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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 5, 1997
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
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(Exact name of registrant as specified in charter)
STATE OF WASHINGTON 0-16718 91-1366564
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(State or other jurisdiction of (Commission (IRS Employer
of incorporation) File Number) Identification No.)
NORTHLAND COMMUNICATIONS CORPORATION
3600 WASHINGTON MUTUAL TOWER
1201 THIRD AVENUE, SEATTLE, WASHINGTON 98101
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(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (206) 621-1351
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N.A.
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name or former address, if changed since last report)
This filing contains ___________ pages. Exhibits Index appears on page
___________ .
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NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
ITEM 2. ACQUISITION OF ASSETS
On August 27, 1997 Northland Cable Properties Seven Limited Partnership
(the "Registrant") entered into an agreement to acquire substantially all
operating assets and franchise rights of the cable television systems serving
the incorporated communities of Toccoa, Royston, Franklin Springs, Canon,
Lavonia, Bowersville, and nearby unincorporated areas of Stephens, Franklin and
Hart counties, all within the state of Georgia (the "Systems"). The Systems are
operated from two headends located in Toccoa and Royston, representing 7,420
basic subscribers, and were purchased from Robin Media Group, Inc. (the
"Seller"). The Systems were acquired on December 5, 1997 at a purchase price of
$11,360,000, adjusted at closing for the proration of certain revenues and
expenses. Of the total $11,360,000 purchase price the Seller received
$11,305,000 on December 5, 1997. Under the terms of the purchase agreement the
remaining balance of $55,000 will be held in escrow for a period of six months
to be offset by any remaining post-closing adjustments. There is no material
relationship between the Registrant and Seller or any of their affiliates,
directors, officers or associates.
FINANCING
The purchase was financed by borrowings under the Registrant's amended
and restated revolving credit and term loan facility (the "Credit Facility").
The Credit Facility provides for borrowings up to $45,000,000 including a
$37,000,000, 8 1/2 year term loan, and an $8,000,000 revolving credit facility
which converts to a 5 1/2 year term loan on December 1, 2000. As of the date of
this filing the balance outstanding under the Credit Facility is $41,350,000.
The remaining credit capacity of $3,650,000 is available to the Registrant based
on maintenance of certain financial covenants. This credit capacity will be
available to the Registrant for future working capital needs. Based on
management's estimates no borrowings will be required to meet the Registrant's
future operating, debt service or capital expenditure obligations.
On December 11, 1997 the Registrant entered into a self-amortizing
interest rate swap agreement on $21,000,000 at a fixed rate of 8.89% expiring
December 11, 2000. Additionally the Registrant has fixed rates as follows:
$10,000,000 fixed at 8.63% expiring June 11, 1998; $10,100,000 fixed at 8.56%
expiring March 11, 1998. The above rates include a margin paid to the lender
based on overall leverage (currently 2.625%), and may increase or decrease as
the Registrant's leverage fluctuates.
PROFILE OF THE TOCCOA/ROYSTON SYSTEMS
The City of Toccoa is located in northeastern Georgia adjacent to the
South Carolina line at the headwaters of Lake Hartwell. It is 81 miles northeast
of Atlanta and 65 miles southwest of Greenville, South
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Carolina. Toccoa serves as the county seat of Stephens County and its economy is
driven by the textile industry as well as agricultural products such as poultry,
pulpwood and livestock.
Split between Hart and Franklin counties, Royston is located in
northeastern Georgia approximately 60 miles north of Athens. The economy of
Royston is primarily driven by manufacturing industries.
SUBSCRIBER SUMMARY
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TOCCOA ROYSTON
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Estimated Homes Passed: 8,810 2,479
Basic Subscribers: 5,593 1,827
% of Homes Passed 63.5% 73.7%
Pay Subscribers: 2,564 549
% of Basic 45.8% 30.0%
CURRENT RATES
Basic $25.75 $25.75
HBO 12.33 9.95
The Movie Channel 11.84 N/A
Showtime 11.84 9.95
Encore 1.46 N/A
Installation 40.00 40.00
Reconnect fee 24.00 24.00
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CHANNEL LINE-UP - TOCCOA, GEORGIA
CABLE CHANNEL STATION
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2 WSB
3 SHOWTIME
4 WYFF
5 WAGA
6 WFBC
7 WSPA
8 WGTV
9 WGGS
10 WHNS
11 WXIA
12 WLOS
13 WNEG
14 ENCORE
15 AMC
16 CNN
17 WTBS
18 TNN
19 WGN
20 TMC
21 NICKELODEON/ NICK AT NITE
22 HBO
23 DISNEY
24 ESPN
25 USA
26 TNT
27 LIFETIME
28 F/X
29 CNN-HN
30 DISCOVERY
31 QVC
32 CNBC
33 A&E
34 BET
35 WEATHER
36 FAMILY
37 SPORTSOUTH/ C-SPAN
99 MTV
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CHANNEL LINE-UP - ROYSTON, GEORGIA
CABLE CHANNEL STATION
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2 WGTV
3 WNEG
4 WYFF
5 WAGA
6 WGGS
7 HBO
8 WSB
9 WFBC
10 WSPA
11 WXIA
12 WHNS
13 WLOS
14 SHOWTIME
15 TNT
16 DISNEY
17 ESPN
18 CNN
19 USA
20 C-SPAN
21 WEATHER
22 NICKELODEON/ NICK AT NITE
23 TNN
24 WGN
25 LIFETIME
26 WTBS
27 CNN-HN
28 CMT
29 DISCOVERY
30 F/X
31 FAMILY
32 INSPIRATION
33 QVC
34 SPORTSOUTH
35 A&E
36 TCM
37 BET
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FRANCHISE AGREEMENTS
The Systems operate under the terms of following franchise agreements:
FRANCHISE EXPIRATION DATE FRANCHISE FEE
Stephens County June 30, 1998 5%
City of Toccoa November 30, 2009 5%
Franklin County December 31, 2011 5%
City of Franklin Springs December 31, 2011 5%
City of Canon December 31, 2011 5%
City of Lavonia June 1, 2007 5%
Hart County January 22, 1999 3%
City of Royston December 31, 2011 5%
City of Bowersville December 31, 2011 3%
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Item 7. Financial Statements and Exhibits
Financial Statements, Pro Forma
(a)(4) The financial statements required to be filed were not available
as of the date of this filing.
(b)(2)(c) Exhibits
Asset Purchase Agreement between Northland Cable Properties
Seven Limited Partnership and Robin Media Group, Inc.
Revolving Credit and Term Loan Agreement between Northland Cable
Properties Seven Limited Partnership and Seafirst Bank
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
BY: Northland Communications Corporation,
Managing General Partner
Dated: __________ BY: /s/ GARY S. JONES
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Gary S. Jones
(Vice President)
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INDEX TO EXHIBITS
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Exhibit Sequentially
Number Description Numbered Page
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10.33 Asset Purchase Agreement between Northland Cable Properties Seven
Limited Partnership and Robin Media Group, Inc.
10.34 Revolving Credit and Term Loan Agreement between Northland Cable
Properties Seven Limited Partnership and Seafirst Bank.
</TABLE>
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ASSET PURCHASE AND SALE AGREEMENT
DATED AS OF AUGUST 27, 1997
BY AND BETWEEN
ROBIN MEDIA GROUP, INC.
AS SELLER
AND
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
AS BUYER
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TABLE OF CONTENTS
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ARTICLE 1 Definitions........................................................... 1
1.1 Accounts Payable...................................................... 1
1.2 Accounts Receivable................................................... 1
1.3 Affiliate............................................................. 1
1.4 Agreement............................................................. 2
1.5 Assumed Contracts..................................................... 2
1.6 Assets................................................................ 2
1.7 Authorities........................................................... 2
1.8 Basic Subscriber...................................................... 2
1.9 Basic Subscriber Rate................................................. 2
1.10 Business.............................................................. 3
1.11 Business Day.......................................................... 3
1.12 Code.................................................................. 3
1.13 Communications Act.................................................... 3
1.14 Contracts............................................................. 3
1.15 Current Assets........................................................ 3
1.16 Current Liabilities................................................... 3
1.17 Deferred Revenue...................................................... 3
1.18 Equipment............................................................. 3
1.19 Excluded Assets....................................................... 4
1.20 FCC................................................................... 4
1.21 [Intentionally Omitted]............................................... 4
1.22 Franchises............................................................ 4
1.23 Franchise Areas....................................................... 4
1.24 GAAP.................................................................. 4
1.25 Governmental Authority................................................ 5
1.26 Governmental Permits.................................................. 5
1.27 Intangibles........................................................... 5
1.28 Legal Rules........................................................... 5
1.29 Necessary Consents.................................................... 5
1.30 Nonstandard Charges................................................... 5
1.31 Other Current Liabilities............................................. 5
1.32 Prepaid Expenses...................................................... 5
1.33 Real Property......................................................... 6
1.34 Required Consents..................................................... 6
1.35 Rules and Regulations................................................. 6
1.36 Signals............................................................... 6
1.37 Subscriber............................................................ 6
1.38 Subscriber Adjustment................................................. 6
1.39 Systems............................................................... 6
1.40 Taxes................................................................. 6
1.41 Working Capital Adjustment............................................ 7
1.42 Other Definitions..................................................... 7
ARTICLE 2 Purchase and Sale..................................................... 8
2.1 Purchase and Sale of Assets........................................... 8
2.2 Assumed Obligations................................................... 8
2.3 Purchase Price and Payment............................................ 8
2.4 Preliminary and Final Adjustments..................................... 9
2.5 Disputed Liabilities.................................................. 10
2.6 Completion of Purchase and Sale....................................... 10
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ARTICLE 3 Representations and Warranties of Seller.............................. 11
3.1 Organization and Qualification........................................ 11
3.2 Seller's Authority.................................................... 11
3.3 Enforceability........................................................ 11
3.4 Approvals............................................................. 11
3.5 Compliance with Laws.................................................. 11
3.6 Compliance with Other Instruments..................................... 12
3.7 Complete System....................................................... 12
3.8 Title and Encumbrances................................................ 12
3.9 Cable Plant and Homes Passed.......................................... 13
3.10 Franchises............................................................ 13
3.11 Authorities........................................................... 13
3.12 Contracts............................................................. 13
3.13 Real Property......................................................... 14
3.14 Environmental Laws.................................................... 14
3.15 Carriage of Signals and Channel Capacity.............................. 15
3.16 FCC and Copyright..................................................... 15
3.17 Revenue Summary....................................................... 15
3.18 Litigation............................................................ 16
3.19 Employees and Employee Benefits....................................... 16
3.20 Commissions........................................................... 17
ARTICLE 4 Representations and Warranties of Buyer............................... 17
4.1 Organization and Qualification........................................ 17
4.2 Buyer Authority....................................................... 18
4.3 Enforceability........................................................ 18
4.4 Approvals............................................................. 18
4.5 Compliance with Other Instruments..................................... 18
4.6 Commissions........................................................... 19
ARTICLE 5 Covenants of Seller................................................... 19
5.1 Access to System...................................................... 19
5.2 Continuity and Maintenance of Operations.............................. 19
5.3 Compliance with Contracts and Laws.................................... 19
5.4 Adverse Changes....................................................... 19
5.5 Line Extensions and Rebuilds.......................................... 20
5.6 Taxes................................................................. 20
ARTICLE 6 Other Covenants....................................................... 21
6.1 Confidentiality....................................................... 21
6.2 HSR Notification...................................................... 22
6.3 Required Consents and Estoppel Certificates........................... 22
6.4 Franchise Transfer Expenses........................................... 23
6.5 Employee Matters...................................................... 23
ARTICLE 7 Conditions Precedent to Obligations of Buyer.......................... 26
7.1 Conditions Precedent.................................................. 26
7.2 Waiver................................................................ 27
ARTICLE 8 Conditions Precedent to Obligations of Seller......................... 27
8.1 Conditions Precedent.................................................. 27
8.2 Waiver................................................................ 28
ARTICLE 9 Closing............................................................... 28
9.1 Closing............................................................... 28
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9.2 Closing Documents..................................................... 28
ARTICLE 10 Indemnification....................................................... 30
10.1 Indemnification by Seller............................................. 30
10.2 Indemnification by Buyer.............................................. 31
10.3 Notice and Right To Defend Third-Party Claims......................... 32
10.4 Notice and Right to Remediate......................................... 33
10.5 Mitigation............................................................ 34
10.6 Exclusive Remedy...................................................... 34
ARTICLE 11 Termination........................................................... 34
11.1 Termination Events.................................................... 34
11.2 Manner of Exercise.................................................... 35
11.3 Effect of Termination................................................. 35
ARTICLE 12 General............................................................... 35
12.1 Covenant Not To Sue and Nonrecourse to
Partners.............................................................. 35
12.2 Assignment............................................................ 36
12.3 Parties in Interest................................................... 37
12.4 Time of Essence....................................................... 37
12.5 Severability.......................................................... 37
12.6 Amendment............................................................. 37
12.7 Terms................................................................. 37
12.8 Headings.............................................................. 37
12.9 Entire Understanding; Schedules....................................... 37
12.10 Counterparts.......................................................... 37
12.11 Applicable Law........................................................ 38
12.12 Notices............................................................... 38
12.13 Further Acts.......................................................... 39
12.14 Expenses.............................................................. 39
12.15 Attorneys' Fees....................................................... 39
12.16 Judicial Proceedings.................................................. 39
</TABLE>
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EXHIBITS
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Exhibit A Escrow Agreement
Exhibit B Franchise Consent Form
Exhibit C Assignment, Assumption & Consent - Leases
Exhibit D Assignment, Assumption & Consent - Contracts
Exhibit E Receipt
Exhibit F Bill of Sale
Exhibit G FIRPTA Certificate
Exhibit H Certificate of Seller
Exhibit I Opinion of Seller's Counsel
Exhibit J Assumption Agreement
Exhibit K Opinion of Buyer's Counsel
Exhibit L Certificate of Buyer
Exhibit M Post-Closing Escrow Agreement
SCHEDULES
Schedule 1 The Businesses (including Rate Schedules)
Schedule 0 Assumed Contracts
Schedule 1.18 Vehicles
Schedule 0 Excluded Assets
Schedule 0 Franchises
Schedule 0 Necessary Consents
Schedule 0 Required Consents
Schedule 2.3 Purchase Price Allocation
Schedule 0 Contracts and Instruments
Schedule 0 Real Property
Schedule 0 Environmental Disclosure
Schedule 0 Revenue Summary
Schedule 0 Material Changes
Schedule 0 Litigation
Schedule 0 Employees and Employment Agreement
Schedule 0 Collective Agreements
Schedule 0 Employment Benefit Plans
Schedule 0(d) Seller's Welfare Plans
Schedule 6.6 Programming Services
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ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT is made as of August 27, 1997, by
and between ROBIN MEDIA GROUP, INC., a Nevada corporation ("Seller"), and
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP ("Buyer").
