Agent (acting directly or
through the appointment of one or more trustees or agents of Agent's choosing)
may proceed to protect and enforce its rights and those of the Lenders under the
Loan Documents in any manner or order it or they deem expedient without regard
to any equitable principles of marshalling or otherwise.
10.2.2 Equitable Remedies. It is agreed that, in addition to all other rights
hereunder or under law, the Agent shall have the right to institute proceedings
in equity or other appropriate proceedings for the specific performance of any
covenant or agreement made in any of the Loan Documents or for an injunction
against the violation of any of the terms of any of the Loan Documents or in aid
of the exercise of any power granted in any of the Loan Documents or by law or
otherwise.
10.2.3 Appointment of Receiver.
(a) Without limiting the generality of the foregoing or limiting in any way the
rights of the Agent and Lenders under the Loan Documents or otherwise under
applicable law, at any time after the occurrence, and during the continuance, of
an Event of Default under Section 10.1, the Agent on behalf of the Lenders shall
be entitled to and at the request of the Requisite Lenders shall apply for, and
have a receiver appointed under state or federal law by a court of competent
jurisdiction in any action taken by the Agent and Lenders to enforce their
rights and remedies hereunder and under the Loan Documents in order to manage,
protect, preserve, sell and otherwise dispose of all or any portion of the
Collateral and continue the operation of the business of the Borrower and the
Subsidiaries, and to collect all revenues and profits thereof and apply the same
to the payment of all expenses and other charges of such receivership, including
the compensation of the receiver, and to the payment of the Loans and other fees
and expenses due hereunder and under the Loan Documents as aforesaid until a
sale or other disposition of such Collateral shall be finally made and
consummated.
(b) EACH OF THE BORROWER AND THE SUBSIDIARIES HEREBY IRREVOCABLY CONSENTS TO AND
WAIVES ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER
AS PROVIDED ABOVE. EACH OF THE BORROWER AND THE SUBSIDIARIES (i) GRANTS SUCH
WAIVER AND CONSENTS KNOWINGLY AFTER HAVING DISCUSSED THE IMPLICATIONS THEREOF
WITH COUNSEL, (ii) ACKNOWLEDGES THAT (A) THE UNCONTESTED RIGHT TO HAVE A
RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS CONSIDERED ESSENTIAL BY THE
AGENT AND LENDERS IN CONNECTION WITH THE ENFORCEMENT OF THEIR RIGHTS AND
REMEDIES HEREUNDER AND UNDER THE LOAN DOCUMENTS, AND (B) THE AVAILABILITY OF
SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES WAS A MATERIAL
FACTOR IN INDUCING THE LENDERS TO MAKE THE LOANS TO THE BORROWER AND (iii)
AGREES TO ENTER INTO ANY AND ALL STIPULATIONS IN ANY LEGAL ACTIONS, OR
AGREEMENTS OR OTHER INSTRUMENTS IN CONNECTION WITH THE FOREGOING AND TO
COOPERATE FULLY WITH THE LENDERS IN CONNECTION WITH THE ASSUMPTION AND EXERCISE
OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION OF THE COLLATERAL.
10.2.4 Remedies Cumulative. All rights and remedies given by this Agreement, the
Notes and the other Loan Documents are cumulative and not exclusive of any of
such rights or remedies or of any other rights or remedies available to the
Agent or any Lender, and no course of dealing between the Borrower and/or any
Subsidiary, on the one hand, and the Agent or any Lender, on the other hand, or
any delay or omission in exercising any right or remedy shall operate as a
waiver of any right or remedy, and every right and remedy may be exercised from
time to time and as often as shall be deemed appropriate by the Agent or any
Lender.
10.2.5 Special Provisions Respecting FCC Licenses and Other Franchises. If the
consent of the FCC, any PUC, or other applicable regulatory authority is
required in connection with any of the actions which may be taken by the Agent
or any of the Lenders, as the case may be, in the exercise of its or their
rights hereunder or under the other Loan Documents, then the Borrower and the
Subsidiaries, at sole cost and expense of the Borrower (but subject to the
guarantees set forth in Article 3 above), shall use their best efforts to secure
such consent and to cooperate fully with the Agent or the Lenders, as the case
may be, in any action commenced by the Agent or the Lenders, as the case may be,
to secure such consent. Upon the occurrence and during the continuation of an
Event of Default, the Borrower or the applicable Subsidiary, subject to the
provisions of applicable law, shall promptly execute and file and/or cause the
execution and filing of all applications, certificates, instruments and other
documents that the Agent or the Lenders deem necessary or advisable to file in
order to obtain any governmental consent, approval, or authorization, and if the
Borrower or the applicable Subsidiary, fails or refuses to execute, or fails or
refuses to cause another Person to execute, such documents, the clerk of any
court with jurisdiction over the Loan Documents or the relevant Loan Party or
Loan Parties may execute and file the same on behalf of the Borrower or the
applicable Subsidiary. The Borrower and each Subsidiary recognize that the FCC
Licenses and other Franchises held by such Person are unique assets which may
have to be transferred in order for the Agent and the Lenders adequately to
realize the value of their security interests. The Borrower and each Subsidiary
further recognizes that a violation of this covenant would result in irreparable
harm to the Agent and the Lenders for which monetary damages are not readily
ascertainable. Therefore, in addition to any other remedy which may be available
to the Agent or the Lenders, at law or in equity (including other remedies
involving specific performance), the Agent and/or the Lenders, shall have the
remedy of specific performance of the provisions of this subsection. To enforce
the provisions of this Section 10.2, the Agent is authorized to request the
consent or approval of the FCC, any PUC or other regulatory authority to a
voluntary or an involuntary transfer of control of any FCC License or other
Franchise.
Notwithstanding anything to the contrary contained in
this Agreement or any of the other Loan Documents, the Agent and the Lenders
will not knowingly take any action pursuant to this Agreement or any such
documents which would constitute or result in assignment of an FCC License or
other Franchise or any transfer of control of the holder of an FCC License or
other Franchise if such assignment of license or transfer of control would
require under then existing law (including the written rules and regulations
promulgated by the FCC or any PUC), the prior approval of the FCC or such PUC,
without first obtaining such approval. In connection with this provision the
Agent and the Lenders shall be entitled to rely upon the advice of counsel of
the Agent's choice whether or not the advice rendered is ultimately determined
to have been accurate.
<PAGE>
Article 11
AGENT
11.1 Authority.
The Lenders hereby irrevocably appoint First Union
National Bank to act as Agent as specified in the Loan Documents, and each of
the Lenders hereby irrevocably authorizes, and each of the holders of any Note
by the acceptance of such Note shall be deemed irrevocably to authorize First
Union National Bank, for such Lender and such holder, to execute and take such
action on its behalf under the provisions of this Agreement, the Notes, and the
other Loan Documents and to exercise such powers under the Loan Documents as are
specifically delegated to the Agent by the terms of the Loan Documents and such
powers as are reasonably incidental thereto. The Agent's duties shall be purely
ministerial and it shall have no duties or responsibilities except those
expressly set forth in the Loan Documents. The Agent shall not be required under
any circumstances to take any action that, in its judgment, (a) is contrary to
any provision of the Loan Documents or Applicable Law or (b) would expose it to
any Liability or expense against which it has not been indemnified to its
satisfaction. The Agent shall not, by reason of its serving as Agent, be a
trustee or other fiduciary for any Lender.
11.2 Expenses; Indemnification.
In default of reimbursement or indemnification by
the Borrower, the Lenders will, in proportion to their respective portions of
the Revolving Credit Commitment or, if none, the outstanding Loans, reimburse or
indemnify, as the case may be, the Agent for and against all expense, liability,
penalty and damage of any nature whatsoever (including but not limited to
reasonable attorneys' fees) which may be incurred or sustained by the Agent in
any way in connection with the Loan Documents or its duties under the Loan
Documents provided that (i) no Lender shall be liable for any portion of the
foregoing items resulting from the gross negligence or willful misconduct of the
Agent and (ii) unless a Default or an Event of Default has occurred and is
continuing (or is believed by the Agent to have occurred and be continuing), no
Lender shall be liable for the normal administrative costs and expenses of the
Agent incidental to the performance of its duties as Agent under the Loan
Documents, but the Lenders shall be liable for all out of pocket costs and
expenses of the Agent (including out-of-pocket administrative costs) during the
existence of a Default or an Event of Default (including one believed to exist
by Agent). The Agent shall not have any obligation to take any action in
connection with the performance of its duties as Agent under the Loan Documents
which, in its opinion, requires the payment of expenses or the incurrence of
liability, if there is a reasonable ground for belief that reimbursement of such
expenses or liability is not reasonably assured to it.
11.3 Exculpatory Provisions.
Neither the Agent, nor any Lender constituting the
Agent, nor any of its respective officers, directors, employees or agents, shall
be liable for any action taken or omitted under the Loan Documents or in
connection with the Loan Documents unless caused by its or their gross
negligence or willful misconduct. The Agent shall not be responsible for any
recitals, warranties or representations in the Loan Documents or for the
validity, enforceability, collectibility or due execution of this Agreement or
any of the other Loan Documents. The Lenders hereby acknowledge that they have
reviewed this Agreement and the other Loan Documents and are fully aware of the
terms thereof. The Agent may execute any of its duties by or through agents or
employees and shall be entitled to advice of counsel, accountants or other
professionals of its selection concerning all matters pertaining to the Loan
Documents and its duties under the Loan Documents. The Agent shall be entitled
to rely upon any writing or other document, telegram or telephone conversation
believed by it to have been signed, sent or made by the proper person or persons
and, in respect of legal matters, upon the advice of counsel selected by the
Agent whether or not such advice is correct. With respect to the portion of the
Loans made by it and Notes issued to it, the Agent shall have the same rights
and powers under the Loan Documents as any other Lender or holder of a Note and
may exercise the same as though it were not the Agent, and the term "Lenders" or
"holders of Notes" or any similar term shall, unless the context otherwise
indicates, include the Agent in its capacity as a Lender or noteholder.
11.4 Investigation by Lenders.
Each Lender expressly acknowledges that the Agent has
not made any representation or warranty to it and that no act taken by the Agent
shall be deemed to constitute a representation or warranty by the Agent to the
Lenders. Each Lender further acknowledges that it has taken and will continue to
take such action and to make such investigation as it deems necessary to inform
itself of the affairs of the Borrower and other Loan Parties and that it has
made and will continue to make its own independent investigation of the
creditworthiness and the business and operations of the Borrower and other Loan
Parties. In entering into this Agreement, and in making an advance under this
Agreement, each Lender represents that it has not relied and will not rely upon
any information or representations furnished or given by the Agent or by any
other Lender. The Agent shall be under no duty or responsibility to the Lenders
to ascertain or to inquire into the performance or observance by the Borrower or
any other Loan Party of any of the provisions of this Agreement or any document
or instrument now or hereafter executed in connection with this Agreement. For
all purposes under the Loan Documents, the Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment to it of
fees or principal of or interest on Loans) unless the Agent has received a
written notice from a Lender or the Borrower specifying such Default and stating
that such notice is a "Notice of Default."
11.5 Amendments, Waivers and Consents.
With the written consent of the Requisite Lenders, or
all the Lenders as required by Subsection 12.4.2, or as otherwise specified in
said Subsection 12.4.2, the Agent may, on behalf of the Lenders, enter into
agreements which change, amend or supplement this Agreement or any other Loan
Document, and may waive compliance with any provision of any of the Loan
Documents.
11.6 Action Upon Defaults.
11.6.1 Acceleration. Upon the occurrence and during the continuation of an Event
of Default, the Agent may (if in its sole discretion it determines that it shall
not be exposed to liability and that the exigencies so require) and upon the
request of the Requisite Lenders shall declare the Notes to be due and payable
and proceed to enforce the rights of the holders of the Notes by such
proceedings as the Agent may deem appropriate, whether at law or in equity. Upon
any request as aforesaid, the Agent shall declare the Notes to be due and
payable, but the Agent shall be justified in failing or refusing to take any
further action unless it shall be indemnified to its satisfaction or if it shall
reasonably determine that such action may expose the Agent to liability. It is
agreed that if the Agent, having been so indemnified to its satisfaction as
aforesaid, or not having been so indemnified, shall fail to so proceed, the
Requisite Lenders (acting through any Lender) shall be entitled to take such
action as it shall deem appropriate to enforce its rights.
11.6.2 Collateral. The Agent, on behalf of all the Lenders, shall hold in
accordance with the Loan Documents all items of Collateral or interests therein
received or held by the Agent. Subject to the Agent's and the Lenders' rights to
reimbursement for their costs and expenses and subject to the application of
payments in accordance with the terms hereof, each Lender shall have an interest
in any Collateral or interests therein in the same proportions that the
aggregate outstanding amount of Obligations owed to such Lender bears to the
aggregate outstanding amount of all Obligations, without priority or preference
among the Lenders.
11.7 Instructions
The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Documents (i) in accordance
with written instructions of the Requisite Lenders or all Lenders, as
applicable, or (ii) in accordance with the advise of legal counsel whether or
not such advice shall ultimately be determined to be correct or (iii) as a court
of competent jurisdiction may direct.
11.8 Resignation; Termination.
The Agent may resign at any time by giving prior
written notice to the Borrower and the Lenders. The Agent may be removed at any
time with cause by the Requisite Lenders. Such resignation or removal shall take
effect at the end of the sixty (60) day period after such notice of resignation
or removal has been given or upon the earlier appointment of a successor agent
by the Requisite Lenders. The Lenders shall, upon receipt of such notice,
appoint a successor agent from among the Lenders (subject to the consent of the
Borrower, which consent shall not be unreasonably withheld), and the Lenders and
the Borrower shall execute such documents as shall be necessary to effect such
appointment. If no successor Agent shall have been so appointed by the Requisite
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation, then the retiring Agent may,
on behalf of the Lenders and with the consent of the Borrower (which consent
shall not be unreasonably withheld), appoint any bank or financial institution
as the successor Agent. Upon the acceptance by any Person of its appointment as
a successor Agent, such Person 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 as
Agent under the Loan Documents. After any retiring Agent's resignation as Agent,
the provisions of this Article 11 and all indemnification and expense provisions
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.
11.9 Sharing.
If any Lender shall at any time receive payment of or
on account of all or a part of any Note held by it, whether by set-off or
otherwise, in a greater proportion than the payments made on the Notes held by
the other Lenders, such Lender shall purchase, without recourse, for cash,
ratably from each of the other Lenders, such portion of the Notes held by such
other Lenders so that, after such purchase, each Lender will hold an unpaid
principal amount of Notes in the same proportion that the outstanding principal
balance due to such Lender immediately prior to such payment bore to the
aggregate outstanding principal balance due to all Lenders immediately prior to
such payment. In the event that, at any time, any Lender shall be required to
refund any amount which has been paid to or received by it on account of any
Note held by it, and which has been applied to the purchase of a portion of the
Notes held by other Lenders pursuant to this Section, then, upon notice from
such Lender, each of the other Lenders shall purchase, without recourse, its
portion for cash, to the extent of its ratable share thereof, of the Notes held
by the Lender required to make such refund.
11.10 Other Relationships.
It is acknowledged that the Agent and the Lenders
may now or hereafter have lending or other relationships with the Borrower or
other Loan Parties and with Affiliates of such persons, and it is agreed that
the Agent and the Lenders are free to act with respect thereto without
consulting with one another and without regard to the effect of any such action
or relationship upon the Loans, the Collateral or any rights or obligations
under the Loan Documents.
Article 12
MISCELLANEOUS
12.1 Notices.
Unless otherwise expressly provided under this
Agreement all notices, requests, demands, directions and other communications
(collectively "notices") given to or made upon any party under the provisions of
this Agreement (and unless otherwise specified, in each other Loan Document)
shall be by telephone (immediately confirmed in writing) or in writing
(including facsimile communication) and if in writing shall be delivered by
hand, nationally recognized overnight courier or U.S. mail or sent by facsimile
to the respective parties at the addresses and numbers set forth under their
respective names on the signature pages of this Agreement or in accordance with
any subsequent unrevoked written direction from any party to the others. All
notices shall, except as otherwise expressly provided in this Agreement, be
effective (a) in the case of facsimile, when received, (b) in the case of
hand-delivered notice, when hand delivered, (c) in the case of telephone, when
telephoned, provided, however, that in order to be effective unless otherwise
expressly provided, telephonic notices must be confirmed in writing no later
than the next day by letter or facsimile, (d) if given by U.S. mail, the day
after such communication is deposited in the mails with overnight first class
postage prepaid, return receipt requested, and (e) if given by any other means
(including by air courier), when delivered; provided, further that notices to
the Agent shall not be effective until received. Any Lender giving any notice to
the Borrower shall simultaneously send a copy of such notice to the Agent, and
the Agent shall promptly notify the other Lenders of the receipt by it of any
such notice. Except as otherwise provided in this Agreement, in the event of a
discrepancy between any telephonic or written notice, the written notice shall
control.