RECITALS
O. Seller, through its ownership and operation of various assets,
provides cable television and related services to subscribers located in the
vicinities of Bowersville, Canon, Franklin County, Franklin Springs, Hart
County, Lavonia, Royston, Stephens County and Toccoa, Georgia, including all
franchised communities listed on SCHEDULE 1 (the "Systems").
O. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, subject to the terms and conditions contained in this Agreement,
substantially all of the assets, rights, privileges, interests, business and
properties owned, leased, held or utilized by Seller to operate and maintain the
Systems.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, Seller and Buyer
agree as follows:
ARTICLE 1
Definitions
As used in this Agreement, the following terms shall have the following
meanings:
1.1 Accounts Payable. The book value of all accounts payable of the
Systems relating to the conduct of the Businesses determined as of the Closing
Date in accordance with GAAP on a basis consistent with the application of such
principles in the preparation of the Financial Statements.
1.2 Accounts Receivable. All accounts receivable of Seller representing
amounts owed to Seller in connection with its operation of the Businesses.
1.3 Affiliate. With respect to any person or entity, any other person or
entity owning a majority interest in or controlling such person or entity, or
owned or controlled by or under common ownership or control with such person or
entity, where "control" (and its corollaries) includes ownership of interests
representing a majority of total voting power in an entity, and "ownership" (and
its corollaries) includes ownership of a majority of the equity interests in an
entity.
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1.4 Agreement. This Asset Purchase and Sale Agreement dated as of August
27, 1997 between Seller and Buyer, as the same may be amended from time to time.
1.5 Assumed Contracts. All contracts of the Businesses
as set forth on SCHEDULE 0.
1.6 Assets. All of Seller's right, title and interest in all properties,
privileges, rights, interests and claims, real and personal, tangible and
intangible, of every type and description that are owned, leased, held for or
used exclusively in the Businesses in which Seller has any right, title or
interest or in which Seller acquires any right, title or interest on or before
the Closing Date, including Governmental Permits, Intangibles, Contracts,
Equipment and Real Property, but excluding any Excluded Assets.
1.7 Authorities. Any and all approvals, consents, rights, certificates,
orders, franchises, determinations, permissions, licenses, authorities or grants
issued, noticed, declared, designated or promulgated by any Governmental
Authority; excluding, however, the Franchises.
1.8 Basic Subscriber. As of any date and for each Franchise Area served
by the Systems, without duplication, the aggregate of all of the following which
are receiving basic cable television service ("Basic Services") provided by the
Systems: (a) private residential customer accounts that are billed by individual
unit (regardless of whether such accounts are in single family homes or in
individually billed units in apartment houses and other multi-unit buildings)
(excluding Nonstandard Charges (as defined herein)) each of which shall be
counted as one "Basic Subscriber;" and (b) all commercial, bulk-billed and other
accounts not billed by individual unit, such as hotels, motels, apartment houses
and multi-family homes, provided that the number of "Basic Subscribers" serviced
by each such account shall be deemed to be an amount equal to the quotient of
(x) the aggregate monthly Basic Services revenue and expanded basic cable
television service revenue derived by the Systems from such accounts (excluding
any Nonstandard Charges), in each case for the last calendar month preceding the
date of such determination, divided by (y) the Basic Subscriber Rate in effect
on the date of such determination. Notwithstanding the foregoing, the term
"Basic Subscriber" shall not include any commercial, residential or other
subscriber who (A) has not paid for at least one (1) month of service, or (B) is
more than sixty (60) days delinquent from the date of billing on five dollars
($5.00) or more due to Seller.
1.9 Basic Subscriber Rate. For each Franchise Area, the monthly fees and
charges for the provision of both "basic service" and "expanded basic service"
(as such terms are customarily used in the cable television industry and
excluding
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any charges for additional outlets and installation fees and revenues derived
from the rental of converters, remote control devices and other like charges for
equipment) charged to customers served by the Systems, as of the end of the last
full month prior to the Closing Date.
1.10 Businesses. The individual cable television businesses conducted by
Seller on the date of this Agreement through the Systems in the Franchise Areas,
as described on SCHEDULE 1.
1.11 Business Day. Any day other than Saturday, Sunday or a day on which
banking institutions in either San Francisco, California or New York, New York
are required or authorized to be closed.
1.12 Code. The Internal Revenue Code of 1986, as amended.
1.13 Communications Act. The Communications Act of 1934, as amended,
including, but not limited to, by the Cable Communication Policy Act of 1984 and
by the Cable Television Consumer Protection and Competition Act of 1992, and the
rules and regulations promulgated thereunder.
1.14 Contracts. Any and all leases of real and personal property,
private easements, rights-of-way, rights of access, contracts for easements,
pole line or pole attachment agreements, joint line agreements, underground
conduit agreements, wire or cable crossing agreements, contracts with
Subscribers, bulk and commercial service agreements relating to the Systems, and
any other agreements with third parties relating to the Systems.
1.15 Current Assets. The sum of (a) Accounts Receivable as of the
Closing Date which have not been outstanding for more than ninety (90) days, net
of any credit balances due to subscribers, and (b) Prepaid Expenses.
1.16 Current Liabilities. The sum of (a) Accounts Payable, (b) Deferred
Revenue, and (c) Other Current Liabilities.
1.17 Deferred Revenue. Liabilities to Subscribers representing advance
billings for services to be performed by Buyer after the Closing Date.
1.18 Equipment. All electronic devices, trunk and distribution coaxial
and optical fiber cable, amplifiers, power supplies, conduit, vaults and
pedestals, grounding and pole hardware, Subscriber's devices (including
converters, encoders, transformers behind television sets and fittings), headend
hardware (including origination, earth stations, transmission and distribution
system), test equipment, vehicles and other tangible personal property owned,
leased, used or held for use
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in the Businesses. SCHEDULE 1.18 lists each vehicle owned, used or held for use
in the Businesses.
1.19 Excluded Assets. All (a) insurance policies and rights and claims
thereunder; (b) bonds, letters of credit, surety instruments, notes and other
similar items; (c) cash and cash equivalents; (d) Seller's rights under any
agreement governing or evidencing an obligation of Seller for borrowed money;
(e) Seller's rights under any contract, license, authorization, agreement or
commitment other than those creating or evidencing Assumed Contracts; (f)
claims, rights and interests in and to any refunds for federal, state or local
franchise, income or other taxes or fees (including, without limitation,
copyright fees) of any nature whatsoever relating to such taxes or fees payable
for taxable periods, or portions thereof, ending on or prior to the Closing
Date; (g) assets or properties owned by Seller that are unrelated to the
Businesses; (h) assets of any Employee Plan or arrangement, except as expressly
provided in Section ; (i) Seller's names and all trademarks, servicemarks and
copyrights owned by Seller; (j) Seller's billing contracts; provided that Seller
shall offer Buyer billing services related to the Businesses at Seller's actual
cost at the time of providing such service, for a period of ninety (90) days
following the Closing, which period shall be extended at Buyer's option for an
additional thirty (30) days, and shall cooperate with Buyer to effect the
transition of billing services from Seller's service provider to Buyer's service
provider; (k) programming and carriage agreements, except as described on
SCHEDULE 0; and (l) the assets described on SCHEDULE 0.
1.20 FCC. The Federal Communications Commission or any successor agency.
1.21 [Intentionally Omitted]
1.22 Franchises. The franchises set forth on SCHEDULE hereof.
1.23 Franchise Areas. The areas in which Seller is authorized to provide
cable television service under the Franchises, and the areas, if any, served by
the Systems in which Seller provides cable television service without a
Franchise.
1.24 GAAP. Generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
1.25 Governmental Authority. Any nation or government,
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any state, province or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.26 Governmental Permits. All franchises, approvals, authorizations,
permits, licenses, easements, registrations, qualifications, leases and similar
rights obtained from any Governmental Authority.
1.27 Intangibles. All intangible assets, including subscriber lists,
accounts receivable, claims (excluding any claims relating to Excluded Assets),
patents, copyrights and goodwill, if any, owned, used or held for use in the
Businesses.
1.28 Legal Rules. The requirements of all federal, state, municipal or
local laws, codes, statutes, ordinances, orders, judgments, decrees,
injunctions, franchises, determinations, approvals, rules, regulations, permits,
licenses, authorizations, certificates, notices, demand letters, circulars,
opinion letters and directions, of all Governmental Authorities.
1.29 Necessary Consents. All material franchises, licenses,
authorizations, approvals and consents required under Governmental Permits,
Contracts or otherwise for (a) Seller to transfer the Assets and the Businesses
to Buyer, (b) Buyer to conduct the Businesses and to own, lease, use and operate
the Assets at the places and in the manner in which the Businesses are conducted
as of the date of this Agreement and on the Closing Date and (c) Buyer to assume
and perform the Governmental Permits and Contracts. SCHEDULE 0 sets forth all
Necessary Consents.
1.30 Nonstandard Charges. Any charges for taxes, second connects,
additional outlets, installation fees, deposits and other non-recurring items
and any charges for the rental of converters, remote control devices and other
like charges for equipment.
1.31 Other Current Liabilities. All current liabilities (including, but
not limited to, accrued vacation pay of employees of Seller, subscriber security
deposits and customer advance payments, but excluding (i) Accounts Payable and
(ii) Deferred Revenue) of the Systems relating to the conduct of the Businesses
determined as of the Closing Date in accordance with GAAP on a basis consistent
with the application of such principles in the preparation of the Financial
Statements.
1.32 Prepaid Expenses. The book value of prepaid expenses and
miscellaneous prepaids (in each case, only to the extent constituting a current
asset) of the Systems with respect to the Businesses determined as of the
Closing Date in
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accordance with GAAP on a basis consistent with the application of such
principles in the preparation of the Financial Statements, to the extent that
such prepaid expenses will accrue to the benefit of Buyer upon and after the
Closing Date.
1.33 Real Property. All assets consisting of realty, including
appurtenances, improvements and fixtures located on such realty, and any other
interests in real property, including fee interests in Seller's offices and
headend sites and leasehold interests and easements, licenses, rights-of-way or
other real property rights used or held for use in the Businesses, but excluding
any Excluded Assets.
1.34 Required Consents. Those Necessary Consents which must be obtained
prior to Closing. SCHEDULE 0 sets forth all Required Consents.
1.35 Rules and Regulations. Rules and Regulations of the FCC, as in
effect from time to time.
1.36 Signals. The transmissions, except radio signals (whether
television, satellite or otherwise), of video programming or other information
that the Systems make available to all Subscribers generally.
1.37 Subscriber. A Basic Subscriber of the Systems.
1.38 Subscriber Adjustment. An amount equal to the product of (x) $1,535
and (y) the difference between 7,400 and the actual number of Basic Subscribers
in the Systems as of the Closing Date if such difference is greater than 74.
1.39 Systems. The individual cable television reception and distribution
systems operated in the conduct of the Businesses, each of which is capable of
being operated, without modification, as an independent system without
interconnections to other systems.
1.40 Taxes. Any and all governmental or quasi-govern- mental fees
(including, without limitation, license, filing and registration fees), taxes
(including, without limitation, income, gross receipts, franchise, sales, use,
property, real or personal, tangible or intangible taxes), interest equalization
and stamp taxes, assessments, levies, imposts, duties, charges, required
contributions or withholdings of any kind or nature whatsoever, together with
any and all penalties, fines or interest thereon. For purposes of determining
any Tax cost or Tax benefit to any person, such amount will be the actual cost
or benefit recognized by such person at the time of actual payment of the
additional Tax or actual recognition of the Tax benefit. In the event that any
payment or other amount is required to be determined on an after-Tax basis, such
payment or other amount will initially be determined without regard to any Tax
cost or Tax benefit not actually recognized currently, and appropriate
adjustments will be made when and to
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the extent that such Tax cost or Tax benefit is actually recognized.
1.41 Working Capital Adjustment. The number obtained by subtracting (x)
the sum of the Current Liabilities existing (as defined and determined in
accordance with GAAP) of Seller existing on the Closing Date which constitute
assumed Current Liabilities, from (y) the sum of the Current Assets (as defined
and determined in accordance with GAAP, except that inventory and cash shall not
be included as a current asset) of Seller on the Closing Date which are included
within the Assets.
1.42 Other Definitions. In addition, the following terms have the
meanings given them in the following sections:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Adjustment Time 0
Buyer's DC Plan 0
Buyer's Welfare Plans 0
CLI 0
Closing 0
Closing Date 0
COBRA 0
Copyright Act 0
Deposit 0
Employee Plans 0
Employment Transfer Date 0
Environmental Law 0
ERISA 0
ERISA Affiliate 0
Final Adjustments Report 0
Hazardous Substance 0
HSR Act 0
HSR Adjustment 0
Indemnifiable Damages 0
Indemnitee 0
Indemnitor 0
Lien 0
New Employees 0
Nonrecourse 0
Nontransferring Employees 0
Preliminary Adjustments Report 0
Prospective Employees 0
Purchase Price 0
Seller's DC Plan 0
Seller's Welfare Plans 0
Transaction Document 0
</TABLE>
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<PAGE> 13
ARTICLE 2
Purchase and Sale
2.1 Purchase and Sale of Assets. Subject to the terms and conditions
hereinafter set forth, Buyer hereby agrees to purchase from Seller, and Seller
hereby agrees to sell to Buyer, the Assets. Seller will retain, and Buyer hereby
does not purchase, the Excluded Assets.
2.2 Assumed Obligations. Concurrently with the purchase described in
Section and subject to the terms and conditions hereinafter set forth, Buyer
shall assume and agree to pay when due, and perform, those obligations, but only
those obligations, that (i) constitute the Current Liabilities, (ii) arise on or
after the Closing Date under all Franchises and Assumed Contracts, or (iii)
arise out of its ownership and operation of the Assets after the Closing Date.
2.3 Purchase Price and Payment.
(a) The consideration to be paid for the Assets shall be eleven million,
three hundred sixty thousand dollars ($11,360,000) in cash adjusted as
hereinafter provided (the "Purchase Price"). SCHEDULE 2.3 sets forth the manner
in which the Purchase Price is to be allocated among the Assets. Notwithstanding
the foregoing, in the event that after the adjustments the Purchase Price is
less than ten million, seven hundred ninety-two thousand dollars ($10,792,000),
at Seller's option, this Agreement may be terminated prior to Closing and, if so
terminated, the parties shall have no further rights or obligations hereunder,
except for the respective obligations of the parties under Sections , 12.1 and .
(b) On the Closing Date, the Purchase Price shall be:
(i) either
(A) decreased by the Working Capital Adjustment to the
extent it is a negative amount as of the Closing Date; or
(B) increased by the Working Capital Adjustment to the
extent it is a positive amount as of the Closing Date; and
(ii) either increased (up to a maximum of $568,000) or decreased,
as the case may be, for the Subscriber Adjustment, if any.
(c) To secure Buyer's obligations under this Agreement and the agreement
to be entered into in connection with the acquisition by Buyer of cable systems
located in Aiken and Greenwood, South Carolina, among others, immediately upon
execution of this Agreement, Buyer shall either (i) deposit the
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amount of $1,000,000 into an escrow account, under an escrow agreement, the form
of which is attached hereto as EXHIBIT A (the "Escrow Agreement"), or (ii)
obtain an irrevocable letter of credit in favor of the Seller in the amount of
$1,000,000 issued by a financial institution reasonably acceptable to the Seller
(in either case, the "Deposit").
(d) All revenues and all expenses arising from the operations of the
Systems until 12:01 a.m. on the Closing Date (the "Adjustment Time") shall be
prorated between Buyer and Seller as of the Adjustment Time in accordance with
GAAP on the principle that Seller shall receive all revenues (other than with
respect to Accounts Receivable being purchased by Buyer hereunder) and shall be
responsible for all expenses, costs and liabilities allocable to the period
prior to the Adjustment Time and Buyer shall receive all revenues and shall be
responsible for all expenses, costs and liabilities allocable to the period
after the Adjustment Time.
2.4 Preliminary and Final Adjustments. Preliminary and final adjustments
to the Purchase Price will be determined as follows:
(a) At least ten (10) Business Days prior to the Closing Date, Seller
will deliver to Buyer a report (the "Preliminary Adjustments Report"), prepared
in good faith and on a reasonable basis and in a manner consistent with the
Financial Statements, setting forth in reasonable detail a pro forma
determination as of the Closing Date of the adjustments and prorations set forth
in Section 0. The Preliminary Adjustments Report shall: (i) contain all
information reasonably necessary to determine such adjustments and prorations
and such other information as may be reasonably requested by Buyer; (ii) be
prepared in accordance with GAAP; and (iii) be certified by an authorized
officer of Seller to be true, correct and complete as of the date thereof.
Within five (5) Business Days after receipt of such report, Buyer shall give
Seller written notice of any objections. If Buyer makes any such objections, the
parties shall agree on the amount, if any, which is not in dispute within two
(2) Business Days after Seller's receipt of Buyer's objections thereto. Any
undisputed amounts shall be paid by the party responsible therefor to the other
party upon the Closing, and the remaining disputed amounts shall be determined
in the Final Adjustments Report.
(b) Within sixty (60) days after the Closing Date, Buyer shall deliver
to Seller a report (the "Final Adjustments Report"), prepared in good faith and
on a reasonable basis and similarly certified by Buyer, setting forth in
reasonable detail the final determination of all adjustments that were not
calculated as of the Closing Date and containing any corrections to the
Preliminary Adjustments Report.
(c) Within fifteen (15) days after receipt of the Final Adjustments
Report, Seller shall notify Buyer of its
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<PAGE> 15
objections, if any. Any amount which is not in dispute shall, within five (5)
Business Days of the expiration of the review period, be paid in cash by wire or
interbank transfer in immediately available funds as follows: (i) if the
Purchase Price calculated based on the Final Adjustments Report is greater than
the Purchase Price calculated based on the Preliminary Adjustments Report, Buyer
shall pay such difference to Seller, or (ii) if the Purchase Price is less,
Seller shall pay such difference to Buyer. In the event any payment required by
this Section 0(c) or by Section 2.4(d) is not made when due, Seller or Buyer, as
appropriate, shall make the payment required by this Section 0(c) with interest
accruing from the date such payment was due at a rate of ten percent (10%) per
annum.
(d) Any disputed amounts will be determined within ninety (90) days
after the Closing Date by the San Francisco, California office of the accounting
firm of Price Waterhouse, whose determination will be conclusive. Seller and
Buyer will bear equally the fees and expenses payable to such firm in connection
with such determination. The payment required after determination of all
disputed amounts will be made by the responsible party by wire transfer of
immediately available funds to the other party within three (3) Business Days
after the final determination.
2.5 Disputed Liabilities. If a proration or adjustment to the Purchase
Price is made in Buyer's favor for any liability assumed by Buyer but is in good
faith being contested by Seller as of the Closing Date, and if Buyer is relieved
of this liability, Buyer shall pay to Seller or its designee in cash (by means
of wire or interbank transfer in immediately available funds) an amount equal to
the portion of this liability so relieved within five (5) Business Days after
the date Buyer is relieved of this liability. In the event any payment required
by this Section 0 is not made by Buyer when due, Buyer shall make the payment
required by this Section 0 with interest accruing from the date Buyer was
relieved of such liability at a rate of ten percent (10%) per annum.
2.6 Completion of Purchase and Sale. The purchase and sale of the Assets
shall be completed in accordance with Article 0 (the "Closing"). Within five (5)
Business Days of fulfillment of all conditions to Closing, Buyer and Seller
shall mutually agree upon the date of Closing (the "Closing Date"), which date
shall not be later than December 31, 1997. The Closing shall take place in the
offices of Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco,
California 94104.
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ARTICLE 3
Representations and Warranties of Seller
As a material inducement to Buyer to enter into this Agreement, Seller
represents and warrants to Buyer the following:
3.1 Organization and Qualification. Seller is a corporation duly
organized, validly existing and in good standing under the laws of Nevada and
has all requisite power and authority to own, lease and use the Assets as they
are currently owned, leased and used and to conduct the Businesses as currently
conducted. Seller is duly qualified or licensed to do business and is in good
standing under the laws of the State of Georgia.
3.2 Seller's Authority. Seller has the corporate right, power, legal
capacity and authority to execute, deliver and (subject to the receipt of the
Necessary Consents) perform its obligations under this Agreement and the
documents, instruments and certificates to be executed and delivered by Seller
pursuant to this Agreement. The execution and delivery of, and performance of
the obligations contained in, this Agreement by Seller and the transactions
contemplated hereby have been, and all documents, instruments and certificates
have been or as of the Closing will be, duly authorized by all necessary
partnership action on the part of Seller.