12.2 Duration; Survival.
All representations and warranties of the Borrower
and other Loan Parties contained in the Loan Documents shall survive the making
of the Loans and shall not be waived by the execution and delivery of this
Agreement, any investigation by the Agent or the Lenders, the making of the
Loans, or payment in full of the Loans.
12.3 No Implied Waiver.
No failure or delay on the part of the Agent or any
Lender in exercising any right, power or privilege under any or all of the Loan
Documents and no course of dealing between the Borrower and/or and the Agent or
any Lender shall operate as a waiver of any such right, power or privilege; nor
shall any single or partial exercise of any right, power or privilege under the
Loan Documents preclude any other or further exercise of any such right, power
or privilege or the exercise of any other right, power or privilege. The rights
and remedies expressly provided in the Loan Documents are cumulative and not
exclusive of any rights or remedies which Agent or any Lender would otherwise
have. No notice to or demand on the Borrower or any other Loan Party in any case
shall entitle the Borrower or any other Loan Party to any other or further
notice or demand in similar or other circumstances or shall constitute a waiver
of the right of the Agent or any Lender to take any other or further action in
any circumstances without notice or demand.
12.4 Entire Agreement and Amendments
12.4.1 Entire Agreement. This Agreement and the other Loan Documents represent
the entire agreement between the parties to this Agreement with respect to the
Revolving Credit Commitment, the Loans and the transactions contemplated under
the Loan Documents and, except as expressly provided in the Loan Documents,
shall not be affected by reference to any other documents.
12.4.2 Amendments; Waivers. Any term, covenant, agreement or condition of any
Loan Document to which the Lenders (or the Agent) are party may be amended, and
any right under the Loan Documents may be waived, if, but only if, such
amendment or waiver is in writing and is signed by the Requisite Lenders (or by
the Agent at the direction of the Requisite Lenders) provided, however, if the
rights and duties of the Agent are affected thereby such amendment or waiver
must be executed, by the Agent; provided further, that no such amendment or
waiver shall be effective unless in writing and signed by all Lenders if it
shall increase the maximum amount of the Loans or the Revolving Credit
Commitment or Term Loan Commitment; and provided, further, that no such
amendment or waiver shall be effective, unless in writing and signed by each
Lender affected thereby, to the extent it would
(a) extend the maturity of any Note or decrease the rate of interest or amount
of fees or extend the time of payment or mandatory prepayment or decrease the
principal amount of any Note or extend the time of payment of interest or fees,
provided that the written consent of the Requisite Lenders, rather than the
consent of all Lenders, shall be sufficient to waive imposition of the Default
Rate, or
(b) amend the definition of "Requisite Lenders," or
(c) change the number of Lenders which are required to consent to any proposed
action under this Agreement before such action may be taken under this
Agreement, or
(d) release any guaranty or collateral security granted pursuant to the Loan
Documents; provided, however, the Agent may without the consent of any Person
release any guarantor or collateral security granted pursuant to the Loan
Documents, (i) as a court of competent jurisdiction may direct, (ii) in
connection with a disposition permitted under Section 9.7, above (other than a
disposition to the Borrower or a Subsidiary) or as may be otherwise provided
under the Loan Documents, or (iii) to the extent that such Collateral released
(together with all other Collateral released under this clause (iii)) is worth
no more than $1,000,000 as certified by the Borrower.
It is understood and agreed that, (x) except for Section 11.8 hereof, the Agent
and the Lenders may amend or modify the provisions of Article 11 hereof without
the need for any consent or approval from the Borrower, it being acknowledged
that the Borrower is not a third party beneficiary of the provisions of said
Article 11 except for said Section 11.8 and (y) without the consent of any
Lenders, the Agent may enter into amendments and modifications to this Agreement
and the other Loan Documents as necessary or desirable to add additional
Subsidiary Guarantors or add additional Collateral.
12.5 Successors and Assigns.
12.5.1 Assignments by the Borrower. Without the prior written consent of all of
the Lenders, the Borrower may not assign any of its rights or delegate any of
its duties or obligations under this Agreement or the other Loan Documents.
12.5.2 Participation. Each Lender may sell participations to one or more
Eligible Institutions of all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties to this Agreement for the performance of such
obligations, (iii) all amounts payable by the Borrower under this Agreement
shall be determined as if such transferor Lender had not sold such participation
and no participant shall be entitled to receive any greater amount pursuant to
this Agreement 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, (iv) without the prior
written consent of the Borrower and the Agent, no Lender may sell a
participation if its portion of the Revolving Credit Commitment and Term Loan
is, or after giving effect to the proposed participation would be, less than Ten
Million Dollars ($10,000,000), (v) each such participation shall be of a
constant, and not a varying percentage of all the transferor Lender's interests,
rights and obligations under this Agreement (including, without limitation, its
rights and obligations with respect to Revolving Credit Loans and Term Loans),
(vi) such participant shall agree to be bound by the provisions of this
Agreement and the other Loan Documents, and (vii) the Borrower, the Agent and
the other Lenders shall continue to deal solely and directly with such
transferor Lender in connection with such Lender's rights and obligations under
this Agreement, and such Lender shall retain the sole right and responsibility
vis-a-vis the Borrower to enforce the obligations of the Borrower relating to
the Loans including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement (subject to the rights
of the participants to approve amendments, modifications or waivers which would
reduce the interest or fees payable to them under this Agreement or increase the
amount of the Commitment, release collateral or extend the time of any payment
of or prepayment of the Loans).
12.5.3 Assignments by Lenders. Each Lender may assign to one or more Eligible
Institutions all or a portion of its interest, rights and obligations under this
Agreement (including without limitation all or a portion of its Commitment) and
the other Loan Documents; provided, however, that (i) unless the assignee is
(prior to the effective time of the assignment) an existing Lender or an
Affiliate of an existing Lender, the Agent and, if no Event of Default has
occurred and is continuing, the Borrower must give their prior written consent
to such assignment (which consents shall not be unreasonably withheld), (ii)
each such assignment shall be of a constant, and not a varying percentage of all
the assigning Lender's interests, rights and obligations under this Agreement,
(including, without limitation, its rights and obligations with respect to
Revolving Credit Loans and Term Loans) (iii) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and the Borrower's
acceptance, an Assignment and Acceptance Agreement in form and content
satisfactory to the Agent (the "Assignment and Acceptance"), together with (A)
any Note subject to such assignment, and, (B) unless the assignee is at the time
of such assignment also a Lender hereunder, a processing and recordation fee of
$3,500, and (C) reimbursement for fees of Agent's counsel in connection with
services rendered in respect of such assignment (which amounts are payable by
the applicable assignee and assignor) and (iv) without the prior written consent
of the Borrower and the Agent, no Lender may make a partial assignment if its
portion of the Revolving Credit Commitment and Term Loan is, or after giving
effect to the proposed assignment would be, less than Ten Million Dollars
($10,000,000). "Partial assignment" as used in clause (iv) above means any
assignment of a Lender's rights and obligations hereunder except an assignment
of all of such Lender's rights and obligations such that after the assignment
such Lender shall have no Commitment and no interest in any Loans hereunder.
Upon compliance with clauses (i) through (iv) above from and after the effective
date specified in the relevant Assignment and Acceptance, (x) the assignee shall
be a party to this Agreement and the other Loan Documents to which the assignor
was a party, and to the extent provided in such Assignment and Acceptance have
the rights and obligations of a Lender under this Agreement and under the other
Loan Documents and (y) the assigning Lender shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement and the other Loan Documents.
12.5.4 Procedures Respecting Assignment. Upon their receipt of an Assignment and
Acceptance executed by the assignor and the assignee, subject to the conditions
set forth in Subsection 12.5.3, the Agent and the Borrower shall accept such
Assignment and Acceptance. Within five (5) Business Days after such Assignment
and Acceptance is signed and accepted by all parties, the Borrower, at its own
expense, shall execute and deliver to the Agent new Notes in exchange for the
surrendered Notes, each to the order of such assignee in an amount equal to its
portion of the Commitment and Loans assigned to it pursuant to such Assignment
and Acceptance and new Notes to the order of the assigning Lender in an amount
equal to the Commitment and Loans retained by it. Such Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the date of such surrendered Notes (each
assignee shall confirm in the Assignment and Acceptance that, notwithstanding
the date of the new Notes made in favor of such assignee, such assignee shall
have no right to, or interest in, any fees or interest which shall have accrued
on the Loans prior to the effective date of the Assignment and Acceptance).
Cancelled Notes shall be returned to the Borrower upon the execution of such new
Notes.
12.5.5 Assignments to Federal Reserve Bank. Notwithstanding any of the terms of
this Section 12.5, any Lender may assign all or any portion of its rights to
payments in connection with this Agreement to a Federal Reserve Bank as
collateral in accordance with Regulation A of the Board of Governors of the
Federal Reserve System. Such assignment shall not affect any other rights or any
obligations of the assigning Lender.
12.6 Descriptive Headings.
The descriptive headings of the several sections of
this Agreement are inserted for convenience only and shall not affect the
meaning or construction of any of the provisions of this Agreement.
12.7 Governing Law.
This Agreement and the rights and obligations of the
parties under this Agreement and under the Notes shall be construed in
accordance with and shall be governed by the laws of the Commonwealth of
Pennsylvania.
12.8 Holidays
Except as otherwise provided herein, whenever any
payment to be made under the Loan Documents shall become due and payable on a
day which is not a Business Day, such payment may be made on the next succeeding
Business Day and such extension of time shall in such case be included in
computing interest on such payment.
12.9 Counterparts.
The Loan Documents and any notice or communication
under the Loan Documents may be executed in one or more counterparts, each of
which shall constitute an original, but all of which together shall constitute
one and the same instrument. Delivery of a photocopy or telecopy of an executed
counterpart of a signature page to any Loan Document shall be effective as
delivery of a manually executed counterpart of such Loan Document.
12.10 Maximum Lawful Interest Rate.
Notwithstanding any provision contained in this
Agreement or the Notes, the total liability of the Borrower for payment of
interest pursuant to this Agreement and the Notes shall not exceed the maximum
amount of such interest permitted by law to be charged, collected, or received
from the Borrower, and if any payments by the Borrower include interest in
excess of such a maximum amount, each Lender shall apply such excess to the
reduction of the unpaid principal amount due pursuant to this Agreement and the
Notes, or if none is due, such excess shall be refunded to the Borrower.
12.11 Set-off.
The Borrower and each Subsidiary hereby pledges and
gives to each Lender a lien and
security interest for the amount of the Obligations owing to such Lender under
the Loan Documents upon and in the balance of any account maintained by the
Borrower or any Subsidiary with such Lender or any other liability of Lender to
such Subsidiary or the Borrower. Upon the occurrence of and throughout the
period in which there is continuing an Event of Default, in such Lender's sole
option, at any time and from time to time, the Borrower and each Subsidiary
hereby authorizes such Lender to apply any such deposit balances now or
hereafter in the possession of such Lender and/or a credit in the amount of any
such other liability to the payment of the Obligations owing to such Lender
under the Loan Documents. The provisions of this Subsection 12.11 shall not be
deemed or construed to limit rights of set-off or liens or similar rights which
any Lender may otherwise have by reason of applicable law or otherwise.
12.12 Severability.
Every provision of this Agreement and each of the
other Loan Documents is intended to be severable, and if any term or provision
of this Agreement or any of the other Loan Documents shall be invalid, illegal
or unenforceable for any reason, the validity, legality and enforceability of
the remaining provisions shall not be affected or impaired thereby, and any
invalidity, illegality or unenforceability in any jurisdiction shall not affect
the validity, legality or enforceability of any such term or provision in any
other jurisdiction.
12.13 Non-Merger of Remedies.
It is the intention of the parties hereto that the
covenants and obligations of the Borrower and the Subsidiaries and the rights
and remedies of the Agent and Lenders hereunder and under the other Loan
Documents shall not merge with or be extinguished by the entry of judgment
hereunder or thereunder, and such covenants, obligations, rights and remedies
shall survive any entry of judgment until payment in full of the Loans. All
obligations under the Loan Documents shall continue to apply with respect to and
during the collection of amounts due under the Loan Documents or the proof and
allowability of any claim arising under this Agreement or any other Loan
Document, whether in bankruptcy or receivership proceedings or otherwise, and in
any workout, restructuring or in connection with the protection, preservation,
exercise or enforcement of any of the terms of this Agreement or of any rights
under this Agreement or under any other Loan Document or in connection with any
foreclosure, collection or bankruptcy proceedings. Without limiting the
generality of the foregoing, post-judgment interest rate shall be the interest
rate provided herein.
12.14 Payment and Reimbursement of Costs and Expenses; Indemnification.
Whether or not any fundings are made under this Agreement, the
Borrower shall unconditionally upon demand, pay or reimburse the Agent and the
Lenders for, and indemnify and save the Agent, the Lenders, and their respective
Affiliates, officers, directors, employees, agents, attorneys, shareholders and
consultants (collectively, "Indemnitees") harmless against, any and all
liabilities, losses, costs, expenses, claims and/or charges (including, without
limitation, fees and disbursements of legal counsel, accountants, investigators
and other experts, whether or not they are employees of the Agent) imposed on,
incurred by or asserted against such Indemnitees and arising out of, relating to
or connected with: (a) the negotiation, preparation, execution and delivery of
the Loan Documents and any waiver, amendment or consent under or with respect to
any of the Loan Documents whether or not executed, (b) consulting with respect
to any matter in any way arising out of, related to, or connected with, the Loan
Documents, including (i) the protection or preservation of the Collateral
securing the obligations under the Loan Documents, (ii) the protection,
preservation, exercise or enforcement of any of the rights of the Agent or
Lenders in, under or related to such Collateral or the Loan Documents or (iii)
the performance of any of the obligations of the Agent or Lenders under or
related to the Loan Documents, (c) protecting or preserving such Collateral or
(d) protecting, preserving, exercising or enforcing any of the rights of the
Agent or the Lenders in, under or related to such Collateral or the Loan
Documents, including defending the security interest granted to Lenders as a
valid, perfected, first priority security interest in such Collateral (e) all
transfer, documentary, stamp and similar taxes, and all recording and filing
fees and taxes payable in connection with, arising out of, or in any way related
to, the execution, delivery and performance of the Loan Documents or the making
of the Loans; and (f) commissions or claims by or on behalf of brokers, finders
or agents not retained by the Lenders provided, however, with respect to
liabilities, losses, costs, expenses, claims and/or charges referred to in
clauses (a) through (d) above to the extent that they are imposed on, incurred
by or asserted against a Lender (as compared to the Agent or someone acting on
behalf of the Agent), the indemnification of such Lender pursuant to this
Section 12.14 shall be limited to amounts that accrue after the occurrence of
and Event of Default.
Without limiting the generality of the foregoing, the
Borrower hereby indemnifies and agrees to defend and hold harmless each
Indemnitee, from and against any and all claims, actions, causes of action,
liabilities, penalties, fines, damages, judgments, losses, suits, expenses,
legal or administrative proceedings, interest, costs and expenses (including
court costs and attorneys', consultants' and experts' fees) arising out of or in
any way relating to: (i) the use, handling, management, production, treatment,
processing, storage, transfer, transportation, disposal, Release or threat of
Release of any Hazardous Substance by or on behalf of, Borrower or any
Subsidiary; (ii) the presence of Hazardous Substances on, about, beneath or
arising from any premises owned or occupied by the Borrower or any Subsidiary
(herein collectively, the "Premises"); (iii) the failure of Borrower or any of
its Subsidiaries or Affiliates or any occupant of any Premises to comply with
the Environmental Laws; (iv) Borrower's breach of any of the representations,
warranties and covenants contained herein or in any Loan Documents; (v)
Regulatory Actions (as hereinafter defined) and Third Party Claims (as
hereinafter defined); or (vi) the imposition or recording of a Lien against any
Premises in connection with any Release at, on or from any Premises or any
activities undertaken on or occurring at any Premises, or arising from such
Premises or pursuant to any Environmental Law. Borrower's indemnity and defense
obligations under this section shall include, without limitation and whether
foreseeable or unforeseeable, any and all costs related to any Remedial Action.
"Regulatory Action" means any notice of violation, citation, complaint, request
for information, order, directive, compliance schedule, notice of claim, consent
decree, action, litigation or proceeding brought or instituted by any
governmental authority under or in connection with any Environmental Law
involving the Borrower any Subsidiary, or any occupant of any of the Premises or
involving any of the Premises or any activities undertaken on or occurring at
any Premises. "Third Party Claims" means claims by a party (other than a party
to this Agreement and other than Regulatory Actions) based on negligence,
trespass, strict liability, nuisance, toxic tort or detriment to human health or
welfare due to Hazardous Substances on, about, beneath or arising from any
Premises or in any way related to any alleged violation of any Environmental
Laws or any activities undertaken on or occurring at any Premises.