3.3 Enforceability. The terms and provisions of this Agreement and all
documents, instruments and certificates made or delivered from time to time by
Seller hereunder and thereunder constitute valid and legally binding obligations
of Seller, enforceable against Seller in accordance with the terms hereof and
thereof, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
3.4 Approvals. SCHEDULE 0 sets forth all Necessary Consents. Except for
the Necessary Consents and compliance with the HSR Act, the execution, delivery
and performance of this Agreement by Seller does not require any material
consent which has not been made, given or otherwise accomplished.
3.5 Compliance with Laws. Seller is in material compliance with all
Legal Rules imposed by any Governmental Authority having jurisdiction over
Seller, the Businesses, the Assets or the Systems, and of any jurisdiction in
which the Systems are being operated or conducted, including, but not limited
to, the Communications Act.
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3.6 Compliance with Other Instruments.
(a) The execution and delivery of this Agreement and (subject to the
receipt of the Necessary Consents) the consummation of the transactions
contemplated hereunder do not and will not result in a breach or violation of
any term or provision of, or result in the imposition of any Lien upon any
Assets or any properties of Seller pursuant to, or constitute a breach or
default (including any event that, with the passage of time or giving of notice,
or both, would become a breach or default) under the articles of incorporation
or bylaws of Seller or under any material contract, agreement, Authority, Legal
Rule, license, lease, indenture, mortgage, loan agreement or note, as to which
Seller is a party or by which any of the Assets may be affected, except for such
breaches or violations as would not have a material adverse effect on the
Businesses or materially impair the ability of Seller to perform its obligations
under this Agreement.
(b) Seller has complied with all provisions of and is not in breach or
default (including any event that, with the passage of time or giving of notice,
or both, would become a breach or default) under any contract, lease, instrument
affecting any parcel of real property, authority or franchise, or obligation to
which it is a party or by which it is or any of the Assets may be bound or
affected, except for such breaches or violations as would not have a material
adverse effect on the Businesses or materially impair the ability of Seller to
operate its business as presently operated.
3.7 Complete System. The Assets constitute fully operational cable
television systems and include the assets, properties, franchises, licenses,
permits, consents, certificates, authorities, operating rights, leases,
easements, licenses, rights-of-way, contracts, agreements, commitments and
arrangements (excluding programming and carriage agreements) necessary to
operate and maintain the same as operated and maintained on the date hereof.
3.8 Title and Encumbrances. Seller has good title to and possession of
all of the Assets, free and clear of all Liens, except for the Permitted Liens.
A "Lien" is any interest in property securing an obligation, whether such
interest is based on common law, statute or contract, and including, but not
limited to, any security interest or lien arising from a mortgage, claim,
encumbrance, pledge, charge, easement, servitude, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. The term "Lien" shall also include reservations, exceptions,
covenants, conditions, restrictions, leases, sub-leases, licenses, occupancy
agreements, pledges, equities, charges, assessments, covenants, reservations,
defects in title, encroachments and other burdens, and other title exceptions
and encumbrances affecting property of any nature, whether accrued or unaccrued,
or absolute or contingent.
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"Permitted Liens" are (a) Liens for taxes not yet due and payable; (b) any
carrier's, warehousemen's, mechanic's, materialmen's, repairmen's or other like
lien arising in the ordinary course of business; (c) easements, rights-of-way,
restrictions, minor encroachments and other similar nonmonetary encumbrances (i)
incurred in the ordinary course of business, and (ii) which do not render the
Asset subject thereto unusable for the purpose intended, materially detract from
the value of the Asset or interfere with the ordinary use of the Asset in the
ordinary course of business; and (d) in the case of real property leased to
Seller, the rights of the fee owner and any lien encumbering the fee interest in
such property.
3.9 Cable Plant and Homes Passed.
As of the Closing Date, the Systems will pass no fewer than ten thousand
eight hundred fifty (10,850) homes and will consist of no greater than three
hundred twenty (320) miles of cable plant.
3.10 Franchises.
(a) SCHEDULE 0 lists each Franchise held by Seller in connection with
the operation or maintenance of the Systems, and the coverage area serviced
thereby.
(b) To Seller's knowledge, each Franchise is in full force and effect
and no proceeding to revoke, cancel, encumber or adversely affect in any manner
any such Franchise has been initiated or threatened, and Seller is in material
compliance therewith.
3.11 Authorities. Seller has all Authorities that are necessary to carry
on the business of the Systems as conducted on the date hereof, except for such
Authorities the failure of which to obtain would not have a material adverse
effect on the Systems. To Seller's knowledge, each such Authority is in full
force and effect and no proceeding to revoke, cancel, encumber or adversely
affect in any manner any such Authority has been initiated or threatened, and
Seller is in material compliance therewith.
3.12 Contracts. SCHEDULE 0 lists all presently effective Contracts that
are material to the conduct of the Businesses as they are now conducted. Copies
of such Contracts as currently in effect have been, or prior to the Closing will
be, made available to Buyer. To Seller's knowledge, each Contract is in full
force and effect and no action to revoke, cancel or adversely affect in any
manner any such Contract has been initiated or threatened, and Seller is in
material compliance therewith.
3.13 Real Property.
SCHEDULE 0 contains a list of all Real Property owned in
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<PAGE> 19
fee or leased by Seller which is used for headend equipment, microwave equipment
and satellite earth receiving stations and related facilities, tower and antenna
sites and office facilities in connection with the Systems.
3.14 Environmental Laws.
(a) Except as disclosed on SCHEDULE 0, to Seller's Actual Knowledge: (i)
none of Seller's operations on the Real Property is currently subject to any
judicial or administrative proceeding alleging the violation of an Environmental
Law; (ii) none of the Real Property is the subject of any investigation by any
Governmental Authority concerning any release of any Hazardous Substance on the
Real Property; (iii) Seller has not filed any written notice under any
Environmental Law indicating past or present treatment, storage or disposal of a
hazardous waste on the Real Property or reporting a spill or release of a
Hazardous Substance into the environment from its operations on the Real
Property; (iv) Seller has no material contingent liability in connection with
any release of any Hazardous Substance into the environment from the Real
Property; (v) no lien in favor of any Governmental Authority for (A) any
liability under Environmental Laws, or (B) damages arising from or costs
incurred in response to a release of any Hazardous Substance into the
environment has been filed or attached to any of the Real Property; and (vi) no
underground storage tanks are currently located on the Real Property and no
building or other structure on the Real Property contains friable asbestos.
(b) "Environmental Law" means a law, regulation, statute or ordinance
pertaining to land use, air, soil, surface water, groundwater (including the
protection, cleanup, removal, remediation or damage thereof) including, without
limitation, the following laws: (i) Clean Air Act (42 U.S.C. Section 7401, et
seq.); (ii) Clean Water Act (33 U.S.C. Section 1251, et seq.); (iii) Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.); (iv)
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601, et seq.); (v) Safe Drinking Water Act (42 U.S.C. Section 300f, et
seq.); and (vi) Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.).
(c) "Hazardous Substance" means any matter that is designated or
regulated as a pollutant, contaminant or hazardous or toxic substance,
constituent or waste under any Environmental Law.
(d) "Seller's Actual Knowledge" means that Robert J. Lewis or Rodney M.
Royse has current actual knowledge of the accuracy of such statement, without
any duty of investigation or inquiry.
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3.15 Carriage of Signals and Channel Capacity. Seller has the legal
right and authority, including (without limitation) all necessary authority from
the FCC and the requisite compulsory copyright license under section 111 of
Title 17 of the United States Code, as amended, and all rules and regulations
promulgated thereunder, as amended (the "Copyright Act"), to carry and use in
the conduct of the Businesses all of the Signals. Other than requests for
network nonduplication and syndex protection, no written notices have been
received by Seller from the FCC or the United States Copyright Office
challenging or questioning the right of Seller or the Systems to carry or
furnish any of the Signals.
3.16 FCC and Copyright.
(a) Seller has Cumulative Leakage Index, as defined by the Rules and
Regulations ("CLI"), monitoring equipment which is required by the Rules and
Regulations, and has in connection with its CLI obligations under the Rules and
Regulations (i) maintained appropriate log books and other recordkeeping, and
(ii) filed all annual FCC Form 320s with the FCC.
(b) Seller has made all material submissions (including, without
limitation, registration statements) required under the Communications Act.
Seller has delivered to Buyer complete and correct copies of all reports and
filings made or filed pursuant to the Communications Act with respect to the
Systems, a completed and accurate Form 393, Form 1200 Series or other FCC rate
document for the Systems, and all notices alleging noncompliance with the
Communications Act or the Franchises. Seller has made all material filings
required to be made with the FCC, including cable television registration
statements, annual reports and aeronautical frequency usage notices. Seller has
all material FCC licenses necessary to operate the Systems and operate such
licensed facilities in conformance with the terms and conditions of such
licenses. The Systems are in compliance with all "must carry" requirements and
have received all retransmission consents.
(c) Seller has deposited with the United States Copyright Office all
statements of account and other documents and instruments, and paid all
royalties, supplemental royalties, fees and other sums to the United States
Copyright Office required under the Copyright Act with respect to the business
and operations of the Systems as are required to obtain, hold and maintain the
compulsory copyright license for cable television systems prescribed in section
111 of the Copyright Act.
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3.17 Revenue Summary.
(a) The revenue summary with respect to the Systems furnished by Seller
to Buyer as SCHEDULE 0, which shall include information for the year ended
December 31, 1996 (other than information described as estimated) is true,
complete and correct in all material respects for the respective dates and
periods thereof, subject to changes resulting from normal audit and year-end
adjustments.
(b) Except as disclosed on SCHEDULE 0, since June 30, 1997, there has
been no material adverse change in the condition, financial or otherwise,
results of operations, revenues, expenses, gross operating profits, assets or
liabilities (contingent or otherwise) of the Businesses.
3.18 Litigation. Except as set forth on SCHEDULE 0, (a) there is no
material claim, grievance, action, proceeding or governmental investigation
pending or, to Seller's knowledge, threatened against Seller or affecting any of
the Assets or the Systems; and (b) there is no material outstanding or
unsatisfied judgment, order or decree to which Seller is a party or which
involves the transactions contemplated herein.
3.19 Employees and Employee Benefits.
(a) Employment Agreements. SCHEDULE 0 sets forth a list of all employees
of the Systems as of June 30, 1997 and the position and base compensation paid
or payable to each such individual. Except as described on SCHEDULE 0, Seller is
not a party to any written employment contract, agreement, commitment or
arrangement with any individual identified on SCHEDULE 0.
(b) Collective Agreements. Except as described in SCHEDULE 0, (i) Seller
is not party to or subject to any labor union or collective bargaining agreement
with respect to any employee of the Systems, (ii) Seller is not party to any
labor or employment dispute as it relates to the Systems and their employees,
and (iii) to the knowledge of Seller, no labor union or bargaining agent holds
bargaining rights with respect to any employee of the Systems or has applied or
indicated an intention to apply to be certified as the bargaining agent of any
employee of the Systems.
(c) Employee Benefit Plans. SCHEDULE 0 lists each pension benefit,
welfare benefit, stock option, stock purchase, disability, vacation pay,
incentive bonus, severance pay, deferred compensation, supplemental income or
other employee benefit plan, policy or arrangement or agreement, including each
"employee benefit plan" within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained by or
contributed to by Seller covering current or former employees of the Systems or
their dependents or survivors (collectively referred to as "Employee Plans").
Seller has provided or, upon Buyer's request, will
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<PAGE> 22
provide or make available to Buyer prior to the Closing Date complete, accurate
and current copies of the plan document(s) of each Employee Plan, summary plan
descriptions and other descriptive materials provided to employees and, in the
case of an Employee Plan intended to qualify under section 401(a) of the Code, a
copy of the most recent Internal Revenue Service determination letter of such
Employee Plan's qualified status.
(d) Employee Benefit Plan Compliance. No material liabilities, other
than for payment of benefits in the ordinary course, have been incurred with
respect to the Employee Plans.
Having made due inquiry, Seller:
(i) Knows of no circumstances relating to an Employee Plan
intended to qualify under section 401(a) of the Code that would likely
be treated by the Internal Revenue Service as a disqualifying defect;
(ii) Knows of no facts reasonably likely to result in any
material liability (whether or not asserted as of the date hereof) of
Seller arising by virtue of any event, act or omission occurring prior
to the Closing Date with respect to any Employee Plan; and
(iii) Knows of no liens under Code section 412(n) or ERISA
section 4069(a), nor liabilities under ERISA section 4069(a) or 4201(a),
in effect with respect to any Employee Plan that would have a material
adverse effect on the Assets, and know of no facts reasonably likely to
result in the assertion of any such liens or liabilities.
3.20 Commissions. Seller has not entered into an agreement, commitment
or obligation with regard to any brokerage commission or finder's fee which
would be payable by Buyer arising out of the execution, delivery or performance
of this Agreement or the transactions contemplated hereby. Seller has employed
Daniels & Associates and will be responsible for its fees and expenses.
ARTICLE 4
Representations and Warranties of Buyer
As a material inducement to Seller to enter into this Agreement, Buyer
represents and warrants to Seller the following for the benefit of Seller:
4.1 Organization and Qualification. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Washington and, prior to Closing, will be authorized to transact business in all
states
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<PAGE> 23
in which the Assets are located. Buyer has all necessary partnership power and
authority to own, lease and utilize its properties and assets and to engage in
the business or businesses in which it is presently engaged and in the places
where such property and assets are now owned, leased or utilized or as such
business is now conducted.
4.2 Buyer Authority. Buyer has the right, power, legal capacity and
authority to execute, deliver and perform its obligations under this Agreement
and the documents, instruments and certificates to be executed and delivered by
Buyer pursuant to this Agreement. The execution, delivery and performance of
this Agreement by Buyer and the transactions contemplated hereby have been, and
all documents, instruments and certificates have been or as of the Closing will
be, duly authorized by all necessary partnership action on the part of Buyer.
4.3 Enforceability. The terms and provisions of this Agreement and all
documents, instruments and certificates made or delivered from time to time by
Buyer hereunder and thereunder constitute valid and legally binding obligations
of Buyer enforceable against Buyer in accordance with the terms hereof and
thereof, except as the same may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting generally the
enforcement of creditors' rights and by general principles of equity.
4.4 Approvals. Except for compliance with the HSR Act, the execution,
delivery and performance of this Agreement by Buyer and the consummation by
Buyer of the transactions contemplated hereby do not require any material
consent which consent has not been made, given or otherwise accomplished and
satisfactory evidence thereof has been delivered to Seller.
4.5 Compliance with Other Instruments.
(a) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereunder do not and will not result in a breach
or violation of any term or provision of Buyer's partnership agreement or under
any contract, agreement, Authority, Legal Rule, license, lease, indenture,
mortgage, loan agreement or note, as to which Buyer is a party, except for such
breaches or violations as would not materially impair the ability of Buyer to
perform its obligations under this Agreement.
(b) Buyer has complied with all provisions of and is not in breach or
default (including any event that, with the passage of time or giving of notice,
or both, would become a breach or default) under its partnership agreement or
any contract, lease, instrument affecting any parcel of real property, authority
or franchise, or obligation to which it is a party or by which it is bound or
affected, except for such breaches or defaults as would not materially impair
the ability
-18- ASSET PURCHASE AND
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<PAGE> 24
of Buyer to operate the Businesses as presently operated.
4.6 Commissions. Buyer has entered into no agreement, commitment or
obligation with regard to any brokerage commission or finder's fee which would
be payable by Seller arising out of the execution, delivery or performance of
this Agreement or the transactions contemplated hereby.
ARTICLE 5
Covenants of Seller
5.1 Access to System. Prior to the Closing Date, Seller shall give
Buyer's employees and representatives, during normal business hours and with
reasonable prior notice, access to all of the properties, books, accounts,
records, contracts, agreements, commitments, arrangements and documents of or
relating to the Assets and the Systems, and shall permit the making of copies or
extracts thereof. Prior to the Closing Date, Seller shall furnish to Buyer and
its representatives such existing documentation concerning the operation and
financial condition of the Assets and the Systems as Buyer or any such
representative shall reasonably request.
5.2 Continuity and Maintenance of Operations. Except as to actions which
Buyer has been advised and to which it has consented in writing and except as
specifically permitted or required by this Agreement or required by any Legal
Rule, Seller shall from the date hereof to the Closing Date, operate the
Businesses in the ordinary course consistent with past practices, and use
reasonable efforts to preserve any beneficial business relationships with
customers, suppliers and others having business dealings with it that are
material to the Businesses and use reasonable efforts to keep available to Buyer
the services of present employees of the Systems.
5.3 Compliance with Contracts and Laws. From the date hereof to the
Closing Date, Seller shall keep in full force and effect and shall comply in all
material respects with all Franchises, Authorities and material Contracts to
which it is a party or by which it or the Assets may be bound or affected and
which are material to the Businesses.
5.4 Adverse Changes. From the date hereof to the Closing Date, Seller
shall promptly notify Buyer in writing of any material adverse developments
affecting the Systems which become known to Seller, including, without
limitation: (a) any material adverse change in the condition, financial or
otherwise, of the Systems; (b) any damage, destruction or loss (whether or not
covered by insurance) materially adversely affecting any of the Assets or the
Systems; or (c) any material notice of violation, forfeiture or complaint under
any Franchise.
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5.5 Line Extensions and Rebuilds. All line extensions made by Seller
from the date hereof until the Closing Date shall be built and spaced to operate
at a minimum of 450 MHz. On the Closing Date, Buyer shall reimburse Seller for
any and all rebuild expenditures incurred by Seller and approved by Buyer from
the date hereof until the Closing Date.
5.6 Taxes.
(a) Seller agrees to timely file all sales or transfer tax returns with
respect to sales, including the sale of Assets hereunder, occurring on or before
the Closing Date, in connection with the Systems, and Seller shall timely pay
all sales or transfer taxes applicable to the sales reported on such tax
returns, provided that Buyer cooperates, to the extent required, in the
preparation and execution of such tax returns and related filing.
(b) Seller and Buyer shall cooperate fully as and to the extent
reasonably requested by the other party in connection with any audit, litigation
or other proceeding with respect to Taxes. 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. Seller and Buyer agree (i) to retain all books and records with
respect to Tax matters pertinent to the Assets relating to all taxable periods
until the statute of limitations (including any extensions) as to any taxable
year that may be affected thereby shall have run, (ii) to abide by all record
retention agreements entered into with any Governmental Authority, and (iii) to
give the other party reasonable written notice prior to destroying or discarding
any such books and records and, if one party so requests, shall allow the
requesting party to take possession of such books and records proposed for
destruction or discard.
(c) No new elections with respect to Taxes or any changes in current
elections with respect to Taxes affecting the Assets shall be made after the
date of this Agreement without the prior written consent of Buyer.
ARTICLE 6
Other Covenants
6.1 Confidentiality.
(a) Neither of the parties hereto shall make any public announcement
regarding the transactions contemplated in this Agreement without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed;
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provided, however, that either of the parties may at any time make announcements
which are required by applicable law so long as the party so required to make an
announcement promptly upon learning of such requirement notifies the other party
of such requirement and discusses with the other party in good faith the exact
wording of any such announcement.
(b) Each party shall keep strictly confidential any and all information
furnished to it or to its Affiliates, agents or representatives in the course of
negotiations relating to this Agreement or any transaction contemplated by this
Agreement, and the business and financial reviews and investigation conducted by
such party in connection with this Agreement. Each party has instructed its
officers, employees and other representatives having access to such information
of such party's obligation of confidentiality. If this Agreement is terminated,
each party shall promptly deliver to the other party or certify as to the
destruction of all originals and copies (including all notes, extracts and
computer disks) of documents, work papers and other written material concerning
or obtained from such other party or its agents, employees or representatives in
connection with such negotiations and business and financial reviews and
investigations, whether so obtained before or after the execution hereof.
Neither party shall use any information so obtained except in connection with
the transactions contemplated by this Agreement or disclose or divulge such
information to any other person, and each party will keep confidential any
information so obtained.
(c) Notwithstanding the foregoing, either party may disclose any
information which such party is obligated under this Section to keep
confidential after consultation with the other party as follows:
(i) to which the other party consents in
writing;
(ii) to representatives, agents, consultants and attorneys of the
disclosing party who need to know such confidential information for the
purpose of assisting or advising such party, provided that the
disclosing party informs each such representative, agent, consultant and
attorney of the confidential nature of such information and requires
them to be bound by the provisions of this Section 6.1 prior to
disclosure;
(iii) to third parties whose consent or approval is required for
consummating the transactions contemplated herein;
(iv) in compliance with applicable Legal Rules; or
(v) in order to use such information as
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evidence in or in connection with any pending or threatened litigation
related to this Agreement or any transaction contemplated hereunder;
but in each case only to the extent such disclosure is necessary in connection
with the purpose for which disclosure is permitted. The obligations of
confidentiality set forth herein shall not apply to information generally
available to the public or in the possession of the receiving party on a
non-confidential basis.
6.2 HSR Notification. As soon as practicable, if required by applicable
Legal Rules, Seller and Buyer shall complete and file, or cause to be completed
and filed, any notification and report required to be filed under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Each of the parties will take or cause to be taken any additional action
that may be necessary, proper or advisable, will cooperate to prevent
inconsistencies between their respective filings and will furnish to each other
such necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of necessary filings or submissions
under the HSR Act. Buyer and Seller shall use commercially reasonable efforts
(including the filing of a request for early termination) to obtain the early
termination of the waiting period under the HSR Act. Buyer and Seller shall
share equally all HSR filing fees and any other fees to a governmental authority
in connection with the transfer of the Assets.
6.3 Required Consents and Estoppel Certificates. Seller will use
reasonable commercial efforts to obtain, as soon as possible, all the Required
Consents, in form and substance satisfactory to Buyer. Required Consents will be
deemed to be satisfactory to Buyer if they are similar in all material respects
to the applicable form attached as EXHIBIT B, C OR D. Seller will provide copies
of all correspondence to or from, any parties in connection with the Required
Consents. Buyer will cooperate with Seller to obtain all Required Consents.
Buyer and Seller shall bear equally any costs or fees in connection with
obtaining the Required Consents.
6.4 Franchise Transfer Expenses.
Buyer and Seller shall share equally all administrative fees and
expenses, if any, required by any Governmental Authority in connection with the
transfer to Buyer of all Franchises.
6.5 Employee Matters.
(a) Employment. SCHEDULE 0 sets forth a list of all employees of the
Systems as of June 30, 1997, showing then- current positions and rates of
compensation. At least forty-five (45) days prior to the Closing, Buyer shall
notify Seller
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of the employees ("Prospective Employees") it intends to hire and shall offer
employment as of the Closing Date to all Prospective Employees for a position
with at least comparable responsibility. Prospective Employees who accept
Buyer's offer of employment and become employees of Buyer within six (6) months
of the Closing Date are referred to herein as "New Employees" and all other
employees of the Systems are referred to as "Nontransferring Employees." Subject
to the provisions of this Section as to any particular benefit, Buyer shall
provide New Employees with compensation and employee benefits that are
substantially similar to those provided to similarly situated Buyer employees.