The indemnities contained herein shall survive repayment of the Loans
and satisfaction, release, and discharge of the Loan Documents, whether through
full payment of the Loans, foreclosure, deed in lieu of foreclosure or
otherwise.
The foregoing amounts are in addition to any other amounts which may be
due and payable to the Agent and/or the Lenders under this Agreement. A
certification by the Agent or a Lender hereunder of the amount of liabilities,
losses, costs, expenses, claims and/or charges shall be conclusive, absent
manifest error. Notwithstanding the foregoing, the Borrower shall not be
required to indemnify any Indemnitee with respect to a claim or liability that
arises as the result of the gross negligence or willful misconduct of such
Indemnitee.
12.15 Certain Matters Respecting Secured Obligations. The Loan Documents provide
for certain guarantees of, and security for, the Obligations which (in addition
to obligations arising under or out of the Loan Documents) include, under clause
(c) of the definition of "Obligations", certain obligations respecting
Indebtedness to Lenders permitted by the terms of clause (b)(iii) of Section 9.1
above (the "Other Secured Obligations"). From time to time, Lenders may extend
credit to the Borrower and/or Subsidiaries (other than pursuant to the Loan
Documents) ("Additional Lender Debt") intending such credit to be secured and
guaranteed in reliance on said clause (c). However, the obligations in respect
of Additional Lender Debt shall only constitute Other Secured Obligations and be
secured and guaranteed under the Loan Documents to the extent that they are
permitted by the terms of the Loan Documents. Moreover, Other Secured Debt shall
only be guaranteed and secured to the extent that the obligations arising under
or out of the Loan Documents are secured and guaranteed. Holders of Other
Secured Obligations shall have no rights under the Loan Documents except the
right to receive such proceeds of guarantees and Collateral as specified in the
Loan Documents. Therefore, notwithstanding anything to the contrary set forth in
any Loan Document, any purported guaranty of Additional Lender Debt or any
purported collateral security therefor shall be subject to the following
limitations:
12.15.1 Limitation on Amount of Obligations under clause (c) of the definition
of "Obligations" be limited to Seven Million Five Hundred Thousand Dollars
($7,500,000) or such lesser amount as may be permitted from time to time by the
terms of clause (b)(iii) of Section 9.1 (Indebtedness) above after giving effect
to any other Indebtedness (i.e., Indebtedness to Persons that are not Lenders)
(such net amount, the "Additional Secured Credit Limit"). Accordingly, at any
time that a Lender shall extend credit in reliance on clause (b)(iii) of Section
9.1 above, it shall provide a written notice to the Agent clearly marked "Notice
of Extension of Secured Credit to Harron Communications Corp.", specifying the
amount and principal terms of the credit. Further,
(a) If the amount of Additional Lender Debt shall exceed the
Additional Secured Credit Limit, then the amount of such
Additional Lender Debt which shall be deemed to be "Other
Secured Obligations" within the meaning of this Section 12.15
or "Obligations" within the meaning of Article 3 hereof or
"Secured Obligations" within the meaning of the Parent Pledge
Agreement and the Pledge Agreement or any similar term in any
other Loan Document shall be such Additional Lender Debt in an
amount up to the Additional Secured Credit Limit for which the
Agent shall have first (in chronological order of receipt)
received written notice from the applicable Lender;
(b) If the amount of Additional Lender Debt does not exceed the
Additional Secured Credit Limit, then all Additional Lender
Debt shall be deemed to be "Other Secured Obligations",
"Obligations" or "Secured Obligations", as the case may be;
and
(c) If the amount of Additional Lender Debt exceeds the Additional
Secured Credit Limit, but no notice or notice of an amount
thereof less than the Additional Secured Credit Limit shall
have been received by the Agent, then the Additional Lender
Debt as to which no notice shall have been received by the
Agent (the "Undesignated Obligations") shall be deemed to be
"Other Secured Obligations", "Obligations" or "Secured
Obligations" as the case may be as follows: first, all
Additional Lender Debt as to which the Agent shall have
received notice shall be "Other Secured Obligations",
"Obligations" and "Secured Obligations" and, second, each
Lender's Undesignated Obligations shall be deemed to be "Other
Secured Obligations", "Obligations" or "Secured Obligations"
based on such Lender's pro rata share of Undesignated
Obligations.
Nothing in this Section 12.15 shall relieve the Borrower of
any Default or Event of Default in connection with incurring Indebtedness in
excess of the amounts permitted by Section 9.1. Further, nothing in this Section
12.15 shall impose any duty on the Agent to monitor amounts of Indebtedness
incurred by the Borrower or to notify any Lender that any Additional Lender Debt
is in excess of the amount that may be deemed to be "Other Secured Obligations",
"Obligations" or "Secured Obligations", as the case may be.
12.15.2 Termination. It is the intention of the parties that the Other Secured
Obligations shall be secured and guaranteed only for so long as the Obligations
arising out of the Loan Documents are secured and guaranteed. Therefore,
notwithstanding anything to the contrary in the Loan Documents, any guaranty
obligations under Article 3 above and any security provided for in the other
Loan Documents shall terminate as specified in the applicable Loan Document but
without regard to whether there shall be any outstanding Other Secured
Obligations.
12.16 Consent to Jurisdiction, Service and Venue; Waiver of Jury Trial
(a) For the purpose of enforcing payment and performance of the Loan Documents,
including without limitation, any payment under the Notes and performance of
other obligations under the Loan Documents, or in any other matter relating to,
or arising out of, the Loan Documents, each of the Borrower and the Subsidiaries
hereby consents to the jurisdiction and venue of the courts of the Commonwealth
of Pennsylvania or of any federal court located in such state, waive personal
service of any and all process upon it and consents that all such service of
process be made by certified or registered mail directed to the Borrower or such
Subsidiary at the address provided for in Section 12.1 and service so made shall
be deemed to be completed upon actual receipt. Each of the Borrower and the
Subsidiaries hereby waives the right to contest the jurisdiction and venue of
the courts located in the Commonwealth of Pennsylvania on the ground of
inconvenience or otherwise and, further, waives any right to bring any action or
proceeding against (a) the Agent in any court outside the Commonwealth of
Pennsylvania, or (b) any other Lender other than in a state within the United
States designated by such Lender. The provisions of this Section 12.16 shall not
limit or otherwise affect the right of the Agent or any Lender to institute and
conduct an action in any other appropriate manner, jurisdiction or court.
(b) NEITHER THE AGENT NOR ANY LENDER NOR ANY SUBSIDIARY NOR THE BORROWER NOR ANY
OTHER PERSON LIABLE FOR THE INDEBTEDNESS TO THE LENDERS REFERRED TO IN THE LOAN
DOCUMENTS, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF THE
FOREGOING SHALL SEEK A JURY TRIAL IN ANY PROCEEDING BASED UPON OR ARISING OUT OF
THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT, OR INVOLVING ANY COLLATERAL OR ANY
GUARANTY RELATING TO SUCH INDEBTEDNESS OR THE RELATIONSHIP BETWEEN OR AMONG SUCH
PERSONS OR ANY OF THEM. NEITHER THE AGENT NOR ANY LENDER NOR ANY SUBSIDIARY NOR
THE BORROWER NOR ANY OTHER PERSON WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT
AS PROHIBITED BY LAW, EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE
TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THIS SECTION 12.16, ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES. EACH PARTY TO THIS AGREEMENT (i) CERTIFIES
THAT NEITHER THE AGENT NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE AGENT NOR ANY
LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH LENDER
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(ii) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH
OTHER LOAN DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS PARAGRAPH (b) OF SECTION 12.16. THE PROVISIONS OF THIS
SECTION 12.16 HAVE BEEN FULLY DISCLOSED TO THE PARTIES AND THE PROVISIONS SHALL
BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED
TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 12.16 WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Credit
Agreement to be duly executed by their respective, duly authorized officers as
of the date first above written.
BORROWER:
HARRON COMMUNICATIONS CORP.
By:/s/Michael C. Mulcahey
Name: Michael C. Mulcahey
Title: Assistant Treasurer
Notice Information
Address: 1 North Main Street
Coudersport, Pennsylvania 16915
Phone No.: (814) 274-6445
Fax No.: (814) 274-6586
Attention: Dean Marshall
Director of Finance
with a copy to:
Paula A. Zawadzki, Esquire
Buchanan Ingersoll, Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
<PAGE>
AGENT AND LENDERS:
FIRST UNION NATIONAL BANK in its capacity as Agent and a Lender
By:/s/Elizabeth Elmore
Name: Elizabeth Elmore
Title: Senior Vice President-Director
Notice Information
Address: Communications/Media Group
PA 4829
One South Penn Square
Philadelphia, Pennsylvania 19107
Phone No.: (215) 786-4321
Fax No.: (215) 786-7721
Attention: Elizabeth Elmore, Senior Vice President-Director
Wire Transfer Information
First Union National Bank
Commercial Loans
Philadelphia, PA
ABA Number 031000011
Account Number 0132-0452
Attention: Stacy Shegda
Associate Director
Re: Harron Communications Corp.
<PAGE>
Any notices relating to the administration of the Loans, including, without
limitation, requests for fundings and selection of a rate of interest, should
also be sent to the Agent at:
First Union National Bank Capital Markets
PA 4830
One South Penn Square
Philadelphia, Pennsylvania 19107
Phone (215) 973-6621
FAX (215) 973-1887
Attention: Stacy Shegda
Associate Director
<PAGE>
KEY CORPORATE CAPITAL INC.
By:/s/Tim Willard
Name: Tim Willard
Title: Vice President
Notice Information:
Address: NY-31-66-0631
66 South Pearl Street
Albany, NY 12207
Phone: (518) 487-4044
Fax No.: (518) 488-5199
Attention: Tim Willard, Vice President
<PAGE>
BANK OF MONTREAL
By:/s/Karen Klapper
Name: Karen Klapper
Title: Director
Notice Information:
Address: 430 Park Avenue
New York, NY 10022
Phone: (212) 605-1559
Fax No.: (212) 605-1648
Attention: Karen Klapper, Director
<PAGE>
BANK OF AMERICA, N.A.
By:/s/Roselyn Drake
Name: Roselyn Drake
Title: Principal
Notice Information:
Address: 901 Main Street, 64th Floor
Dallas, TX 75202-8748
Phone: (214) 209-0988
Fax No.: (214) 209-9390
Attention: Roselyn Drake, Principal
<PAGE>
CIBC INC.
By:/s/Colleen Risorto
Name: Colleen Risorto
Title: Executive Director
Notice Information:
Address: 425 Lexington Avenue
New York, NY 10017
Phone: (212) 856-3774
Fax No.: (212) 856-3558
Attention: Colleen Risorto, Executive Director
<PAGE>
ALLFIRST BANK (as successor to FMB BANK, formerly known as FIRST
NATIONAL BANK OF MARYLAND)
By:/s/Wendy M. Andrus
Name: Wendy. M. Andrus
Title: Vice President
Notice Information:
Address: 25 S. Charles Street, 18th Floor
Mail Code 101-511
Baltimore, MD 21203
Phone: (410) 545-2044
Fax No.: (410) 244-4920
Attention: Wendy M. Andrus, Vice President
<PAGE>
COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:/s/Alan E. McLintock
Name: Alan E. McLintock
Title: Vice President
By:
Name:
Title:
Notice Information:
Address: 245 Park Avenue
New York, NY 10167-0062
Phone: (212) 916-7850
Fax No.: (212) 983-0973
Attention: Credit Department
Address: 300 South Wacker Drive, Suite 3500
Chicago, IL 60606-6610
Phone: (312) 408-8248
Fax No.: (312) 786-0052
Attention: Alan E. McLintock, Vice President
<PAGE>
THE CHASE MANHATTAN BANK
By:/s/Edmond DeForest
Name: Edmond DeForest
Title: Vice President
Notice Information:
Address: 270 Park Avenue, 37th Floor
New York, NY 10017
Phone: (212) 270-9627
Fax No.: (212) 270-4584
Attention: Edmond DeForest, Vice President
<PAGE>
FLEET BANK, N.A.
By:
Name:
Title:
Notice Information:
Address: 1185 Avenues of Americas, 16th Floor
MC: NY NY S16K
New York, NY 10036
Phone: (212) 819-6049
Fax No.: (212) 819-6202
Attention: Eric S. Meyer, Vice President
<PAGE>
SUMMIT BANK
By:
Name:
Title:
Notice Information:
Address: 301 Carnegie Center
Princeton, NJ 08543
Phone: (609) 987-3497
Fax No.: (609) 734-9125
Attention: Hank Kush, Sr. Vice President
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By:/s/Sonia L. Isaacs
Name: Sonia L. Isaacs
Title: Vice President
Notice Information:
Address: 445 S. Figueroa Street
Los Angeles, CA 90071
Phone: (213) 236-7834
Fax No.: (213) 236-5747
Attention: Sonia L. Isaacs, Vice President
<PAGE>
FIRST HAWAIIAN BANK
By:/s/Travis Ruetenik
Name: Travis Ruetenik
Title: Asst. Vice President
Notice Information:
Address: 180 Montgomery Street, 25th Floor
San Francisco, CA 84104
Phone: (415) 765-4906
Fax No.: (415) 362-4855
Attention: Donald C. Young, Vice President
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By:/s/John T. Wilden
Name: John T. Wilden
Title: Vice President
Notice Information:
Address: 1600 Market Street, 21st Floor
Philadelphia, PA 19103
Phone: (215) 585-4326
Fax No.: (215) 585-6680
Attention: John T. Wilden, Vice President
<PAGE>
NATEXIS BANQUE BFCE
By:/s/Evan S. Kraus & Frank H. Madden, Jr.
Name: Evan S. Kraus Frank H. Madden, Jr.
Title: Asst. Vice President Vice Pres. & Group Mgr.
Notice Information:
Address: 645 Fifth Avenue, 20th Floor
New York, NY 10022
Phone: (212) 872-5029
Fax No.: (212) 872-5045
Attention: Cynthia E. Sachs, Vice President
<PAGE>
CRESTAR BANK
By:/s/J. Eric Millham
Name: J. Eric Millham
Title: Vice President
Notice Information:
Address: 919 East Main Street, 22nd Floor
P.O. Box 26665
Richmond, VA 23261-6665
Phone: (804) 782-5675
Fax No.: (804) 782-5413
Attention: J. Eric Millham, Vice President
<PAGE>
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By:/s/Constance Loosemore
Name: Constance Loosemore
Title: Assistant Vice President
By:/s/Patrick A. Keleher
Name: Patrick A. Keleher
Title: Vice President
Notice Information:
Address: 75 Wall Street
New York, NY 10005-2889
Phone: (212) 429-3006
Fax No.: (212) 429-4181
Attention: Patrick A. Keleher, Vice President
<PAGE>
THE FUJI BANK, LIMITED
By:/s/Kazuyuki Nishimura
Name: Kazuyuki Nishimura
Title: Senior Vice President
Notice Information:
Address: Two World Trade Center
79th Floor
New York, NY 10048
Phone: (212) 898-2082
Fax No.: (212) 912-0516
Attention: Mark S. Gronich, Vice President
<PAGE>
FIRSTRUST BANK
By:/s/Kent Nelson
Name: Kent Nelson
Title: Vice President
Notice Information:
Address: 15 East Ridge Pike
Conshohocken, PA 19428
Phone: (610) 238-5026
Fax No.: (610) 238-5066
Attention: Kent Nelson, Vice President and Manager
<PAGE>
MELLON BANK, N.A.
By:/s/Paul F. Noel
Name: Paul F. Noel
Title: Vice President
Notice Information:
Address: One Mellon Bank Center
500 Grant Street, Rm. 0370
Pittsburgh, PA 15258-0001
Phone: (412) 234-2999
Fax No.: (412) 234-6375
Attention: Thomas P. Joyce, Vice President
<PAGE>
SUBSIDIARY GUARANTORS:
HARRON CABLEVISION OF MASSACHUSETTS, INC.
HARRON CABLEVISION OF PENNSYLVANIA (formerly
HARRON CABLEVISION OF KENNETT SQUARE, INC.)
HARRON CABLEVISION OF MICHIGAN, INC.
HARRON TELECOM CORP.
HARRON CABLEVISION OF NEW YORK, INC.
HARRON CABLEVISION OF NEW HAMPSHIRE, INC.