Buyer shall indemnify and hold Seller and its Affiliates harmless from and
against all claims, expenses (including reasonable attorneys' fees), loss and
liability arising either (i) out of Seller's submission of personnel records or
information to Buyer about the employees of the Systems, or (ii) with respect to
the New Employees' employment with Buyer after the Closing. Except as otherwise
specifically provided in this Agreement, Seller and its Affiliates shall
indemnify and hold Buyer and its Affiliates harmless from and against all
claims, expenses (including reasonable attorneys' fees), loss and liability
arising out of the New Employees' and Nontransferring Employees' employment with
Seller or its Affiliates prior to the Closing.
(b) Service Credit for New Employees. Subject to the provisions of this
Section as to any particular benefit, Buyer shall recognize all prior service of
New Employees with Seller and any Affiliate that is aggregated with Seller under
section 414(b), 414(c) or 414(m) of the Code ("ERISA Affiliate") for tenure
purposes, and for all benefit plan purposes, other than benefit accrual under a
defined benefit plan, at least to the extent recognized under the comparable
Seller employee benefit plan as in effect on the Closing Date, but without
regard to any amendment increasing such service adopted or made effective less
than twelve (12) months prior to the Closing Date. On or before the Closing
Date, Seller shall provide Buyer with a list setting forth the service accrued
by each Prospective Employee. Seller agrees that Buyer shall be under no
obligation to and shall not assume sponsorship of any Employee Plan.
(c) Qualified Defined Contribution Plan. Seller is currently a
participating company in the InterMedia Partners Tax-Deferred Savings Plan
("Seller's DC Plan"). New Employees shall not accrue any further benefits under
Seller's DC Plan as of any date after the Closing (unless employed by Seller or
its ERISA Affiliates).
Buyer is a participating company in the Northland Telecommunications
Corporation 401(k) Plan ("Buyer's DC Plan"). The account balances of New
Employees in Seller's DC Plan shall be transferred to Buyer's DC Plan as soon as
reasonably practicable following the Closing in accordance with this Subsection.
Buyer represents and warrants that Buyer's DC Plan and related trust meet the
requirements for qualification
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under section 401 and related sections of the Code and shall continue to meet
such requirements as of the date of the transfer described in this Subsection 0.
Prior to such transfer, but in no event later than two (2) months after the
Closing Date, Buyer shall provide to Seller satisfactory evidence that Buyer's
DC Plan complies with such requirements, including copies of Buyer's DC Plan and
the most recent determination letter issued by the Internal Revenue Service (and
any subsequent determination letter application filed with the Internal Revenue
Service).
As soon as reasonably practicable after the Closing and provision of
satisfactory evidence pursuant to this Subsection , the trustee of Seller's DC
Plan shall transfer to the trustee of Buyer's DC Plan cash and/or assets,
including plan loan obligations, equal to the value of the account balances of
each New Employee under Seller's DC Plan as of the last valuation date
immediately preceding the transfer date, which amount shall be credited to the
respective account or accounts under Buyer's DC Plan. The foregoing
notwithstanding, the amount to be so transferred with respect to any New
Employee shall be reduced by any withdrawals and other distributions made from
Seller's DC Plan to the New Employee between such valuation date and such
transfer date.
Buyer agrees that once the transfers made herein have been made, the
sole and exclusive responsibility for providing the benefits accrued by the New
Employees under Seller's DC Plan as of the transfer date and transferred to
Buyer's DC Plan shall be that of Buyer's DC Plan and Buyer.
(d) Welfare Plans. Each New Employee shall be eligible for coverage as
of the later of the Closing Date or the date on which he or she becomes a New
Employee (the "Employment Transfer Date") under any medical, dental, vision,
prescription drug, life insurance and other welfare benefit plans (within the
meaning of section 3(1) of ERISA) maintained by Buyer for its employees
("Buyer's Welfare Plans"). Buyer agrees to (i) waive any waiting periods and
preexisting condition limitations in Buyer's Welfare Plans, except to the extent
coverage would have been denied or restricted on a similar basis under the
welfare benefit plans of Seller for employees of the Systems ("Seller's Welfare
Plans") and (ii) coordinate deductibles, maximum benefit restrictions and
"out-of-pocket" maximums so that (A) New Employees receive credit toward any
deductibles under Buyer's Welfare Plans for deductibles paid under Seller's
Welfare Plans during the coverage year of Buyer's Welfare Plans in which the
Employment Transfer Date occurs and (B) New Employees receive credit for
eligible claims incurred under Seller's Welfare Plans during the coverage year
of Buyer's Welfare Plans in which the Employment Transfer Date occurs toward any
"out-of-pocket" maximums under Buyer's Welfare Plans. As soon as reasonably
practicable after the Closing Date, Seller shall prepare and deliver to Buyer
SCHEDULE 0, setting forth the information needed for Buyer to
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comply with the preceding sentence. Seller will pay or cause to be paid all
eligible unpaid claims incurred by New Employees prior to the Employment
Transfer Date and which are timely submitted for reimbursement in accordance
with Seller's Welfare Plans. Seller will be responsible for providing
continuation health care ("COBRA") coverage as required by section 4980B of the
Code and sections 601-608 of ERISA to or with respect to any of Seller's
employees who incurs a "qualifying event" prior to the Employment Transfer Date,
including a qualifying event that occurs as a result of the transaction
contemplated by this Agreement. Buyer will be responsible for providing COBRA
coverage to or with respect to any New Employee who incurs a "qualifying event"
after the Employment Transfer Date.
(e) Vacation. As of the Closing Date, Buyer shall assume Seller's
liability for each New Employee's vacation pay for up to and including four
weeks of vacation accrued under Seller's vacation policy but not taken before
the Closing Date. The aggregate dollar value of the liabilities so assumed by
Buyer shall be an "Other Current Liability."
(f) Sick Leave. As of the Closing Date, Buyer shall assume Seller's
liability for each New Employee's sick (short-term disability) days for up to
and including ten (10) days of sick leave accrued under Seller's sick leave
policy but not taken before the Closing Date. The aggregate dollar value of the
liabilities so assumed by Buyer shall be an "Other Current Liability."
(g) General. Seller and Buyer shall give any notices required by law and
take whatever other actions with respect to the plans described in this Section
as may be necessary to carry out the arrangements described in this Section 0.
Seller and Buyer shall provide each other with such plan documents and
descriptions, employee data and other information as may reasonably be required
to carry out the arrangements described in this Section. If any of the
arrangements in this Section is determined by the Internal Revenue Service or
other applicable governmental authority, or by a court of competent
jurisdiction, to be prohibited by law, Seller and Buyer shall modify such
arrangement to as closely as possible retain the intent of the parties, as
reflected herein, in a manner that is not so prohibited.
(h) No Third Party Beneficiaries. Except as set forth in Section 10.2,
nothing in this Section or elsewhere in this Agreement shall be deemed to make
any employee of Seller a third party beneficiary of this Agreement.
ARTICLE 7
Conditions Precedent to Obligations of Buyer
7.1 Conditions Precedent. The obligations of Buyer to
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consummate the transactions contemplated on the Closing Date are subject to the
satisfaction, on or before the Closing Date, of all the following conditions:
(a) If required under applicable Legal Rules, all filings required under
the HSR Act shall have been made and the applicable waiting period shall have
expired or been earlier terminated without the receipt of any objection or the
commencement or threat of any litigation by a Governmental Authority of
competent jurisdiction to restrain the consummation of the transactions
contemplated by this Agreement.
(b) Seller shall have performed and complied in all material respects
with all covenants, conditions and obligations required by this Agreement to be
performed or complied with by Seller on or before the Closing Date.
(c) All representations and warranties of Seller, including, without
limitation, those made to the knowledge of Seller, contained in this Agreement,
shall be true, correct and complete in all material respects on and as though
made on the Closing Date.
(d) Each of the Franchises transferred pursuant to this Agreement and
listed on SCHEDULE 0 hereof shall have a term expiring no earlier than one (1)
year after the Closing Date.
(e) Seller shall have obtained and delivered to Buyer all Required
Consents.
(f) As of the Closing Date, no action or proceeding shall be completed,
pending or threatened against Buyer or Seller that has or may result in a
judgment, decree or order that would prevent or make unlawful the consummation
of the transactions under this Agreement or have a material adverse effect on
the Systems and there shall be in effect no order restraining or prohibiting the
consummation of the transactions contemplated by this Agreement nor any
proceedings pending with respect thereto.
(g) Seller shall have tendered to Buyer all documents which Seller is
required by Section 0 to deliver to Buyer.
7.2 Waiver. Buyer may waive any or all of the conditions set forth in
Section 0 hereof in whole or in part; however, no such waiver of a condition
shall constitute a waiver by Buyer of any of its other rights or remedies under
this Agreement or otherwise at law or in equity if Seller should be in default
of any of the covenants, agreements, representations or warranties of Seller
under this Agreement.
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ARTICLE 8
Conditions Precedent to Obligations of Seller
8.1 Conditions Precedent. The obligations of Seller to consummate the
transactions contemplated on the Closing Date are subject to the satisfaction,
on or before the Closing Date, of all the following conditions:
(a) If required under applicable Legal Rules, all filings required under
the HSR Act shall have been made and the applicable waiting period shall have
expired or been earlier terminated without the receipt of any objection or the
commencement or threat of any litigation by a Governmental Authority of
competent jurisdiction to restrain the consummation of the transactions
contemplated by this Agreement.
(b) Buyer shall have performed and complied in all material respects
with all covenants, conditions and obligations required by this Agreement to be
performed or complied with by Buyer on or before the Closing Date.
(c) All representations and warranties made by Buyer, including, without
limitation, those made to the knowledge of Buyer, contained in this Agreement
shall be true, correct and complete in all material respects at and as of the
Closing Date as though made on such date.
(d) Seller shall have obtained all Required Consents, provided that this
condition shall be deemed to be satisfied as to Seller with respect to any
Required Consent if Buyer at or prior to Closing waives the requirement that
such consent be obtained prior to Closing.
(e) As of the Closing Date, no action or proceeding shall be completed,
pending or threatened against Seller or Buyer that has or is likely to result in
a judgment, decree or order that would prevent or make unlawful the consummation
of the transactions under this Agreement and there shall be in effect no order
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement nor any proceedings pending with respect thereto.
(f) Buyer shall have tendered to Seller the Purchase Price and all
documents which Buyer is required by Section 0(b) to deliver to Seller.
8.2 Waiver. Seller may waive any or all of such conditions set forth in
Section 8.1 hereof in whole or in part; however, no such waiver of a condition
shall constitute a waiver by Seller of any of its other rights or remedies under
this Agreement or otherwise at law or in equity if Buyer should be in default of
any of the covenants, agreements, representations or warranties made by Buyer
under this Agreement.
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ARTICLE 9
Closing
9.1 Closing. The Closing shall take place on the Closing Date at the
place set forth in Section 0. At the Closing, each of the parties shall take all
action and deliver all documents, instruments, certificates, agreements and
other items as required under this Agreement in order to perform, fulfill and
observe all covenants, conditions and agreements on its part to be performed,
fulfilled and observed at or prior to the Closing Date (and not theretofore
accomplished) and cause all conditions precedent to the other party's
obligations hereunder to be satisfied in full.
9.2 Closing Documents.
(a) At the Closing, Seller shall deliver to Buyer all of the following:
(i) a certificate of Seller that all appropriate action
authorizing the execution, performance and delivery of this Agreement
has been taken;
(ii) a copy of each instrument pursuant to which a Governmental
Authority or other person consents to the transfer of the Franchise
which it issued, substantially in the form of EXHIBIT B;
(iii) wire transfer instructions for the Purchase Price and a
receipt, substantially in the form of EXHIBIT E, for the Purchase Price;
(iv) a bill of sale, substantially in the form of EXHIBIT F;
(v) for each parcel of Real Property a deed in the form
customarily used in the jurisdiction where the real property is located;
(vi) Certification of Nonforeign Status for Seller pursuant to
section 1.1445-2(b)(2) of the United States Treasury Income Tax
Regulations, substantially in the form of EXHIBIT G;
(vii) for each lease of real property listed on SCHEDULE 3.13 for
which a consent is required, an assignment, assumption and consent, if
required, substantially in the form of EXHIBIT C, duly executed by
Seller and the third party, if any, whose consent is required for the
assignment of such lease;
(viii) for each Contract the assignment of
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which requires a Required Consent, an assignment, assumption and consent
substantially in the form of EXHIBIT D, duly executed by Seller and the
third party to such Contract;
(ix) documents of title for any motor vehicles included within
the Assets;
(x) a certificate of Seller, substantially in
the form of EXHIBIT H;
(xi) a written opinion dated the Closing Date, from Pillsbury
Madison & Sutro LLP, counsel to Seller, in the form annexed hereto as
EXHIBIT I;
(xii) all data, books and records which relate primarily to the
Systems and the Assets;
(xiii) a Certificate of Good Standing for Seller certified to by
the Secretary of State of the State of Nevada and a Certificate of
Qualification certified to by the Secretary of State of the State of
Georgia;
(xiv) such other documents and certificates as Buyer may
reasonably request.
(b) At the Closing, Buyer shall deliver to Seller the following
documents:
(i) a Certificate of Good Standing of Buyer certified to by the
Secretary of State of the State of Washington and a Certificate of
Qualification of Buyer certified to by the Secretary of State of the
State of Georgia;
(ii) a Certificate of Buyer that all appropriate action authorizing
the execution, performance and delivery of this Agreement has been
taken;
(iii) an assumption agreement, substantially in the form of EXHIBIT J
and an executed counterpart of each assignment, assumption and consent
delivered by Seller pursuant to and in accordance with Section
hereof;
(iv) a written opinion dated the Closing Date, from Buyer's counsel,
in the form annexed hereto as EXHIBIT K;
(v) a certificate of Buyer, substantially in the form of EXHIBIT
L;
(vi) a wire transfer of the Purchase Price pursuant to
instructions received from Seller; and
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(vii) such other documents and certificates as Seller may reasonably
request.
ARTICLE 10
Indemnification
10.1 Indemnification by Seller.
(a) Seller agrees severally, and for its own account only, to indemnify
Buyer and hold it harmless on an after-Tax basis, from any and all losses,
liabilities, claims, suits, proceedings, demands, judgments, damages, expenses
and costs, including, without limitation, counsel fees and disbursements, expert
fees and costs and expenses incurred in the investigation, defense or settlement
of any claims covered by this indemnity (in this Section 0, collectively, the
"Indemnifiable Damages") which Buyer may suffer or incur by reason of (i) the
inaccuracy of any representation or warranty of Seller contained in this
Agreement; (ii) the breach by Seller of any covenant made by it in any of the
Transaction Documents; (iii) the ownership, operation or transfer of the Assets
or the Systems on or prior to the Closing Date and any liabilities relating to
the Systems not assumed by Buyer, provided that in no case shall this Subsection
0 apply to or include Indemnifiable Damages caused by, relating to or arising
under Environmental laws, including contamination of the Real Property, which
are intended to be covered by Subsection 0. The foregoing obligation of Seller
shall be subject to and limited by each of the qualifications set forth in this
Article 0.
(b) Except as set forth in subparagraphs (i) and (ii) below or with
respect to bona fide and valid claims for which notice has been given within
twelve (12) months of the Closing Date, each representation, warranty and
covenant made by Seller in this Agreement or pursuant hereto shall survive until
the date which is twelve (12) months following the Closing Date, and thereafter
all such representations, warranties and covenants shall be extinguished:
(i) the representations, warranties and covenants made by Seller
in Section 0 (Taxes) shall survive until the end of any statutory
limitation period with respect thereto; and
(ii) the representations, warranties and covenants made by Seller in
the first sentence of Section 0 (title) shall survive indefinitely.
(c) The indemnity obligations of Seller hereunder shall not apply (i) to
the extent that Buyer is compensated for the same loss under Buyer's insurance
policies in the absence of
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any indemnity hereunder if the insurers under such policy waive their rights of
subrogation with respect thereto; (ii) if the damages to Buyer do not exceed
$250,000; and (iii) if such damages exceed $250,000, the indemnity obligations
hereunder shall only apply to that portion of the damages that exceed such
$250,000 threshold and thereafter losses shall be paid up to a maximum of
$1,000,000.
(d) Fifty five thousand dollars ($55,000) of the Purchase Price shall be
held in escrow pursuant to a mutually acceptable form of escrow agreement, a
form of which is attached hereto as EXHIBIT M (the "Post-Closing Escrow
Agreement") for a period of six (6) months after the Closing as security for the
indemnity obligations of Seller hereunder.
10.2 Indemnification by Buyer.
(a) Buyer agrees to indemnify Seller and its Affiliates, directors,
partners, agents and employees against and hold each of them harmless on an
after-Tax basis, from any and all Indemnifiable Damages which any such
indemnified party may suffer or incur by reason of or in connection with (i) the
inaccuracy of any representation or warranty of Buyer contained in this
Agreement or any document, certificate or agreement delivered pursuant hereto;
(ii) the breach by Buyer of any covenant made by it in any of the Transaction
Documents; (iii) the ownership and operation of the Assets after the Closing
Date; and (iv) any obligation or liability assumed by Buyer hereunder or under
any document, certificate or agreement delivered pursuant hereto. The foregoing
obligation of Buyer shall be subject to and limited by each of the
qualifications set forth below.
(b) Except as set forth in the next succeeding sentence, or with respect
to bona fide and valid claims for which notice has been given prior to the date
twelve (12) months from the Closing Date, each representation, warranty and
covenant made by Buyer in this Agreement or pursuant hereto and the indemnity
obligations set forth in this Section shall survive until the date twelve (12)
months from the Closing Date, and thereafter all such representations,
warranties, covenants and indemnity obligations and any liability thereunder
shall be extinguished. The right of Seller to assert claims for Indemnifiable
Damages arising out of the ownership or operation of the Assets or the Systems
after the Closing Date and any obligation or liability assumed by Buyer
hereunder or pursuant hereto shall survive indefinitely.
(c) The indemnity obligations of Buyer hereunder shall not apply (i) to
the extent that Seller or any Affiliates are compensated for the same loss under
Seller's or any Affiliate's insurance policies in the absence of any indemnity
hereunder if the insurers under such policy waive their rights of subrogation
with respect thereto; (ii) if the damages to Seller or any Affiliates do not
exceed $250,000; and (iii) if such
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damages exceed $250,000, the indemnity obligations hereunder shall only apply to
that portion of the damages that exceed such $250,000 threshold and thereafter
losses shall be paid up to a maximum of $1,000,000.
10.3 Notice and Right To Defend Third-Party Claims.
(a) Upon receipt of written notice of any claim, demand or assessment or
the commencement of any suit, action or proceeding in respect of which indemnity
may be sought on account of an indemnity agreement contained in this Article,
the party seeking indemnification (the "Indemnitee") shall promptly, but in no
event later than twenty (20) days prior to the date a response or answer thereto
is due (unless a response or answer is due within fewer than twenty (20) days
from the date of Indemnitee's receipt of notice thereof), inform the party
against whom indemnification is sought (the "Indemnitor") in writing thereof.
The failure, refusal or neglect of such Indemnitee to notify the Indemnitor
within the time period specified above of any such claim or action shall relieve
such Indemnitor from any liability which it may have to such Indemnitee in
connection therewith, if the effect of such failure, refusal or neglect is to
prejudice materially the rights of the Indemnitor in defending against the claim
or action.
(b) In case any claim, demand or assessment shall be asserted or suit,
action or proceeding commenced against an Indemnitee, and such Indemnitee shall
have timely and properly notified the Indemnitor of the commencement thereof,
the Indemnitor shall assume the defense, conduct or settlement thereof, with
counsel selected by the Indemnitor. After assumption of the defense, conduct or
settlement thereof, the Indemnitor will not be liable to the Indemnitee for
expenses incurred by Indemnitee in connection with the defense, conduct or
settlement thereof, except for such expenses as may be reasonably required to
enable the Indemnitor to take over such defense, conduct or settlement.
(c) The Indemnitee will at its own expense cooperate with the Indemnitor
in connection with any such claim, make personnel, witnesses, books and records
relevant to the claim available to the Indemnitor at no cost, and grant such
authorizations or powers of attorney to the agents, representatives and counsel
of the Indemnitor as the Indemnitor may reasonably request in connection with
the defense or settlement of any such claim.
(d) Notwithstanding the foregoing in this Section 0, the Indemnitee
shall have the right to employ separate counsel in any such action, claim or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be its fees and expenses unless (i) the Indemnitor has
agreed to pay such fees and expenses, (ii) the Indemnitor has failed to assume
the defense of such action, claim or
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<PAGE> 38
proceeding or (iii) the named parties to any such action, claim or proceeding
(including any impleaded parties) include both the Indemnitor and the Indemnitee
and the Indemnitee has been advised by counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnitor (in which case, if the Indemnitee informs the
Indemnitor in writing that it elects to employ separate counsel at the expense
of the Indemnitor, the Indem- nitor shall not have the right to assume the
defense of such action, claim or proceeding on behalf of the Indemnitee, it
being understood, however, that the Indemnitor shall not, in connection with any
one such action, claim or proceeding or separate but substantially similar or
related actions, claims or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time for the
Indemnitee, which firm shall be designated in writing by the Indemnitee).
10.4 Notice and Right to Remediate. Anything in this Agreement to the
contrary notwithstanding, Seller shall have no obligation to indemnify Buyer
with respect to Indemnifiable Damages arising under Environmental Laws,
including damages due to any necessary investigation, remediation or cleanup of
Hazardous Substances at the Real Property, unless Buyer first gives Seller an
option to conduct any necessary response or perform any required work and Seller
refuses to do so. Such an option should be given with the written notice
required by Section 0, but in any case, shall be given prior to any Buyer
expenditure of what it considers to be Indemnifiable Damages. Seller shall
respond to the option in writing within thirty (30) Business Days. If Seller
exercises its option, Seller shall perform all work in a safe and workmanlike
manner in compliance with all applicable Environmental Laws to the satisfaction
of the appropriate Governmental Authority. In addition, Seller will afford Buyer
a reasonable opportunity to comment (at Buyer's sole expense) in advance of
Seller's proposed responses or submissions to Governmental Authorities or third
parties relating to activities on the Property, including reports and workplans,
provided that such comment period does not delay or interfere with Seller's
obligations to any third party. Seller shall consider Buyer's comments in good
faith, but are under no obligation to accept or incorporate Buyer's comments.
Buyer, its representatives and agents will not make comments or submissions to
any Governmental Authority or third parties with respect to environmental
conditions as to which Seller has exercised its option. Any conflicts between
Section and this Section 0 shall be resolved in favor of this Section 0.
10.5 Mitigation. Nothing herein contained shall affect a party's legal
duty to mitigate damages.
10.6 Exclusive Remedy. This Article shall be the sole and exclusive
basis of any remedy that each party may have
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<PAGE> 39
against the other party for an inaccuracy or breach of a representation,
warranty or covenant under this Agreement or any agreement contemplated hereby,
and each party hereby waives any claim (other than under this Article 0) it may
have against the other party with respect to the inaccuracy or breach of any
such representation, warranty or covenant.