By:/s/Michael C. Mulcahey
Name: Michael C. Mulcahey
Title: Assistant Treasurer
EXHIBIT 10.120
ADELPHIA COMMUNICATIONS CORPORATION
$500,000,000
9 3/8% Senior Notes due 2009
UNDERWRITING AGREEMENT
November 10, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
SALOMON SMITH BARNEY INC.
as Representatives of the several Underwriters
named on Schedule I hereto
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Ladies and Gentlemen:
Adelphia Communications Corporation, a Delaware corporation
(the "Company"), may issue and sell from time to time a series of its debt
securities registered under the registration statement referred to in Section
1(a) hereof. The Company proposes to sell $500,000,000 in aggregate principal
amount of its 9 3/8% Senior Notes due 2009 (collectively, the "Securities" and,
individually, a "Security"), to the several underwriters named on Schedule I
hereto (the "Underwriters"). The Securities will be issued pursuant to an
Indenture dated as of April 28, 1999 (the "Base Indenture") as supplemented by a
Second Supplemental Indenture (the "Supplemental Indenture" and, together with
the Base Indenture, the "Indenture") between the Company and Harris Trust
Company of New York, as trustee (the "Trustee"). The form of the Supplemental
Indenture will be filed on Form 8-K and incorporated by reference as an exhibit
to the registration statement referred to below.
1. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to, and agrees with, the several
Underwriters on and as of the date hereof and the Closing Date (as defined in
Section 3) that:
(a) A registration statement (No. 333-78027), including a
prospectus, with respect to the Securities have been prepared by the
Company in conformity with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder and have become effective. Copies of such
registration statement have been delivered by the Company to you as the
Underwriters. As used in this Agreement, (i) "Registration Statement"
means each such registration statement, as amended and supplemented to
the date hereof; (ii) "Basic Prospectus" means the prospectus included
in the Registration Statement; and (iii) "Prospectus" means the Basic
Prospectus, together with any prospectus amendment or supplement
(including in each case all documents incorporated therein by reference
(the "Incorporated Documents")) specifically relating to the
Securities, as filed with the Commission pursuant to paragraph (b) of
Rule 424 of the Rules and Regulations. The Commission has not issued
any order preventing or suspending the use of any Prospectus, and no
proceedings for such purposes have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with.
(b) The Registration Statement and the Prospectus contain, and
(in the case of any amendment or supplement to any such document, or
any material incorporated by reference in any such document, filed with
the Commission after the date as of which this representation is being
made) will contain at all times during the period specified in
Paragraph 4(c) hereof, all statements which are required by the
Securities Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), and the rules and regulations of the Commission
under such Acts; the Indenture, with any amendments and supplements
thereto will conform, with the requirements of the Trust Indenture Act
and the rules and regulations of the Commission thereunder; and the
Registration Statement, the Prospectus and the Incorporated Documents
do not, and (in the case of any amendment or supplement to any such
document, or any material incorporated by reference in any such
document, filed with the Commission after the date as of which this
representation is being made) will not, at any time during the period
specified in Paragraph 4(c) hereof, 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;
provided that the Company makes no representation or warranty as to
information contained in or omitted from any Registration Statement or
any Prospectus in reliance and based upon information furnished to the
Company by or on behalf of any Underwriter, it being understood and
agreed that the only such information is that described as such in
Section 9(b) hereof, or as to any statements in or omissions from the
Statement of Eligibility of the Trustee under the Indenture.
(c) Neither the Company nor any of its material subsidiaries
(the "Subsidiaries") has sustained since December 31, 1998 any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the
respective dates as of which information is given in the Prospectus,
there has not been any reduction in the consolidated stockholders'
equity or change in the capital stock, as applicable (other than
reductions in the ordinary course of business consistent with prior
periods), material increase in the total amount of short-term debt
(excluding trade payables) or long-term debt of the Company or any of
its Subsidiaries, or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, partners' equity,
shareholders' equity or results of operations of the Company and its
subsidiaries or any of the Acquired Companies and their subsidiaries,
otherwise than as set forth or contemplated in the Prospectus;
(d) Each of the Company and its Subsidiaries has good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company and its Subsidiaries; and any real
property and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries; except in any case that
would not have a material adverse effect on the business, general
affairs, management, financial position, partners equity or
shareholders' equity (other than reductions in the ordinary course of
business consistent with prior periods), results of operations or
prospects of the Company and its Subsidiaries, taken as a whole a
"Material Adverse Effect;"
(e) (i) Each of the Subsidiaries that is a partnership has
been duly formed and is validly existing as a partnership in good
standing under the laws of its state of formation, with full power and
authority (partnership and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as
a foreign partnership for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction
except where the failure to so qualify would not have a Material
Adverse Effect; and (ii) each of the Company and the Subsidiaries that
are corporations has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its state of
incorporation, with full power and authority (corporate and other) to
own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification, or is
subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction except where the failure to
so qualify would not have a Material Adverse Effect;
(f) Each of the Company and its Subsidiaries has the ownership
or authorized capitalizations, as the case may be, as set forth in the
Prospectus, and all of the partnership interests of the Subsidiaries
that are partnerships and all of the issued shares of capital stock of
its Subsidiaries that are corporations have been duly and validly
authorized and issued and with respect to shares of capital stock are
fully paid and non-assessable; and all of the partnership interests of
the Subsidiaries disclosed in the Prospectus as being owned directly or
indirectly by the Company and all of the issued shares of capital stock
of the Subsidiaries that are corporations disclosed in the Prospectus
as being owned directly or indirectly by the Company have been duly and
validly authorized and issued are fully paid and non-assessable and are
owned directly or indirectly by the Company free and clear of all
liens, encumbrances, equities or claims (other than liens to secure
indebtedness under credit facilities disclosed in the Prospectus); and
ownership of the various interests and shares of the Company and its
Subsidiaries is as described in the Prospectus;
(g) The Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Indenture under which they are to be issued, which will
be substantially in the form previously delivered to the Underwriters;
the Indenture has been duly authorized by the Company and, when
executed and delivered by the Company and the Trustee, the Indenture
will constitute a valid and legally binding instrument, enforceable in
accordance with its terms against the Company, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and
to general equity principles; and the Securities and the Indenture will
conform to the descriptions thereof in the Prospectus and will be in
substantially the form previously delivered to the Underwriters;
(h) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale
of the Securities) will violate or result in a violation of Section 7
of the Exchange Act, or any regulation promulgated thereunder,
including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System;
(i) Prior to the date hereof, none of the Company or any of
their affiliates (other than the Underwriters or any person acting on
their behalf as to which the Company makes no representation) has
taken, directly or indirectly, any action which is designed to or which
has constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Securities;
(j) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the Indenture
and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any material indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement or other similar financing agreement or
instrument or other agreement or instrument (including, without
limitation, any license or franchise granted to the Company or one of
its Subsidiaries by a local franchising governmental body) to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or has rights under or to which any
of the property or assets of the Company or any of its Subsidiaries is
subject, nor will such action result in any violation of the provisions
of the certificate of incorporation or bylaws of the Company or its
Subsidiaries that are corporations or the certificates of limited
partnership or the partnership agreements of its Subsidiaries that are
partnerships or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the issue and sale of the Securities or the consummation by the
Company of the transactions contemplated by this Agreement or the
Indenture, other than such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the Underwriters;
(k) None of the Company or its Subsidiaries is in violation of
its certificate of incorporation or bylaws, as the case may be, or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, sale/leaseback agreement, loan agreement or other
similar financing agreement or instrument or other agreement or
instrument (including, without limitation, any license or franchise
granted to the Company or a subsidiary by a local franchising
governmental body) to which the Company or a subsidiary is a party or
by which it or any of its properties may be bound, except for such
defaults as would not have individually or in the aggregate a Material
Adverse Effect;
(l) The statements set forth in the Prospectus under the
caption "Description of the Notes," insofar as they purport to
constitute a summary of the terms of the Securities, and incorporated
by reference in the Prospectus from the Form 10-K and Forms 10-Q (each
as defined in the Prospectus) under the captions "Business" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," as applicable, insofar as they purport to
describe the provisions of the laws and documents referred to therein,
are accurate, complete and fair in all material respects;
(m) None of the Company or its Subsidiaries is or, after
giving effect to the offering and sale of the Securities, will be an
"investment company," or an entity "controlled" by an "investment
company," as such terms are defined in the United States Investment
Company Act of 1940, as amended (the "Investment Company Act");
(n) None of the Company, its Subsidiaries or any of their
affiliates does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section 517.075,
Florida Statutes;
(o) Other than as set forth in the Prospectus (including those
matters referred to therein relating to general rulemakings and similar
matters relating generally to the cable television industry), there are
no legal or governmental proceedings pending to which the Company or
any of its Subsidiaries is a party or of which any property of the
Company or any of its Subsidiaries is the subject which, if determined
adversely to the Company or any of its Subsidiaries, would individually
or in the aggregate have a Material Adverse Effect and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or by others; and except with
respect to general rulemakings and similar matters relating generally
to the cable television industry, during the time the Systems (as
defined below) have been owned by the Company or a subsidiary (i) there
has been no adverse judgment, order, or decree issued by the United
States Federal Communications Commission (the "FCC") relating to any of
the Systems that has not been disclosed in the Prospectus that would be
required to be disclosed in a public offering registered under the
Securities Act; (ii) there are no actions, suits, proceedings,
inquiries or investigations by the FCC pending or threatened in writing
against or affecting the Company, any of its Subsidiaries or any
System; and (iii) to the Company's knowledge, after due inquiry, there
is no reasonable basis for any such action, suit, proceeding or
investigation;
(p) Each of Deloitte & Touche LLP, who has reported on the
financial statements of the Company and some of the Acquired Companies
(as defined below), and KPMG LLP, who has reported on the financial
statements of some of the Acquired Companies, is an independent public
accountant as required by the Securities Act and the rules and
regulations of the Commission thereunder;
(q) This Agreement has been duly authorized, executed and
delivered by the Company;
(r) Except for matters covered by paragraph (v) below or with
respect to matters that would not individually or in the aggregate have
a Material Adverse Effect, (i) the Company and its Subsidiaries have
made all filings, recordings and registrations with, and possess 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, cable television franchises, pole attachment agreements,
and cable antenna relay service, broadcast auxiliary, earth station,
business radio, microwave or special safety radio service licenses
issued by the FCC (collectively, the "Authorizations") necessary or
appropriate to own, operate and construct the cable communication
systems owned by them (the "Systems") or otherwise for the operation of
their businesses and are not in violation thereof; (ii) all such
Authorizations are in full force and effect, 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 Systems or
otherwise for the operation of any such business; (iii) none of the
Company or any of its Subsidiaries is in violation of any duty or
obligation required by the United States Communications Act of 1934, as
amended (the "Communications Act"), or any FCC rule or regulation
applicable to the operation of any portion of any of the Systems; (iv)
none of the Company or any of its Subsidiaries is in violation of any
duty or obligation required by state or local laws, or local rules or
regulations applicable to the operation of any portion of any of the
Systems; (v) there is not pending or, to the best knowledge of the
Company or any of its Subsidiaries, threatened, any action by the FCC
or state or local regulatory authority to modify, revoke, cancel,
suspend or refuse to renew any Authorization; (vi) other than as
described in the Prospectus, there is not now issued or outstanding or,
to the best knowledge of the Company or any of its Subsidiaries,
threatened, any notice of any hearing, material violation or material
complaint against the Company or any of its Subsidiaries with respect
to the operation of any portion of the Systems and none of the Company
or its Subsidiaries has any knowledge that any person intends to
contest renewal of any material Authorization;
(s) (i) (A) The Company and its Subsidiaries have entered
into, or have rights under, all required programming agreements
(including, without limitation, all non-broadcast affiliation
agreements under which the Company and its Subsidiaries are accorded
retransmission rights relating to programming that the Systems provide
to their customers) that are material to the conduct of their business
as described in the Prospectus; and (B) all such material agreements
are in full force and effect and none of the Company, any of its
Subsidiaries or any of its affiliates has received any written notice
of revocation or material modifications of such material agreements;
and (ii)(A) either the Company or its Subsidiaries has entered into
agreements with the television stations that have notified the Company
or its Subsidiaries that such station's respective consent is required
to carry such stations on the Systems or has ceased carrying such
stations; (B) all such agreements grant the Company or one of its
Subsidiaries retransmission consent in exchange for various non-cash
consideration; and (C) all such agreements are in full force and effect
and are not subject to revocation (except in the case of material
breach by the Company or its Subsidiaries) or material modifications,
and no event has occurred that permits, or after notice or lapse of
time could permit, the revocation, termination or material modification
of any such agreement, except where the failure of such agreements to
be in full force and effect or such revocation would not, in either
case, individually or in the aggregate have a Material Adverse Effect;
(t) Except for matters that would not individually or in the
aggregate have a Material Adverse Effect, (i) all registration
statements and all other documents (including but not limited to annual
reports) required by the FCC in connection with the operation of the
Systems have been filed with the FCC; (ii) all frequencies within the
restricted aeronautical and navigational bands (i.e., 108-136 MHz and
225-400 MHz) which are currently being used in connection with the
operation of the Systems have been authorized for such use by the FCC;
(iii) each of the Systems subject to Equal Employment Opportunity
Commission ("EEOC") compliance certification by the FCC has been
certified by the FCC for annual EEOC compliance during the time such
Systems have been owned by the Company or its Subsidiaries; and (iv)
all towers associated with the Systems are in compliance with the rules
and regulations of the United States Federal Aviation Administration;
(u) Except for matters that would not individually or in the
aggregate have a Material Adverse Effect, none of the Company or any of
its Subsidiaries is in breach or violation of, or in default under, any
of the terms, conditions or provisions of the Communications Act or the
rules, regulations or policies of the FCC thereunder;
(v) (i) Except for matters that would not individually or in
the aggregate have a Material Adverse Effect, all statements of
accounts and any other filings that are required under Section 111 of
the United States Copyright Act of 1976, as amended, in connection with
the retransmission of any broadcast television and radio signals on the
Systems have been timely filed with the United States Copyright Office
and indicated royalty payments have been made for each System for each
accounting period during which such Systems have been owned by the
Company or its Subsidiaries; (ii) none of the Company, any of its
Subsidiaries or any System has received any inquiry or request from the
United States Copyright Office or from any other party challenging or
questioning any such statements of account or royalty payments; and
(iii) no claim of copyright infringement has been made or threatened in
writing against the Company, any of its Subsidiaries or any System;
(w) Neither the execution and delivery of this Agreement or
the Indenture, nor the consummation of the transactions contemplated
hereby and thereby or by the Prospectus under "Use of Proceeds," nor
compliance with the terms, conditions and provisions thereof by the
Company, will conflict with the Communications Act or the rules,
regulations or policies of the FCC thereunder, or will cause any
suspension, revocation, impairment, forfeiture, nonrenewal or
termination of any material license, permit, franchise, certificate,
consent, authorization, designation, declaration, filing, registration
or qualification;
(x) Neither the execution and delivery of this Agreement or
the Indenture, nor the execution, delivery, offer, issuance and sale of
the Securities, nor compliance with the terms, conditions and
provisions thereof by the Company, requires any license, permit,
franchise, certificate, consent, authorization, designation,
declaration, filing, registration or qualification by or with the FCC;
and
(y) On October 1, 1999, the Company consummated its previously
announced acquisition of Century Communication Corp., Harron
Communications Corp. and FrontierVision Partners, L.P.
(collectively, the "Acquired Companies").
2. Purchase of the Securities. (a) On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company agrees to issue and sell to
each of the Underwriters, severally and not jointly, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company,
the principal amount of Securities set forth opposite the name of such
Underwriter on Schedule 1 hereto at a purchase price equal to 99.204% of the
principal amount thereof.
The Company shall not be obligated to deliver any of the
Securities except upon payment for all of the Securities to be purchased as
provided herein. The Company acknowledges and agrees that the Underwriters may
sell Securities to any affiliate of an Underwriter and that any such affiliate
may sell Securities purchased by it to an Underwriter.
3. Delivery of and Payment for the Securities. (a) Delivery of
and payment for the Securities shall be made at the offices of Latham & Watkins,
New York, New York, or at such other place as shall be agreed upon by the
Underwriters and the Company, at 10:00 A.M., New York City time, on November 16,
1999, or at such other time or date, not later than seven full business days
thereafter, as shall be agreed upon by the Representatives and the Company (such
date and time of payment and delivery being referred to herein as the "Closing
Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire transfer of immediately
available funds to an account at a bank acceptable to Credit Suisse First Boston
Corporation ("CSFBC"), or by such other means as the parties hereto shall agree
prior to the Closing Date, against delivery to the Underwriters of the
certificates evidencing the Securities. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of the Underwriters hereunder. Upon delivery, the
Securities shall be in global form, registered in such names and in such
denominations as CSFBC on behalf of the Underwriters shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company agrees to make one or more global certificates evidencing the Securities
available for inspection by CSFBC on behalf of the Underwriters in New York, New
York at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees
with each of the several
Underwriters:
(a) To furnish promptly to the Underwriters and to counsel for
the Underwriters a conformed copy of each Registration Statement as
originally filed and each amendment or supplement thereto filed prior
to the date hereof or relating to or covering the Securities, and a
copy of each Prospectus filed with the Commission, including all
documents incorporated therein by reference and all consents and
exhibits filed therewith and to file with the Commission pursuant to
Rule 424 a prospectus supplement, in form and substance satisfactory to
CSFBC and its counsel, relating to the offering contemplated hereby no
later than the close of business on November 11, 1999;
(b) To deliver promptly to the Underwriters such reasonable
number of the following documents as the Underwriters may request: (i)
conformed copies of the Registration Statement (excluding exhibits
other than the computation of the ratio of earnings to fixed charges,
the Indenture and this Agreement), (ii) the Prospectus and (iii) any
documents incorporated by reference in the Prospectus;
(c) During such period following the date hereof as, in the
opinion of counsel for the Underwriters, the Prospectus is required by
law to be delivered, to comply with the Securities Act, the Exchange
Act, the Trust Indenture Act and the rules and regulations under each
thereof, so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If
at any time when a prospectus is required by the Securities Act to be
delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in
the reasonable opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue
statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel,
at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of
the Securities Act or the Rules and Regulations, the Company will
promptly prepare and file with the Commission, subject to paragraph (d)
below, such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish
to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request;
(d) Prior to filing with the Commission during the period
referred to in (c) above (i) any amendment to the Registration
Statement, (ii) the Prospectus or any amendment thereto, (iii) the
prospectus supplement utilized in connection with this offering or any
amendment or supplement thereto, or (iv) any document incorporated by
reference in any of the foregoing or any amendment or supplement to
such incorporated document, to furnish a copy thereof to the
Underwriters and to counsel for the Underwriters and not to file any
document that shall have been disapproved by the Underwriters, provided
that neither CSFBC's consent to, nor the Underwriters delivery of, any
such amendments or supplement shall constitute a waiver of any of the
conditions set forth in Section 6 hereof;
(e) To advise the Underwriters promptly (i) when any
post-effective amendment to the Registration Statement relating to or
covering the Securities becomes effective or any supplement to the
Prospectus shall have been filed, (ii) of any comments from the
Commission or any request or proposed request by the Commission for an
amendment or supplement to the Registration Statement (insofar as the
amendment or supplement relates to or covers the Securities), to the
Prospectus, to any document incorporated by reference in any of the
foregoing or for any additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any order directed to the Prospectus or any
document incorporated therein by reference or the initiation or threat
of any stop order proceeding or of any challenge to the accuracy or
adequacy of any document incorporated by reference in any Prospectus,
(iv) of receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threat of any proceeding for that
purpose and (v) of the happening of any event which makes untrue any
statement of a material fact made in the Registration Statement or the
Prospectus or which requires the making of a change in the Registration
Statement or the Prospectus in order to make any material statement
therein not misleading;
(f) If, during the period referred to in (c) above, the
Commission shall issue a stop order suspending the effectiveness of the
Registration Statement, to make every reasonable effort to obtain the
lifting of that order at the earliest possible time;
(g) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a Prospectus is required in connection with the
offering and sale of the Securities;
(h) as soon as practicable to make generally available to the
Company's security holders and to deliver to the Underwriters an
earning statement of the Company and its Subsidiaries (which need not
be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule
158);
(i) for so long as the Securities are outstanding, to furnish
to the Underwriters copies of any annual reports, quarterly reports and
current reports filed by the Company with the Commission on Forms 10-K,
10-Q and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall
be furnished by the Company to the Trustee or to the holders of the
Securities pursuant to the Indenture or the Exchange Act or any rule or
regulation of the Commission thereunder;
(j) to promptly take from time to time such actions as the
Underwriters may reasonably request to qualify the Securities for
offering and sale under the securities or Blue Sky laws of such
jurisdictions as the Underwriters may designate and to continue such
qualifications in effect for so long as required for the resale of the
Securities; and to arrange for the determination of the eligibility for
investment of the Securities under the laws of such jurisdictions as
the Underwriters may reasonably request; provided that the Company and
its Subsidiaries shall not be obligated to qualify as foreign
corporations in any jurisdiction in which they are not so qualified or
to file a general consent to service of process in any jurisdiction;
(k) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment company,
unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company
Act, and to not be or become, or be or become owned by, a closed-end
investment company required to be registered, but not registered
thereunder;
(l) in connection with the offering of the Securities, until
CSFBC on behalf of the Underwriters shall have notified the Company of
the completion of the distribution of the Securities, not to, and to
cause its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or
attempt to induce any person to purchase any Securities; and not to,
and to cause its affiliated purchasers not to, make bids or purchase
for the purpose of creating actual, or apparent, active trading in or
of raising the price of the Securities;
(m) in connection with the offering of the Securities, to make
its officers, employees, independent accountants and legal counsel
reasonably available upon request by the Underwriters and to cooperate
with the Underwriters and Underwriters' counsel with their due
diligence review through the Closing Date;
(n) to furnish to each of the Underwriters on the date hereof
a copy of each of the independent accountants' reports included in
Registration Statement signed by the accountants rendering such
reports;
(o) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its best efforts to satisfy
all conditions precedent on its part to the delivery of the Securities;
(p) to not take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture;
(q) to not take any action prior to the Closing Date
which would require the Prospectus to
be amended or supplemented pursuant to Section 4(c); and
(r) to apply the net proceeds from the sale of the
Securities as set forth in the
Prospectus under the heading "Use of Proceeds".
5. Conditions of Underwriters' Obligations. The respective
obligations of the several Underwriters hereunder are subject to the accuracy,
on and as of the date hereof and the Closing Date, of the representations and
warranties of the Company contained herein, to the accuracy of the statements of
the Company and its officers made in any certificates delivered pursuant hereto,
to the performance by the Company of its obligations hereunder, and to each of
the following additional terms and conditions:
(a) The Prospectus and supplement referred to in Section 4(a)
of this Agreement shall have been timely filed with the Commission in
accordance with Section 4(a) of this Agreement. Prior to the Closing
Date, no stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding
for that purpose shall have been initiated or threatened by the
Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus
or otherwise shall have been complied with to the reasonable
satisfaction of the Underwriters.
(b) The Prospectus (and any amendments or supplements thereto)
shall have been printed and copies distributed to the Underwriters as
promptly as practicable on or following the date of this Agreement or
at such other date and time as to which the Underwriters may agree.
(c) None of the Underwriters shall have discovered and
disclosed to the Company on or prior to the Closing Date that the
Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the
Underwriters, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading.
(d) All corporate proceedings and other legal matters incident
to the authorization, form and validity of each of this Agreement, the
Indenture and the Securities (collectively, the "Transaction
Documents") and the Prospectus, and all other legal matters relating to
the Transaction Documents and the transactions contemplated thereby,
shall be satisfactory in all material respects to the Underwriters, and
the Company shall have furnished to the Underwriters all documents and
information that they or their counsel may reasonably request to enable
them to pass upon such matters.
(e) The Underwriters shall have received on the Closing Date
an opinion of Buchanan Ingersoll Professional Corporation, counsel for
the Company, dated the Closing Date and addressed to the Underwriters,
to the effect that:
(i) The Company has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the state of its formation with full
corporate power and authority to own its properties and
conduct its business as described in the Prospectus;
(ii) This Agreement has been duly
authorized, executed and delivered by the Company;
(iii) The Securities have been duly
authorized and, when issued and delivered pursuant to this
Agreement, will have been duly executed, authenticated, issued
and delivered and will constitute valid and legally binding
obligations of the Company entitled to the benefits provided
by the Indenture and enforceable against the Company in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other
laws of general applicability relating to or affecting
creditors' rights and to general equity principles and further
except that (a) rights to contribution or indemnification may
be limited by the laws, rules or regulations of any
governmental authority or agency thereof or by public policy,
and (b) waivers as to usury, stay or extension laws may be
unenforceable; and the Securities and the Indenture conform in
all material respects to the descriptions thereof in the
Prospectus;
(iv) The Indenture has been duly authorized,
executed and delivered by the Company and duly qualified under
the Trust Indenture Act, assuming that the Indenture is a
valid and binding agreement of the Trustee, constitutes a
valid and legally binding instrument, enforceable in
accordance with its terms against the Company, subject, as to
enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to
or affecting creditors' rights and to general equity
principles and further except that (a) rights to contribution
or indemnification may be limited by the laws, rules or
regulations of any governmental authority or agency thereof or
by public policy, and (b) waivers as to usury, stay or
extension laws may be unenforceable;
(v) The Registration Statement has become
effective under the Securities Act and the Prospectus
(including the prospectus supplement contemplated by Section
4(a) hereof) was filed pursuant to Rule 424(b) of the Rules
and Regulations and, to our knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued or proceeding for that purpose has been instituted
or threatened by the Commission;
(vi) The Registration Statement and the
Prospectus comply as to form in all material respects with the
requirements for registration statements on Form S-3 under the
Securities Act, the Trust Indenture Act and the rules and
regulations of the Commission thereunder;
(vii) The issue and sale of the Securities
and the compliance by the Company with all of the provisions
of the Securities, the Indenture and this Agreement and the
consummation of the transactions herein and therein
contemplated will not contravene the provisions of the
certificate of incorporation and bylaws of the Company, or to
the best of our knowledge, any order, rule or regulation of
any court or governmental agency or body having jurisdiction
over the Company;
(viii) The statements set forth in the
Prospectus under the caption "Description of the Notes,"
insofar as they purport to constitute a summary of the terms
of the Securities, are accurate in all material respects, and
the statements in the Prospectus under the heading "Certain
United States Tax Considerations to Non-United States
Holders," insofar as they purport to constitute a summary of
laws, governmental rules or regulations or documents, are
accurate in all material respects;
(ix) The Company is not an "investment
company" or an entity "controlled" by an "investment company,"
as such terms are defined in the Investment Company Act; and
In addition, such counsel shall also state that such counsel
has participated in conferences with officers and representatives of the Company
and its subsidiaries, representatives of the independent public accountants for
the Company and the Underwriters at which the contents of the Registration
Statement and the Prospectus (including the Incorporated Documents) and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to materiality
to the extent such counsel deemed appropriate upon facts provided by officers
and other representatives of the Company), no facts have come to the attention
of such counsel that lead such counsel to believe that the Registration
Statement, as of the date it was declared effective, or the Prospectus, as of
its date or as of the Closing Date, in each case including the Incorporated
Documents, contained or contains any untrue statement of material fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and other financial and
statistical data included therein).
The opinion of such counsel may be limited to the laws of the
Commonwealth of Pennsylvania, the General Corporation Law of the State of
Delaware and the federal laws of the United States.
(f) The Underwriters shall have received on the Closing
Date an opinion of Randall D. Fisher, Esq., General Counsel to the
Company, dated the Closing Date and addressed to the Underwriters,
to the effect that:
(i) Except as set forth in the Prospectus,
each of the Company and its subsidiaries has all of the
licenses, permits, franchises and authorizations, if any,
required by the relevant governmental authorities of each of
New York, Virginia, Pennsylvania, Ohio, New Jersey,
Massachusetts, New Hampshire, Vermont, Michigan, Connecticut,
Wyoming, Wisconsin, Indiana, Alabama, Mississippi, Puerto
Rico, Georgia, Idaho, Washington, California, New Mexico, and
Montana (collectively, the "Adelphia Jurisdictions") and/or
its political subdivisions for the provision of cable
television service (as such counsel understands service to be
provided which may be based on a certificate of an officer of
the Company, provided that such counsel shall state that they
believe that both the Underwriters and he are justified in
relying on such certificate), where the failure to obtain or
hold such license, permit, franchise or authorization would
have a Material Adverse Effect;
(ii) To the best of such counsel's knowledge
after due inquiry, each of the Company and its subsidiaries
has made all filings, reports, applications and submissions
required by the laws and ordinances relating to cable services
of each of the Adelphia Jurisdictions and the ordinances of
the jurisdiction's political subdivisions relating thereto,
and the rules and regulations promulgated therewith;
(iii) Each of the Company and its
subsidiaries has the consents, approvals, authorizations,
licenses, certificates, permits, or orders of any governmental
authorities of the each of the Adelphia Jurisdictions and its
political subdivisions, if any, required for the consummations
of the transactions contemplated in the Underwriting Agreement
where the failure to obtain the consents, approvals,
authorizations, licenses, certificates, permits or orders
would have a Material Adverse Effect;
(iv) There are no actions, suits or
proceedings pending or, to the best of such counsel's
knowledge, threatened by or before any court or governmental
body each of the Adelphia Jurisdictions (other than Vermont)
against or affecting any of the Company or its subsidiaries,
or the business of the Company and its subsidiaries or, with
respect to Vermont, which if adversely determined would have a
Material Adverse Effect;
(v) The statements in the Prospectus under
the headings "Risk Factors - We are Subject to Extensive
Regulation" and "Risk Factors - Competition," insofar as they
relate to the Company and its subsidiaries operations each of
the Adelphia Jurisdictions and purport to describe the
provisions of the laws and documents referred to therein, are
accurate, complete and fair in all material respects; and
(vi) Neither the execution and delivery of
the Underwriting Agreement nor the offering of the Securities
contemplated thereby will conflict with or result in a
violation of any order or regulation of each of the Adelphia
Jurisdictions or its political subdivisions applicable to the
Company and its subsidiaries, the conflict with or the
violation of which would have a material adverse effect on the
Company and its subsidiaries.
(g) The Underwriters shall have received on the Closing Date
an opinion of Colin H. Higgin, Deputy General Counsel to the Company,
dated the Closing Date and addressed to the Underwriters, to the effect
that:
(i) None of the Company or its subsidiaries
is in violation of its certificate of incorporation, by-laws,
certificate of limited partnership or partnership agreement,
as applicable, or in default in the performance or observance
of any material obligation, covenant or condition contained in
any partnership agreement, indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to
which it is a party or by which it or any of its properties
may be bound;
(ii) Each of the Company and its
subsidiaries has been duly qualified as a foreign corporation
or partnership, as the case may be, for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, or is
subject to no material liability or disability by reason of
the failure to be so qualified in any such jurisdiction,
except where the failure to so qualify would not have a
Material Adverse Effect (such counsel being entitled to rely
in respect of the opinion in this clause upon opinions of
local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such
counsel shall state that he believes that both the
Underwriters and he are justified in relying upon such
opinions and certificates);
(iii) Each subsidiary of the Company is
owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims (other than liens
to secure indebtedness under credit facilities disclosed in
the Prospectus) (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Company or its subsidiaries, provided that
such counsel shall state that he believes that both the
Underwriters and he are justified in relying upon such
opinions and certificates);
(iv) To the best of such counsel's knowledge
and other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company
or any of its subsidiaries is a party or of which any property
of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future consolidated
financial position, shareholder's equity, partners' equity, or
results of operations of the Company and its subsidiaries;
and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(v) The issue and sale of the Securities and
the compliance by the Company with all of the provisions of
the Securities, the Indenture and this Agreement and the
consummation of the transactions herein and therein
contemplated will not, to the best of my knowledge after due
inquiry, conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default
under any material indenture, mortgage, deed of trust,
sale/leaseback transaction, loan agreement or other similar
financing agreement, or instrument or other agreement or
instrument (including, without limitation, any license or
franchise granted to the Company or a subsidiary by a local
franchising governmental body) to which the Company or any of
its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject,
nor will such actions result in any violation of the
provisions of the certificate of incorporation, by-laws, the
certificate of limited partnership or the partnership
agreements of the Company and its subsidiaries, as
appropriate, or any statute or any order, rule or regulation
of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or
any of their properties; and
(vi) No consent, approval, authorization,
order, registration or qualification of or with any such court
or governmental agency or body is required for the issue and
sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement or the
Indenture, except such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase
and resale of the Securities by the Underwriters.
In addition, such counsel shall also state that such counsel
has participated in conferences with officers and representatives of the Company
and its subsidiaries, representatives of the independent public accountants for
the Company and the Underwriters at which the contents of the Registration
Statement and the Prospectus (including the Incorporated Documents) and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for and has not verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus, and has not made any independent check or
verification thereof, on the basis of the foregoing (relying as to materiality
to the extent such counsel deemed appropriate upon facts provided by officers
and other representatives of the Company), no facts have come to the attention
of such counsel that lead such counsel to believe that the Registration
Statement, as of the date it was declared effective, or the Prospectus, as of
its date or as of the Closing Date, in each case including the Incorporated
Documents, contained or contains any untrue statement of material fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
opinion with respect to the financial statements and other financial and
statistical data included therein).
(h) The Underwriters shall have received on the Closing Date
an opinion of Fleischman & Walsh, P.C., special regulatory counsel for
the Company and its subsidiaries, dated the Closing Date, and addressed
to the Underwriters to the effect that:
(i) The communities listed in Section A of
Attachment 1 to the opinion have been registered with the FCC
in connection with the operation of the Systems. The filing of
a registration statement constitutes initial FCC authorization
for the commencement of cable television operations in the
community registered.
(ii) The subsidiaries hold certain FCC
licenses, as that term is defined below ("FCC Licenses"). All
FCC Licenses and receive-only earth station registrations held
by the subsidiaries in connection with the operation of the
Cable Systems are listed on Attachment 1 to the Opinion. To
the best of our knowledge, all such FCC Licenses have been
validly issued or assigned to the present licensee and are
currently in full force and effect. We have no knowledge of
any event which would allow, or after notice or lapse of time
which would allow, revocation or termination of any FCC
License held by the subsidiaries or would result in any other
material impairment of the rights of the holder of such
license. To the best of our knowledge, no other FCC Licenses
are required in connection with the operation of the Cable
Systems by the subsidiaries in the manner we have advised they
are presently being operated. For the purposes of this
opinion, an FCC License is defined as an authorization, or
renewal thereof, issued by the FCC authorizing the
transmission of radio energy through the airways.
(iii) Other than proceedings affecting the
cable television industry generally, there is no action, suit
or proceeding pending before or, to the best of our knowledge,
threatened by the FCC which is reasonably likely to have a
materially adverse impact upon the cable television operations
of the Company and its subsidiaries taken as a whole.
(iv) Statements of Account required by
Section 111 of the Copyright Act of 1976, as amended have been
filed, together with royalty payments accompanying said
Statements of Account, with the U.S. Copyright Office for the
Cable Systems covering each of the accounting periods
beginning with January 1 through June 30, 1996 accounting
period and ending with the January 1 through June 30, 1999
accounting period during which such Cable Systems have been
operated by the subsidiaries. We have not reviewed the
information or calculations contained in these Statements, and
express no opinion with respect to the accuracy thereof. Based
solely on material in counsel's file and material
representations provided by the Company, to the best of such
counsel's knowledge, there is no pending or threatened claim
against the Company or any of its subsidiaries for copyright
infringement or for non-payment of royalty fees nor does such
counsel know of any basis for such a claim.
(v) The Company has obtained all consents,
approvals and authorizations of the FCC, if any, required for
the consummation of the transactions of the transactions
contemplated in the Underwriting Agreement where the failure
to obtain the consents, approval, authorizations, licenses,
certificates, permits or orders would reasonably be expected
to have a materially adverse impact on the Company or the
subsidiaries.
(vi) Neither the execution and delivery of
the Underwriting Agreement nor the offering of the Securities
contemplated thereby will conflict with or result in a
violation of any order or regulation of the FCC applicable to
the Company and the subsidiaries, the conflict with or the
violation of which would reasonably be expected to have a
materially adverse impact on the Company or the subsidiaries.
However, we call your attention to the following.
(vii) Under the Communications Act as now in
effect, the sale or other disposition of certain pledged
collateral and the exercise of certain other rights and
remedies conferred upon you by any agreement or by applicable
law might constitute an assignment of an FCC licensee, or
transfer of control of an FCC license, requiring for its
consummation the prior consent of the FCC granted upon an
appropriate application thereof.
(viii) Under the Communications Act as now
in effect, and as now interpreted by the FCC, no valid
security interest may be granted in an FCC license. To the
extent that the Underwriting Agreement and/or related
financing documents purport to grant to you a security
interest in any FCC licenses, such security interest may not
be legally enforceable.
(ix) In the course of our representation of
the Company and its subsidiaries, no matters have come to our
attention, other than matters affecting the cable television
industry generally, which would reasonable be expected to have
a materially adverse impact upon the cable television
operations of the Company and the subsidiaries taken as a
whole.
(x) In our opinion, the Statements in the
Prospectus under the headings "Risk Factors - We are Subject
to Extensive Regulation" and the statements incorporated by
reference in the Prospectus by reference to the Company's
Transition Report on Form 10-K for the transition period from
April 1, 1998 to December 31, 1998 and the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999 under the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Regulatory and Competitive Matters," insofar as they purport
to describe the provisions of the law referred to therein
regarding the cable television industry, are accurate,
complete and fair in all material respects.
(i) The Underwriters shall have received from Latham &
Watkins, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to such matters as the Underwriters may
reasonably require, and the Company shall have furnished to such
counsel such documents and information as they request for the purpose
of enabling them to pass upon such matters.
(j) The Company shall have furnished to the Underwriters a
letter from each of Deloitte & Touche LLP and KPMG LLP, addressed to
the Underwriters and dated the Closing Date covering the matters
previously requested by the Representatives, in form and substance
satisfactory to CSFBC and their counsel in their sole discretion.
(k) The Company shall have furnished to the Underwriters a
certificate, dated the Closing Date, of its chief executive officer and
its chief financial officer stating that (A) such officers have
carefully examined the Registration Statement and the Prospectus, (B)
in their opinion, the Registration Statement and the Prospectus did not
include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statement and the Prospectus so that the Registration
Statement and the Prospectus (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (C) as of the Closing
Date, the representations and warranties of the Company in this
Agreement are true and correct in all material respects, the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder on or prior to the Closing
Date, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the best of such officer's knowledge, are
contemplated by the Commission, and subsequent to the date of the most
recent financial statements contained in the Registration Statement and
the Prospectus, there has been no material adverse change in the
financial position or results of operation of the Company or any of its
subsidiaries, or any change, or any development including a prospective
change, in or affecting the condition (financial or otherwise), results
of operations, business or prospects of the Company and its
subsidiaries taken as a whole, except as set forth in the Prospectus.
(l) The Indenture shall have been duly executed and delivered
by the Company and the Trustee, and the Securities shall have been duly
executed and delivered by the Company and duly authenticated by the
Trustee.
(m) If any event shall have occurred that requires the Company
under Section 4(d) to prepare an amendment or supplement to the
Prospectus, such amendment or supplement shall have been prepared, the
Underwriters shall have been given a reasonable opportunity to comment
thereon, and copies thereof shall have been delivered to the
Underwriters reasonably in advance of the Closing Date.
(n) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Registration Statement (exclusive of any amendment thereto) and the
Prospectus (exclusive of any supplement thereto), there shall not have
been any change, or any development involving a prospective change,
that would have a Material Adverse Effect on the Company and
Subsidiaries, taken as a whole, not contemplated by the Prospectus, the
effect of which, is, in the judgment of a majority in interest of the
Underwriters including the Representatives, so material and adverse as
to make it impracticable or inadvisable to proceed with the public
offering of the Securities on the terms and in the manner contemplated
by this Agreement and the Prospectus (exclusive of any supplement
thereto).
(o) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Securities.
(p) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any downgrading in the
rating of any debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act), or any public announcement that any such
organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (ii) any material suspension or material
limitation of trading in securities generally on the New York Stock
Exchange or the American Stock Exchange or any setting of minimum
prices for trading on such exchange, or any suspension of trading of
any securities of the Company on any exchange or in the
over-the-counter market; (iii) any banking moratorium declared by U.S.
Federal or New York authorities; or (iv) any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority
in interest of the Underwriters including the Representatives, the
effect of any such outbreak, escalation, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with
completion of the public offering or the sale of and payment for the
Securities.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
6. Effectiveness and Termination. This Agreement shall become
effective upon the execution of this Agreement. The obligations of the
Underwriters hereunder may be terminated by the Underwriters, in their absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5 shall have occurred and be continuing.
7. Defaulting Underwriters. If any Underwriter or Underwriters
default in their obligations to purchase the Securities hereunder on the Closing
Date and the aggregate principal amount of shares of the Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase does not
exceed 10% of the total principal amount of the Securities that the Underwriters
are obligated to purchase on such Closing Date, CSFBC may make arrangements
satisfactory to the Company for the purchase of such Securities by other
persons, including any of the Underwriters, but if no such arrangements are made
by such Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Securities that such defaulting Underwriters agreed but failed to purchase
on such Closing Date. If any Underwriter or Underwriters so default and the
aggregate--principal amount of the Securities with respect to which such default
or defaults occur exceeds 10% of the total principal amount of the Securities
that the Underwriters are obligated to purchase on such Closing Date and
arrangements satisfactory to CSFBC and the Company for the purchase of such
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Sections 8 and
9. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
8. Reimbursement of Underwriters' Expenses. If (a) the Company
shall fail to tender the Securities for delivery to the Underwriters for any
reason permitted under this Agreement or (b) the Underwriters shall decline to
purchase the Securities for any reason permitted under this Agreement, the
Company shall reimburse the Underwriters for such out-of-pocket expenses
(including reasonable fees and disbursements of counsel) as shall have been
reasonably incurred by the Underwriters in connection with this Agreement and
the proposed public offering and sale of the Securities, and upon demand the
Company shall pay the full amount thereof to the Underwriters. If this Agreement
is terminated pursuant to Section 7 by reason of the default of one or more of
the Underwriters, the Company shall not be obligated to reimburse any defaulting
Underwriter on account of such expenses.
9. Indemnification and Contribution. (a) The Company shall
indemnify and hold harmless each Underwriter, its partners, directors and
officers and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly
indemnify and hold harmless the Company, its directors and officers and each
person, if any who controls the Company within the meaning of Section 15 of the
Act, against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each
Underwriter: the method of sale information appearing in (i) the third paragraph
of the cover page and (ii) the second paragraph under the caption
"Underwriting."
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act by
or on behalf of an indemnified party. The indemnifying party shall not be liable
in any one claim or action or separate but substantially similar or related
claims or actions in the same jurisdiction for the expenses of more than one
separate counsel in additional to local counsel.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering
of the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed a Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
10. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company
and their respective successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except as provided in
Sections 9 and 10 with respect to affiliates, officers, directors, employees,
representatives, agents and controlling persons of the Company and the
Underwriters. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 11, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
11. Expenses. The Company agrees with the Underwriters to pay
(a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and filing under the Securities Act
of the Registration Statement and any amendments and exhibits thereto; (c) the
costs of printing and distributing the Registration Statement as originally
filed and each amendment thereto and any post-effective amendments thereof
(including, in each case, exhibits), the Prospectus and any amendment or
supplement thereto, all as provided in this Agreement; (d) the costs of
printing, reproducing and distributing the Indenture, this Agreement and any
underwriting and selling group documents; (e) the filing fees incident to
securing any required review by the National Association of Securities Dealers,
Inc. of the terms of sale of the Securities; (f) the fees and expenses of the
Company's counsel and independent accountants; (g) the fees and expenses of
preparing, printing and distributing Blue Sky Memoranda (including related fees
and expenses of counsel to the Underwriters); (h) any fees charged by rating
agencies for rating the Securities; (i) all fees and expenses of the Trustee and
any paying agent (including related fees and expenses of any counsel to such
parties); and (j) all other costs and expenses incident to the performance of
the obligations of the Company under this Agreement; provided that, except as
provided in this Section 11 and Section 8, the Underwriters shall pay their own
costs and expenses.
12. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Underwriters contained in this Agreement or made by or on behalf of the Company
or the Underwriters pursuant to this Agreement or any certificate delivered
pursuant hereto shall survive the delivery of and payment for the Securities and
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
of them or any of their respective affiliates, officers, directors, employees,
representatives, agents or controlling persons.
13. Notices, etc.. All statements, requests, notices
and agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent
by mail or telecopy transmission to
Credit Suisse First Boston Corporation; Eleven Madison Avenue,
New York, New York 10010-3629, Attention:
Investment Banking Department - Transactions Advisory Group (telecopier
no.: (212) 325-8278); or
(b) if to the Company, shall be delivered or sent by
mail or telecopy transmission to the
address of the Company set forth in the Registration Statement,
Attention: Chief Financial Officer(telecopier no.: (814) 274-7098);
provided that any notice to an Underwriter pursuant to Section 9(c) shall also
be delivered or sent by mail to such Underwriter at its address set forth on the
signature page hereof. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made on
behalf of the Underwriters by CSFBC.
14. Definition of Terms. For purposes of this Agreement,
(a) the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading and (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act.
15. Representation of Underwriters. The Representatives
will act for the several Underwriters in connection with this financing, and any
action under this Agreement taken by the Representatives jointly or by CSFBC
will be binding upon all the Underwriters.
16. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
17. Counterparts. This Agreement may be executed in
one or more counterparts (which may include counterparts delivered by
telecopier) and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
18. Amendments. No amendment or waiver of any
provision of this Agreement, nor any consent or approval to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the parties hereto.
19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
Very truly yours,
ADELPHIA COMMUNICATIONS CORPORATION
By_/S/ Michael J. Rigas_
--------------------
Name: Michael J. Rigas
Title: Executive Vice President
<PAGE>
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
SALOMON SMITH BARNEY INC.
Acting on behalf of themselves and as
the Representatives of the several Underwriters
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Joseph D. Fashano_
---------------------
Name: Joseph D. Fashano
Title: Director
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
Principal
Amount
Underwriters of Securities
- ------------ -------------
<S> <C>
Credit Suisse First Boston Corporation $329,333,333
Salomon Smith Barney Inc. 164,666,667
BNY Capital Markets, Inc. 1,000,000
Chase Securities Inc. 1,000,000
Nesbitt Burns Securities Inc. 1,000,000
PNC Capital Markets, Inc. 1,000,000
Scotia Capital (USA) Inc. 1,000,000
TD Securities (USA) Inc. 1,000,000
-----------
Total $500,000,000
</TABLE>
<PAGE>
EXHIBIT 10.21
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of July 15, 1999, between
FRONTIERVISION OPERATING PARTNERS, L.P., a limited partnership duly organized
and validly existing under the laws of the State of Delaware (the "Company");
each of the Subsidiaries of the Company identified under the caption "SUBSIDIARY
GUARANTORS" on the signature pages hereto (individually, a "Subsidiary
Guarantor" and, collectively the "Subsidiary Guarantors" and, together with the
Company, the "Obligors"); and THE CHASE MANHATTAN BANK, in its capacity as
Administrative Agent pursuant to authority granted by the Majority Lenders
pursuant to Section 11.04 of the Credit Agreement (as defined below).
The Company, certain lenders, The Chase Manhattan Bank, as
Administrative Agent, J.P. Morgan Securities Inc., as Syndication Agent, and
CIBC Inc., as Documentation Agent, are parties to a Second Amended and Restated
Credit Agreement dated as of December 19, 1997 (as heretofore amended, the
"Credit Agreement"). The Obligors and the Administrative Agent (pursuant to the
authority granted by, and having obtained all necessary consents of, the
Majority Lenders) wish to amend the Credit Agreement in certain respects and,
accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined in this
Amendment No. 2, terms defined in the Credit Agreement are used herein as
defined therein.
Section 2. Amendments. The Credit Agreement shall be amended
as follows:
Section 2.01. Certain Defined Terms. Section 1.01 of the
Credit Agreement is amended by adding the following new defined terms (to the
extent not already included in said Section 1.01) and inserting the same in the
appropriate alphabetical locations, and amending the following defined terms (to
the extent already included in said Section 1.01) to read in their entirety, as
follows:
"1999 Acquisition Transaction" shall mean the acquisition by
Adelphia pursuant to the Purchase Agreement dated as of February 22,
1999 (the Purchase Agreement") among FrontierVision LP, FVP GP, L.P.,
the Direct and Indirect Limited Partners of FrontierVision LP party
thereto and Adelphia of all the partnership interests in FrontierVision
LP.
"Adelphia" shall mean Adelphia Communications Corporation.
--------
"Change of Control" shall mean any event that requires the
Company or FrontierVision Capital pursuant to the provisions of the
Senior Subordinated Debt Documents (or any other agreement or
instrument relating to or providing for any other Subordinated
Indebtedness), or that requires FrontierVision Holdings, FrontierVision
Holdings Capital Corporation or FrontierVision Holdings II Capital
Corporation pursuant to the Senior Discount Debt Documents, to redeem
or repurchase, or make an offer to redeem or repurchase, all or any
portion of the Subordinated Indebtedness, or the Senior Discount Debt,
as a result of a change of control (as defined in the Senior
Subordinated Debt Documents or any other agreement or instrument
relating to or providing for any other Subordinated Indebtedness or the
Senior Discount Debt Documents), provided that the term "Change of
Control" shall not include any such event that occurs as a result of
the 1999 Acquisition Transaction.
"Debt Ratio" shall mean, as at any date (but subject in any
event to the provisions of Section 8.10(e) hereof), the ratio of:
(a) the sum of the aggregate amount of all
Indebtedness (other than Junior Subordinated Indebtedness) of
the Company and its Restricted Subsidiaries and all letters of
credit contemplated by Section 8.07(e) hereof, but excluding
all performance bonds contemplated by said Section as at such
date minus, for purposes of Section 8.10(b) only (and not for
purposes of the definition of "Applicable Margin"), for any
date on or before March 30, 2000, $20,000,000 to
(b) the product of EBITDA for the fiscal quarter
ending on, or most recently ended prior to such date times
four.
"Debt Service" shall mean, for any period, the sum, for the
Company and its Restricted Subsidiaries (determined on a consolidated
basis without duplication in accordance with GAAP), of the following:
(a) in the case of Loans under this Agreement, the aggregate amount of
payments of principal of such Loans that, giving effect to Commitment
reductions or terminations scheduled to be made during such period
pursuant to Section 2.03 hereof, were required to be made pursuant to
Section 3.01 hereof during such period plus (b) in the case of all other
Indebtedness, all regularly scheduled payments or prepayments of
principal of such Indebtedness (including, without limitation, the
principal component of any payments in respect of Capital Lease
Obligations but excluding prepayments of principal in respect of Junior
Subordinated Indebtedness) made or payable during such period plus (c)
all Interest Expense for such period (excluding, however, non-cash
amortization of loan facility fees and other deferred debt costs, in
each case to the extent included in determining Interest Expense for
such period).
"Initial Equityholders" shall mean, collectively, (i) J.P.
Morgan Investment Corp., (ii) 1818 II Cable Corp., (iii) Olympus Cable
Corp., (iv) First Union Capital Partners, Inc., (v) any Control
Affiliate of any of the foregoing entities, (vi) any limited
partnership of which any Control Affiliate of any of the foregoing
entities is the sole general partner (so long as the aggregate equity
interests of FrontierVision LP that shall have been transferred to all
such limited partnerships by any such entity shall not exceed 25% of
the aggregate equity interests held by such entity in FrontierVision
LP) and (vii) following consummation of the 1999 Acquisition
Transaction, Adelphia.
"Interest Expense" shall mean, for any period, the sum, for
the Company and its Restricted Subsidiaries (determined on a
consolidated basis without duplication in accordance with GAAP), of the
following: (a) all interest in respect of Indebtedness (including,
without limitation, the interest component of any payments in respect
of Capital Lease Obligations but excluding all interest in respect of
Junior Subordinated Indebtedness) accrued or capitalized during such
period (whether or not actually paid during such period) plus (b) the
net amount payable (or minus the net amount receivable) under Interest
Rate Protection Agreements during such period (whether or not actually
paid or received during such period).
"Junior Subordinated Indebtedness" shall mean the Indebtedness
of the Company in respect of junior subordinated notes, in the form
attached hereto as Exhibit J, issued from time to time to Adelphia.
"Subordinated Indebtedness" shall mean, collectively, (i) the
Indebtedness of the Company and FrontierVision Capital in respect of
the senior subordinated notes of the Company and FrontierVision Capital
due 2006 issued pursuant to the Senior Subordinated Debt Indenture and
(ii) the Junior Subordinated Indebtedness."
Section 2.02. EBITDA. Paragraph (b) of the definition EBITDA
in Section 1.01 of the Credit Agreement is hereby amended to read in its
entirety as follows:
"(b) all operating expenses for such period, including,
without limitation, technical, programming, selling and general
administration expenses incurred by the Company and its Restricted
Subsidiaries during such period, but excluding (to the extent included
in operating expenses) depreciation, amortization, Interest Expense,
interest in respect of Junior Subordinated Indebtedness, any non-cash
charges (including, without limitation, non-cash pension expenses and
any Tax Payment Amount for the relevant period), any non-recurring
expenses incurred in connection with the 1999 Acquisition Transaction,
including but not limited to employee severance expenses (provided that
such expenses are recognized in accordance with GAAP prior to the
fiscal year ending December 31, 1999) plus"
Section 2.03. Financial Statements Etc. Section 8.01 (a),
(b) and (f) of the Credit Agreement are hereby amended to read their entirety as
follows:
"(a) as soon as available and in any event within 90 days
after the end of each of the first three quarterly fiscal periods of
each fiscal year of the Company, consolidated statements of income,
changes in partners' capital and cash flows of the Company and its
Subsidiaries (and, separately stated, for the Company and its
Restricted Subsidiaries) for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and
the related consolidated balance sheets of the Company and its
Subsidiaries (and, separately stated, for the Company and its
Restricted Subsidiaries) as at the end of such period, setting forth in
each case in comparative form the corresponding consolidated figures
for the corresponding periods in the preceding fiscal year (except
that, in the case of balance sheets, such comparison shall be to the
last day of the prior fiscal year), accompanied by a certificate of a
Senior Officer, which certificate shall state that said consolidated
financial statements fairly present the consolidated financial
condition and results of operations of the Company and its Subsidiaries
(or the Company and its Restricted Subsidiaries, as the case may be),
in each case in accordance with generally accepted accounting
principles, consistently applied, as at the end of, and for, such
period (subject to normal year-end audit adjustments), provided that
the requirements of this Section 8.01(a) with respect to financial
statements of the Company and its Subsidiaries may be satisfied by
delivery by the Company (in accordance with this Section 8.01(a)) of
the Company's quarterly report filed on Form 10-Q with the Securities
and Exchange Commission;
(b) as soon as available and in any event within 120 days
after the end of each fiscal year of the Company, consolidated
statements of income, changes in partners' capital and cash flows of
the Company and its Subsidiaries (and, separately stated, for the
Company and its Restricted Subsidiaries) for such fiscal year and the
related consolidated balance sheets of the Company and its Subsidiaries
(and, separately stated, for the Company and its Restricted
Subsidiaries) as at the end of such fiscal year, setting forth in each
case in comparative form the corresponding consolidated figures for the
preceding fiscal year, accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which
opinion shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations
of the Company and its Subsidiaries (or the Company and its Restricted
Subsidiaries, as the case may be) as at the end of, and for, such
fiscal year in accordance with generally accepted accounting
principles, and a statement of such accountants to the effect that, in
making the examination necessary for their opinion, nothing came to
their attention that caused them to believe that the Company was not in
compliance with Sections 8.07, 8.08, 8.09 or 8.10 hereof as at the end
of such fiscal year, insofar as such Sections relate to accounting
matters in accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such fiscal year,
provided that the requirements of this Section 8.01(b) with respect to
financial statements of the Company and its Subsidiaries may be
satisfied by delivery by the Company (in accordance with this Section
8.01(b)) of the Company's annual report filed on Form 10-K with the
Securities and Exchange Commission;
(f) concurrently with the delivery of financial statements
referred to in paragraphs (a) and (b) above, a Quarterly Officer's
Report as at the end of such periods;"
Section 2.04. Indebtedness. Section 8.07 of the Credit
Agreement is hereby amended by deleting the word "and" at the end of paragraph
(e) thereof, adding the word "and" at the end of paragraph (f) thereof and by
adding new paragraph (g) at the end thereof to read in its entirety as follows:
"(g) Junior Subordinated Indebtedness."
Section 2.05. Subordinated Indebtedness; Other Equity
Interests. Section 8.13(b) of the Credit Agreement is hereby amended by adding
the following paragraph at the end thereof to read in its entirety as follows:
"Notwithstanding the foregoing, the Company may make payments
in respect of principal and interest on Junior Subordinated
Indebtedness if at the time of such payments and after giving effect
thereto (i) the Debt Ratio shall not exceed 5.00 to 1, and (ii) at the
time of such payments and after giving effect thereto no Default shall
have occurred and be continuing."
Section 2.06. Events of Default. Sections 9(m)(ii) and (iii)
of the Credit Agreement shall be amended to read in their entirety as follows:
"(ii) at any time prior to the consummation of the 1999
Acquisition Transaction, either James Vaughn or John S. Koo shall, for
any reason, cease to be actively involved in the day to day management
and operation of the Company and its Subsidiaries (and Persons with
equivalent knowledge and experience in the cable television industry
reasonably acceptable to the Majority Lenders are not appointed to
replace one or both of the them within 90 days thereof); or
"(iii) prior to a Qualified Public Offering, either (x) the
Initial Equityholders shall cease to own, collectively, on a
fully-diluted basis (in other words, giving effect to the exercise of
any warrants, options and conversion and other rights), equity
interests representing at least 51% of the aggregate fair market value
(or, if greater, the aggregate liquidation value) of the equity
interests of all classes of FrontierVision LP or (y) James Vaughn or
John S. Koo shall sell, transfer, hypothecate or otherwise dispose of
more than 50% of their direct or indirect economic interest in
FrontierVision LP (other than any transfer to the spouse of either of
such individuals, to his immediate family members, to trusts for the
benefit of such spouse or immediate family members or pursuant to the
1999 Acquisition Transaction); or"
Section 2.07. Exhibits. The Credit Agreement shall be
amended by adding Exhibit J thereto to read in its entirety as Exhibit J hereto.
Section 3. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 2 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 2 by signing any such
counterpart. This Amendment No. 2 shall be governed by, and construed in
accordance with, the law of the State of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to be duly executed and delivered as of the day and year first
above written.
FRONTIERVISION OPERATING
PARTNERS, L.P.
By: FrontierVision Holdings, L.P., as general partner
of FrontierVision Operating Partners, L.P.
By: FrontierVision Partners, L.P., as general partner of
FrontierVision Holdings, L.P.
By: FVP GP, L.P., as general partner of
FrontierVision Partners, L.P.
By: FrontierVision Inc., as general
partner of FVP GP, L.P.
By____________________________
Title:
SUBSIDIARY GUARANTORS
By its signature below each Subsidiary Guarantor (i) consents
to the foregoing Amendment No. 2 and confirms that the obligations of the
Company under the Credit Agreement as herein amended and under the Notes (if
any) and in respect of Pari Passu Obligations are entitled to the benefits of
the Subsidiary Guarantee Agreement executed by each Subsidiary Guarantor,
respectively, (and shall constitute "Guaranteed Obligations" (as defined in such
Subsidiary Guarantee Agreement) under and for all purposes of such Subsidiary
Guarantee Agreement) and (ii) together with the Administrative Agent (acting
with the consent of the Majority Lenders under the Credit Agreement) agrees that
references in such Subsidiary Guarantee Agreement to the "Credit Agreement"
shall be deemed to be references to the Credit Agreement as amended herein.
FRONTIERVISION CAPITAL FRONTIERVISION CABLE NEW ENGLAND, INC.
CORPORATION
By____________________________ By____________________________
Title: Title:
ADMINISTRATIVE AGENT
THE CHASE MANHATTAN BANK,
as Administrative Agent
By____________________________
Title:
<PAGE>
EXHIBIT J
[Form of Junior Subordinated Note]
Junior Subordinated Note of
FrontierVision Operating Partners, L.P.
due ___________, _____
$------------ ------------, ----
New York, New York
FrontierVision Operating Partners, L.P., a limited partnership
duly organized and validly existing under the laws of the State of Delaware (the
"Maker"), for value received, hereby promises to pay to [________] (the "Payee")
the principal sum of [AMOUNT IN WORDS] ($___________) on ___________, ____ [not
to be earlier than one year after the latest maturity of all Loans under the
Credit Agreement], subject to the terms and conditions hereinafter set forth.
Section 1. Payment. The Maker shall pay the principal of this
Junior Subordinated Note in immediately available funds at the offices of the
Payee at ________________________ or at such other place as the Payee shall
designate in writing.
If any principal of this Junior Subordinated Note shall become
due and payable on any date other than a business day at the place of payment,
the time for the payment thereof shall be extended to the immediately succeeding
business day.
Notwithstanding anything to the contrary herein contained, the
Maker may make payments of principal hereunder only at such times and to the
extent permitted under the Credit Agreement. As used herein, the term "Credit
Agreement" shall mean, collectively, (i) the Second Amended and Restated Credit
Agreement dated as of December 19, 1997, between the Maker, certain lenders, The
Chase Manhattan Bank as Administrative Agent, J.P. Morgan Securities Inc. as
syndication agent and CIBC Inc. as documentation agent, and (ii) any extension,
renewal, increase, modification or restatement thereof, or any agreement
refinancing any of the indebtedness thereunder, in each case as the same shall
from time to time be successively extended, renewed, increased, modified,
restated or refinanced.
Section 2. Interest. This Junior Subordinated Note shall bear
interest at the rate of [a market interest rate, subject to approval of the
Administrative Agent], which interest shall be payable only at such times and to
the extent permitted by the Credit Agreement.
Section 3. Prepayment. The Maker may prepay this Junior
Subordinated Note, at any time in whole or in part without penalty or premium,
provided that no such prepayment shall be made to the extent not expressly
permitted under the Credit Agreement.
Section 4. Subordination. Anything in this Junior Subordinated
Note to the contrary notwithstanding, the indebtedness evidenced by this Junior
Subordinated Note shall be subordinate and junior in right of payment, to the
extent and in the manner hereinafter set forth, to all indebtedness or other
liabilities of the Maker outstanding from time to time including, without
limitation, (x) the Maker's obligation to principal, interest and other amounts
under the Credit Agreement, and (y) any interest accruing after the commencement
of any proceedings referred to in clause (ii) below, whether or not such
interest is an allowed claim in such proceeding (all such indebtedness or other
liabilities and interest being herein called "Senior Indebtedness"):
(i) The holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts constituting Senior
Indebtedness before the Payee is entitled to receive any payment on
account of this Junior Subordinated Note, provided that the Maker may
make, and the Payee shall be entitled to receive and retain from time
to time, payments and prepayments in respect of the principal and
interest of this Junior Subordinated Note to the extent permitted under
Sections 1, 2 or 3 above.
(ii) In the event of any insolvency or bankruptcy proceedings,
and any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, relative to the Maker or to its
creditors, as such, or to its property, and in the event of any
proceedings for voluntary liquidation, dissolution or other winding up
of the Maker, whether or not involving insolvency or bankruptcy, then
the holders of Senior Indebtedness shall be entitled to receive payment
in full of all amounts constituting Senior Indebtedness before the
Payee is entitled to receive, or make any demand for, any payment on
account of this Junior Subordinated Note, and to that end the holders
of Senior Indebtedness shall be entitled to receive for application in
payment thereof any payment or distribution of any kind or character,
whether in cash or property or securities.
(iii) If any payment or distribution of any character, whether
in cash, securities or other property, in respect of this Junior
Subordinated Note shall (despite these subordination provisions) be
received by the Payee before all Senior Indebtedness shall have been
paid in full in cash, such payment or distribution shall be held in
trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness (or their representatives), ratably
according to the respective aggregate amounts remaining unpaid thereon,
to the extent necessary to pay all Senior Indebtedness in full.
No present or future holder of Senior Indebtedness shall be
prejudiced in its right to enforce subordination of this Junior Subordinated
Note by any act or failure to act on the part of the Maker or by any act or
failure to act, in good faith on the part of such holder or any trustee or agent
for such holder. The foregoing provisions are solely for the purpose of defining
the relative rights of the holders of Senior Indebtedness on the one hand, and
the Payee on the other hand, and nothing herein shall impair, as between the
Maker and the Payee, the obligation of the Maker, which is unconditional and
absolute, to pay to the Payee the principal hereof in accordance with the terms
hereof, nor shall anything herein prevent the Payee from exercising all remedies
otherwise permitted by applicable law in respect hereof, subject to the rights,
if any, under this Junior Subordinated Note of holders of Senior Indebtedness to
receive cash, property or securities otherwise payable or deliverable to the
Payee.
Section 5. Subrogation. The Payee shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the Senior
Indebtedness until the principal of, interest on, and other amounts owing
pursuant to, the Senior Indebtedness shall be paid in full in cash. For purposes
of such subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the Payee would be
entitled except for the provisions of Section 4, and no payments over pursuant
to the provisions of Section 4 to the holders of Senior Indebtedness by the
Payee, shall, as between the Maker, its creditors other than holders of Senior
Indebtedness, and the Payee, be deemed to be a payment or distribution by the
Maker to or on account of the Senior Indebtedness.
Section 6. Defaults. If after payment in full in cash of the
Senior Indebtedness, any payment is not made when due hereunder, the Payee may
declare all amounts owing under this Junior Subordinated Note due and payable,
provided that if after repayment in full of the Senior Indebtedness, any
payments of Senior Indebtedness shall at any time be rescinded or otherwise must
be returned by the holder of any Senior Indebtedness, such demand, if made,
shall be automatically rescinded.
THIS JUNIOR SUBORDINATED NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
By: FrontierVision Partners, L.P., as general partner of
FrontierVision Holdings, L.P.
By: FVP GP, L.P., as general partner of
FrontierVision Partners, L.P.
By: FrontierVision Inc., as general
partner of FVP GP, L.P.
By______________________
Title:
Exhibit 21.01
List of Subsidiaries of Adelphia Communications Corporation1
ADELPHIA COMMUNICATIONS CORPORATION (Delaware):
ACC INVESTMENT HOLDINGS, INC. (Delaware)
ACC OPERATIONS, INC. (Delaware)
CHELSEA COMMUNICATIONS, L.L.C. (Delaware)
TRI-STATES, L.L.C. (Delaware)
Tele-Media Company Of Tri-States, L.P. (Delaware)
CMA Cablevision Associates VII, L.P. (Pennsylvania)
CMA Cablevision Associates XI, L.P. (Pennsylvania)
ACC HOLDINGS II, L.L.C. (Delaware)
UCA, L.L.C. (Delaware)
Van Buren County Cablevision, L.P. (Michigan)
WELLSVILLE CABLEVISION, L.L.C. (Delaware)
ADELPHIA WESTERN NEW YORK HOLDINGS, L.L.C. (Delaware)
Western NY Cablevision, L.P. (Delaware)
Parnassos Communications, L.P. (Delaware)
Parnassos Holdings, L.L.C. (Delaware)
Parnassos, L.P. (Delaware)
Empire Sports Network, L.P. (Delaware)
ACP HOLDINGS, INC. (Delaware)
OLYMPUS COMMUNICATIONS, L.P. (Delaware)
Adelphia Cable Partners, L.P. (Delaware)
Key Biscayne Cablevision (50% general partnership interest)
(a Pennsylvania general partnership)
Southeast Florida Cable, Inc. (Florida)
Mercom of Florida, Inc. (Florida)
Palm Beach Group Cable Inc. (Florida)
Palm Beach Group Cable Joint Venture (50% general partnership interest)
(a Florida general partnership)
Timotheos Communications, L.P. (Delaware)
Adelphia Telecom Of Florida, Inc. (Delaware)
Ft. Myers Acquisition Limited Partnership (Delaware)
Ft. Myers/Gateway L.L.C. (Delaware)
Leadership Acquisition Limited Partnership (Delaware)
National Cable Acquisition Associates, L.P. (Delaware)
Telemedia Investment Partnership, L.P. (Delaware)
Olympus Capital Corporation (Delaware)
Olympus Communications Holding, L.L.C. (Delaware)
Telesat Acquisition Limited Partnership (Delaware)
West Boca Acquisition L.P. (Delaware)
Starpoint, Limited Partnership (Pennsylvania)
Cable Sentry Corporation (Florida)
Automatic Alarms Company, Inc. (Florida)
ADELPHIA CABLEVISION, INC. (Pennsylvania)
Crestwood Holdings, Inc. (Delaware)
Manchester Cablevision, Inc. (New Jersey)
ADELPHIA COMMUNICATIONS INTERNATIONAL, INC. (Delaware)
ADELPHIA GENERAL HOLDINGS II, INC.
ADELPHIA INTERNATIONAL II, L.L.C. (Delaware)
ADELPHIA INTERNATIONAL III, L.L.C. (Delaware)
ADELPHIA MOBILE PHONES, INC. (Delaware)
ADELPHIA TELECOMMUNICATIONS, INC. (Delaware)
BLACKSBURG/SALEM CABLEVISION, INC. (Virginia)
BRAZAS COMMUNICATIONS, INC. (Delaware)
TMC Holdings Corporation (Delaware)
Eastern Virginia Cablevision, L.P. (Delaware)
Tele-Media Co. Of Hopewell-Prince George (Virginia)
Tele-Media Company Of Western CT (Connecticut)
Eastern Virginia Cablevision Holdings, L.L.C. (Delaware)
CHAUNCEY COMMUNICATIONS CORPORATION (Delaware)
Clear Cablevision, Inc. (Delaware)
CHELSEA COMMUNICATIONS, INC. (Delaware)
Better TV, Inc. of Bennington (Vermont)
Kalamazoo County Cablevision, Inc. (Michigan)
Mt. Lebanon Cablevision, Inc. (Pennsylvania)
Multi-Channel T.V. Cable Company (Ohio)
Pericles Communications Corporation (Delaware)
Mountain Cable Communications Corporation (Delaware)
Lake Champlain Cable Television Corporation (Vermont)
Richmond Cable Television Corporation (Vermont)
Mountain Cable Company (Vermont)
Rigpal Communications, Inc. (Pennsylvania)
Upper St. Clair Cablevision, Inc. (Pennsylvania)
Adelphia Cablevision Associates, L.P. (Pennsylvania)
Three Rivers Cable Associates, L.P. (Ohio)
Young's Cable TV Corporation (Vermont)
GLOBAL CABLEVISION II, INC. (Delaware)
Global Acquisitions Partners, L.P. (Delaware)
GRAND ISLAND Cable, INC. (Delaware)
HARRON COMMUNICATIONS CORPORATION (New York)
Harron Cablevision Of Massachusetts, Inc. (Delaware)
Harron Cablevision Of Michigan, Inc. (Delaware)
Harron Cablevision Of New Hampshire, Inc. (Delaware)
Harron Cablevision Of New York, Inc. (Delaware)
Harron Cablevision Of Pennsylvania, Inc. (Pennsylvania)
Harron Telecom Corporation (New York)
LOUISA CABLEVISION, INC. (Delaware)
MARTHA'S VINEYARD CABLEVISION, L.P. (Delaware)
MERCURY COMMUNICATIONS, INC. (Delaware)
MONTGOMERY CABLEVISION, INC. (Pennsylvania)
ORCHARD PARK CABLEVISION, INC. (Delaware)
PAGE TIME, INC. (Delaware)
ROBINSON/PLUM CABLEVISION, L.P. (Pennsylvania)
SABRES, INC. (Delaware)
SCRANTON CABLEVISION, INC. (Pennsylvania)
DVD Marketing Company, Inc. (Delaware)
SHHH ACQUISITION CORP.
SVHH Holdings, Inc. (Delaware)
SVHH Cable Acquisition, L.P. (Delaware)
SOUTHWEST VIRGINIA CABLE, INC. (Delaware)
ST. MARY'S CABLEVISION, INC. (50% owned) (Pennsylvania)
ADELPHIA GP HOLDINGS, L.L.C.
FrontierVision Holdings, L.P. (Delaware)
FrontierVision Holdings Capital Corporation (Delaware)
FrontierVision Holdings Capital II Corporation (Delaware)
FrontierVision Operating Partners, L.P. (Delaware)
FrontierVision Operating Partners, Inc. (Delaware)
FrontierVision Capital Corporation (Delaware)
FrontierVision Access Partners, L.L.C. (Delaware)
FrontierVision Cable New England, Inc. (Delaware)
New England Cablevision of Massachusetts, Inc. (Maine)
ADELPHIA BUSINESS SOLUTIONS, INC. (Delaware)
Adelphia Business Solutions Operations, Inc. (Delaware)
Hyperion Telecommunications, L.L.C. (Delaware)
Hyperion Communications General Holdings, Inc. (Delaware)
Hyperion Communications Capital, Inc. (Delaware)
Hyperion Communications Long Haul, L.P. (Delaware)
Adelphia Business Solutions International, L.L.C. (Delaware)
Adelphia Business Solutions of Alabama, L.L.C. (Delaware)
Adelphia Business Solutions of Arkansas, L.L.C. (Delaware)
Adelphia Business Solutions of Connecticut, Inc. (Delaware)
Adelphia Business Solutions of Delaware, L.L.C. (Delaware)
Adelphia Business Solutions of District of Columbia, L.L.C. (Delaware)
Adelphia Business Solutions of Florida, Inc. (Florida)
Adelphia Business Solutions of Florida, L.L.C. (Delaware)
Adelphia Business Solutions of Jacksonville, Inc. (Florida)
Adelphia Business Solutions of Georgia, L.L.C. (Delaware)
Adelphia Business Solutions of Illinois, Inc. (Delaware)
Adelphia Business Solutions of Indiana, L.P. (Delaware)
Adelphia Business Solutions of Kansas, L.L.C. (Delaware)
Adelphia Business Solutions of Kentucky, Inc. (Delaware)
Adelphia Business Solutions of Louisiana, Inc. (Delaware)
Adelphia Business Solutions of Maine, Inc. (Delaware)
Adelphia Business Solutions of Maryland, L.L.C. (Delaware)
Adelphia Business Solutions of Massachusetts, Inc. (Delaware)
Adelphia Business Solutions of Michigan, Inc. (Delaware)
Adelphia Business Solutions of Mississippi, L.P. (Delaware)
Adelphia Business Solutions of Nashville, L.P. (California)
Adelphia Business Solutions of New Hampshire, Inc. (Delaware)
Adelphia Business Solutions of New Jersey, L.L.C. (Delaware)
Hyperion Communications of New York, Inc. (Delaware)
Hyperion Communications of Eastern New York, Inc. (Delaware)
Adelphia Business Solutions of North Carolina, L.P. (Delaware)
Adelphia Business Solutions of Ohio, Inc. (Delaware)
Adelphia Business Solutions of Pennsylvania, Inc. (Delaware)
Hyperion Communications of Pennsylvania, L.L.C. (Delaware)
Adelphia Business Solutions of Harrisburg, Inc. (Delaware)
Adelphia Business Solutions of Rhode Island, Inc. (Delaware)
Adelphia Business Solutions of South Carolina, Inc. (Delaware)
Adelphia Business Solutions of Tennessee, Inc. (Delaware)
Hyperion Communications of Tennessee, L.P. (Delaware)
Adelphia Business Solutions of Texas, L.P. (Delaware)
Adelphia Business Solutions of Vermont, Inc. (Delaware)
Adelphia Business Solutions of Virginia, L.L.C. (Virginia)
Adelphia Business Solutions of West Virginia, L.L.C. (Delaware)
!nterprise-MediaOne Fiber Technologies d/b/a MediaOne Data
Communications (Delaware) (50%)
Allegheny Hyperion Telecommunications, L.L.C. (Pennsylvania) (50%)
Hyperion Susquehanna Telecommunications (Pennsylvania General
Partnership) (50%)
PECO Hyperion Telecommunications (Pennsylvania General
Partnership) (50%)
!nterprise-Hyperion of Vermont Data Communications (Virginia General
Partnership) (50%)
!nterprise-Hyperion of Virginia Data Communications (Virginia General
Partnership) (50%)
!nterprise-MediaOne of Virginia Data Communications (Virginia General
Partnership) (50%)
ARAHOVA COMMUNICATIONS, INC. (Delaware)
Century Communications Corporation (Texas)
Badger Holding Corp. (Delaware)
CCC III, Inc. (Delaware)
CDA Cable, Inc. (Idaho)
Century Advertising, Inc. (Delaware)
Century Alabama Corp. (Delaware)
Century Alabama Holding Corp. (Delaware)
Century Australia Communications Corp. (Nevada)
Century Australia Telecommunications Corp. (Delaware)
Century Berkshire Cable Corp. (Delaware)
Century Cable of Southern California (CA)
Century Cable Holding Corp. (New York)
Century Cable Management Corp. (Connecticut)
Century Carolina Corp. (Delaware)
Century Cellular Holding Corp. (New York)
Century Colorado Springs Corp. (Delaware)
Century Cullman Corp. (Delaware)
Century Enterprise Cable Corp. (Delaware)
Century Federal, Inc. (CA)
Century Granite Cable Television Corp. (Delaware)
Century Huntington Company (Delaware)
Century Indiana Corp. (Wyoming)
Century International Holding Corp. (Nevada)
Century Investment Holding Corp. (Delaware)
Century International Investment Corp. (Nevada)
Century Investors, Inc. (Delaware)
Century Island Associates, Inc. (Delaware)
Century Island Cable Television Corp. (Delaware)
Century Kansas Cable Television Corp. (Delaware)
Century Kootenai Cable Television Corp. (Delaware)
Century Lykens Cable Corp. (Delaware)
Century Mendocino Cable Television Inc. (Delaware)
Century Microwave Corp. (Delaware)
Century Mississippi Corp. (Delaware)
Century-ML Cable Corporation (Delaware)
Century Mountain Corp. (Delaware)
Century New Mexico Cable Television Corp. (Delaware)
Century Norwich Corp. (Connecticut.)
Century Ohio Cable Television Corp. (Delaware)
Century Oregon Cable Corp. (Delaware)
Century Pacific Cable TV Inc. (Delaware)
Century Programming, Inc. (Delaware)
Century Programming Ventures Holding Corp. (Nevada)
Century Pullman Cable Television Corp. (Washington)
Century Radio Corp. (Delaware)
Century Realty Corp. (Delaware)
Century Shasta Cable Television Corp. (Delaware)
Century Shenango Cable Television, Inc. (Delaware)
Century Southwest Cable Television, Inc. (Delaware)
Century Southwest Colorado Cable Television Corp. (Delaware)
Century Telecommunications, Inc. (CA)
Century Trinidad Cable Television Corp. (Delaware)
Century Venture Corp. (Delaware)
Century Virginia Corp. (Delaware)
Century Voice and Data Communications, Inc. (Nevada)
Century Warrick Cable Corp. (Delaware)
Century Washington Cable Television Inc. (Delaware)
Century Western Cable Corp. (Nevada)
Century Wyoming Cable Television Corp. (Delaware)
COG Creations Holding Corp. (Nevada)
COG Creations Corp. (Nevada)
Cowlitz Cablevision Inc. (Washington)
CT Investment Corp. (Delaware)
E. & E. Cable Service, Inc. (W. Virginia)
Enchanted Cable Corporation (New Mexico)
FAE Cable Management Corp. (Delaware)
Grafton Cable Company (W. Virginia)
Huntington CATV, Inc. (Indiana)
Imperial Valley Cablevision, Inc. (Texas)
Kootenai Cable, Inc. (Delaware)
Mickelson Media of Florida, Inc. (Florida)
Mickelson Media, Inc. (Minnesota)
Owensboro on the Air, Inc. (Kentucky)
Paragon Cable Television, Inc. (Wisconsin)
Paragon Cablevision Construction Corp. (Wisconsin)
Paragon Cablevision Management Corp. (Wisconsin)
Pullman TV Cable Co., Inc. (Washington)
Rentavision of Brunswick Inc. (Georgia)
S/T Cable Corp. (Delaware)
Sentinel Communications of Muncie, Indiana, Inc. (Indiana)
Southwest Colorado Cable, Inc. (Delaware)
Star Cablevision, Inc. (Georgia)
Star Cable Inc. (W. Virginia)
Valley Video Inc. (New York)
Warrick Cablevision Inc. (Indiana)
Westover T.V. Cable Co., Incorporated (W. Virginia)
Wilderness Cable Company (W. Virginia)
Yuma Cablevision, Inc. (Texas)
Century Colorado Springs Partnership (Delaware)
Century-ML Cable Venture (New York)
Century Partnership Holdings, Inc. (Delaware)
CCC California Holding Corp. (Delaware)
Century Exchange L.L.C. (Delaware)
Century-TCI California L.P. (Delaware)
Century-TCI California Communications, L.P. (Delaware)
Century-TCI Holdings, L.L.C. (Delaware)
U.S. TELE-MEDIA INVESTMENT COMPANY (Pennsylvania)
-------------------------
1 Adelphia Communications Corporation and its subsidiaries operate under the
name "Adelphia", or, regarding Adelphia Business Solutions, Inc. and its
subsidiaries, "Adelphia Business Solutions." Ownership of subsidiaries is
indicated by indentations. Ownership of each subsidiary is 100% unless otherwise
indicated parenthetically or by footnote.
EXHIBIT 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 333-61291 on Form S-3, Amendment No. 1 to Registration Statement Nos.
333-59999, 333-73025, 333-78027, 333-81229 and 333-84119 on Form S-3,
Registration Statement No. 333-72005 on Form S-4, Amendment No. 1 to
Registration Statement No. 333-75995 on Form S-4, Amendment No. 4 to
Registration Statement No. 333-69819 on Form S-3, Post-Effective Amendment No. 2
on Form S-8 to Registration Statement No. 333-85101 on Form S-4, and
Registration Statement No. 333-75741 on Form S-8 of Adelphia Communications
Corporation, of our report dated March 29, 2000, appearing in this Annual Report
on Form 10-K of Adelphia Communcations Corporation for the year ended December
31, 1999.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE FOR ADELPHIA COMMUNICATIONS CORP. FOR THE YEAR ENDED
DECEMBER 31, 1999.
</LEGEND>
<CIK> 0000796486
<NAME> ADELPHIA COMMUNICATIONS CORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 186,874
<SECURITIES> 0
<RECEIVABLES> 194,399<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 16,068,202<F2>
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 17,267,500
<CURRENT-LIABILITIES> 0
<BONDS> 9,291,732
0
0
<COMMON> 1,239
<OTHER-SE> (3,721,187)
<TOTAL-LIABILITY-AND-EQUITY> 17,267,500
<SALES> 0
<TOTAL-REVENUES> 1,287,968
<CGS> 0
<TOTAL-COSTS> 1,148,763
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 359,585
<INCOME-PRETAX> (244,365)
<INCOME-TAX> (14,493)
<INCOME-CONTINUING> (229,872)
<DISCONTINUED> 0
<EXTRAORDINARY> (10,658)
<CHANGES> 0
<NET-INCOME> (240,530)
<EPS-BASIC> (3.88)
<EPS-DILUTED> (3.88)
<FN>
<F1>RECEIVABLES NET OF ALLOWANCE
<F2>PP&E IS NET OF DEPRECIATION
</FN>
</TABLE>