ARTICLE 11
Termination
11.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual agreement of Buyer and Seller;
(b) by either Buyer or Seller, upon written notice to the other, if the
conditions to its obligations set forth in Sections 0 and 0, respectively, shall
not have been satisfied or waived on or before December 31, 1997 for any reason
other than a breach or default by such party of its respective covenants,
agreements, or other obligations hereunder, or any of its representations or
warranties herein not being true and accurate when made or when otherwise
required by this Agreement to be true and accurate;
(c) By Seller, in the event that the Closing does not occur by reason of
breach or default by Buyer under this Agreement and provided that Seller has not
breached or defaulted hereunder and has performed or stands ready, willing, and
able to perform, its obligations under this Agreement in all material respects;
(d) By Buyer, in the event that the Closing does not occur by reason of
a breach or default by Seller under this Agreement and provided that Buyer has
not breached or defaulted hereunder and has performed or stands ready, willing,
and able to perform, its obligations under this Agreement in all material
respects; or
(e) By Seller in the event that the Closing does not occur because the
Purchase Price, as adjusted, is less than the threshold set forth in Section
2.3(a).
11.2 Manner of Exercise. In the event of the termination of this
Agreement by either Buyer or Seller pursuant to this Article 0, notice thereof
shall forthwith be given to the other party and this Agreement shall terminate
and the transactions contemplated hereunder shall be abandoned without further
action by Buyer or Seller.
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11.3 Effect of Termination. In the event of the termination of this
Agreement pursuant to this Article 0 and prior to the Closing, all obligations
of the parties hereunder shall terminate, except for the respective obligations
of the parties under Sections 0 (Confidentiality) and 0 (Expenses); provided,
however, that no termination of this Agreement shall (a) relieve a defaulting or
breaching party from any liability to the other party or parties hereto for or
in respect of such default or (b) result in the rescission of any transaction
theretofore consummated hereunder. If this Agreement is terminated by Seller in
accordance with Section 11.1(c) or by Buyer other than in accordance with
Section 11.1, Seller shall be entitled to retain the Deposit.
ARTICLE 12
General
12.1 Covenant Not To Sue and Nonrecourse to Partners.
(a) Buyer agrees that notwithstanding any other provision in this
Agreement, any agreement, instrument, certificate or document entered into
pursuant to or in connection with this Agreement or the transactions
contemplated herein or therein (each a "Transaction Document") and any rule of
law or equity to the contrary, to the fullest extent permitted by law, Seller's
obligations and liabilities under all Transaction Documents and in connection
with the transactions contemplated therein shall be nonrecourse to all direct
and indirect general and limited partners of Seller.
(b) "Nonrecourse" means that the obligations and liabilities are limited
in recourse solely to the assets of Seller (for those purposes, any capital
contribution obligations of the general and limited partners of Seller or any
negative capital account balances of such partners shall not be deemed to be
assets of Seller) and are not guaranteed directly or indirectly by, or the
primary obligations of, any general or limited partner of Seller, and neither
Seller nor any general or limited partner or any officer, director, partner,
employee or agent of Seller or any general or limited partner of any successor
partnership, either directly or indirectly, shall be personally liable in any
respect (except to the extent of their respective interests in the assets of
Seller) for any obligation or liability of Seller under any Transaction Document
or any transaction contemplated therein.
(c) "Direct" partners include all general and limited partners of
Seller, and "indirect" partners include all general and limited partners and
members of each direct partner and all general and limited partners and members
of each such indirect partner and all such further indirect partners and members
thereof and each such indirect partner.
-35- ASSET PURCHASE AND
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<PAGE> 41
(d) Buyer hereby covenants for itself, its successors and assigns that
it, its successors and assigns will not make, bring, claim, commence, prosecute,
maintain, cause or permit any action to be brought, commenced, prosecuted,
maintained, either at law or equity, in any court of the United States or any
state thereof against any direct or indirect member or general or limited
partner of Seller or any officer, director, partner, employee or agent of Seller
or any direct or indirect member or general or limited partner of Seller for (i)
the payment of any amount or the performance of any obligation under any
Transaction Document or (ii) the satisfaction of any liability arising in
connection with any such payment or obligation or otherwise, including without
limitation, liability arising in law for tort (including, without limitation,
for active and passive negligence, negligent misrepresentation and fraud),
equity (including, without limitation, for indemnification and contribution) and
contract (including, without limitation, monetary damages for the breach of
representation or warranty or performance of any of the covenants or obligations
contained in any Transaction Document or with the transactions contemplated
herein or therein).
12.2 Assignment. Neither Buyer nor Seller may assign its rights and
obligations under, or grant a security interest in, this Agreement to any person
or entity other than an Affiliate of such party without the consent of the other
parties hereto.
12.3 Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and permitted assigns of the parties hereto,
whether herein so expressed or not. Except as provided in Sections 0, 0 and 0,
no person other than Buyer and Seller and their respective Affiliates may rely
upon any provision of this Agreement or any agreement, instrument, certificate
or document executed pursuant to this Agreement.
12.4 Time of Essence. Time is of the essence in each and every provision
in this Agreement.
12.5 Severability. Any provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining provisions of this Agreement or affecting the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
12.6 Amendment. Except as otherwise provided herein, Buyer and Seller
may amend, modify or supplement this Agreement at any time, but only in writing
duly executed by all parties hereto.
12.7 Terms. Defined terms used herein are equally applicable to the
singular and plural forms as appropriate.
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Unless otherwise expressly stated herein, references to Articles and Sections
are to articles and sections of this Agreement and references to parties,
Exhibits and Schedules are to the parties, and the exhibits and schedules
attached, to this Agreement.
12.8 Headings. The headings preceding the text of Sections of this
Agreement are for convenience only and shall not be deemed a part hereof.
12.9 Entire Understanding; Schedules. The terms set forth in this
Agreement including its Schedules and Exhibits are intended by the parties as a
final, complete and exclusive expression of the terms of their agreement and may
not be contradicted, explained or supplemented by evidence of any prior
agreement, any contemporaneous oral agreement or any consistent additional
terms. The Schedules and Exhibits attached to this Agreement are made a part of
this Agreement. All documents or information disclosed in the Schedules are
intended to be disclosed for all purposes under this Agreement and will also be
deemed to be incorporated by reference in each Schedule to which they may be
relevant without further disclosure.
12.10 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.11 Applicable Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California.
12.12 Notices. Any notice or demand desired or required to be given
hereunder shall be in writing and deemed given when personally delivered, sent
by telecopier, overnight courier or deposited in the mail, postage prepaid, sent
certified or registered, return receipt requested, and addressed as set forth
below or to such other address as either party shall have previously designated
by such a notice. Any notice so delivered personally or by telecopy shall be
deemed to be received on the date of delivery or transmission by telecopier; any
notice so sent by overnight courier shall be deemed to be received one (1)
Business Day after the date sent; and any notice so mailed shall be deemed to be
received on the date stamped on the receipt (rejection or other refusal to
accept or inability to deliver because of a change of address of which no notice
was given shall be deemed to be receipt of the notice).
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<PAGE> 43
If to Seller:
Robin Media Group, Inc.
235 Montgomery Street, Suite 420
San Francisco, CA 94104
Attention: Mr. Rodney M. Royse
Telephone: (415) 616-4600
Telecopier: (415) 397-3978
Copy to:
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Attention: Gregg F. Vignos, Esq.
Telephone: (415) 983-1649
Telecopier: (415) 983-1200
If to Buyer:
Northland Cable Properties Seven Limited Partnership
c/o Northland Telecommunications Corporation
1201 Third Avenue, Suite 3600
Seattle, WA 98101
Attention: Mr. John S. Whetzell
Telephone: (206) 674-3900
Telecopier: (206) 674-3950
Copy to:
Ryan Swanson & Cleveland
1201 Third Avenue
Suite 3400
Seattle, WA 98101
Attention: John E. Iverson, Esq.
Telephone: (206) 464-4224
Telecopier: (206) 583-0359
12.13 Further Acts. If, at any time before, on or after the Closing
Date, any further action by either party is necessary to carry out the purposes
of this Agreement, such party shall take all such necessary action or use such
party's reasonable best efforts to cause such action to be taken.
12.14 Expenses. Except as set forth in Sections 6.2, 6.3 and 6.4, Seller
and Buyer shall each bear its own costs and expenses incurred in connection with
the negotiation, preparation or execution of this Agreement (including, but not
limited to, fees and expenses of attorneys, accountants, brokers, consultants,
finders and investment bankers), whether or not the Closing occurs. In the event
that one of the parties hereto breaches this Agreement, however, and fails to
consummate the transaction contemplated hereby, such breaching party shall be
responsible for all costs and expenses incurred by the non-breaching party in
connection herewith.
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12.15 Attorneys' Fees. If any action or proceeding is commenced between
the parties with respect to the Transaction Documents, the prevailing party
shall be entitled to all fees and expenses incurred by it in connection with
such action or proceeding, including reasonable attorneys' fees.
12.16 Judicial Proceedings. Each party consents to the jurisdiction over
it of the courts of the State of California in the City and County of San
Francisco, and of the United States Courts in the Northern District of
California and agrees that personal service of all process may be made by
registered or certified mail pursuant to the provisions of Section 0.
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
SELLER:
ROBIN MEDIA GROUP, INC.
By: ____________________________________
Rodney M. Royse
Vice President
BUYER:
NORTHLAND CABLE PROPERTIES SEVEN
LIMITED PARTNERSHIP
By: ____________________________________
Northland Communications
Corporation
Its Managing General Partner
-40- ASSET PURCHASE AND
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<PAGE> 46
DO NOT DELETE THESE PAGES
References used in this doc - please update as needed
o required consents
o assumed contracts
o excluded assets
o purchase and sale of assets
o purchase price & payment
o purchase price
o consideration for assets
o adjustment time
o preliminary & final settlements
o preliminary adjustments report
o final adjustments report
o disputed liabilities
o closing
ERROR! REFERENCE SOURCE NOT FOUND. closing date
o completion of purchase and sale
o title & encumbrances
ERROR! REFERENCE SOURCE NOT FOUND. franchises
o contracts
o real property
o environmental laws
o environmental law
o hazardous substance
o copyright act
o cli
o financial statements
o profit (a)
o material changes
o sellers taxes
o employees
o employment agreements
o collective agreements
o employee benefit plans
o employee plans
o erisa
o sellers taxes
o confidentiality
o hsr act
o employee matters
o nontransferring employees
o new employees
ERROR! REFERENCE SOURCE NOT FOUND. prospective employees
o erisa affiliates
o qualified defined contribution
o buyer's dc plan
o sellers' dc plan
o welfare plans
o sellers' welfare plans
o buyer's welfare plans
o cobra
o employment transfer date
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<PAGE> 47
o buyers conditions precedent
Article 0 article 9
o closing docs-seller delivers
o closing documents
Article 0 article 10
o indemnification by seller
o indemnifiable damages
o indemnification by buyer
o notice and right
o notice and right (a)
o indemnitee
o indemnitor
o mitigation
Article 0 article 11
o covenant not to sue & nonrecourse
o transaction document
o nonrecourse
o notices
o expenses
-42- ASSET PURCHASE AND
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<PAGE> 1
COMMERCIAL LOAN AGREEMENT
BETWEEN
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP
AS BORROWER
AND
SEAFIRST BANK
AS AGENT FOR ITSELF AND
VARIOUS BANKS
DATED AS OF DECEMBER 1, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1
DEFINITIONS...................................... 1
Section 1.1 Definitions and Exhibits........................................ 1
ARTICLE 2
THE COMMITMENT..................................... 1
Section 2.1 Loans........................................................... 1
Section 2.2 Restrictions on Acquisition Advances............................ 1
Section 2.3 Borrowing Notice................................................ 2
Section 2.4 Bank Records.................................................... 3
ARTICLE 3
REPAYMENT AND INTEREST................................. 3
Section 3.1 Repayment of Principal.......................................... 3
Section 3.2 Additional Payments of Principal/Excess Cash Flow............... 4
Section 3.3 Payment of Interest............................................. 4
Section 3.4 Additional LIBOR Rate Provisions................................ 4
Section 3.5 Prepayment...................................................... 5
Section 3.6 Manner, Method, Place, Time and Application of Payment,
Reinstatement................................................... 5
Section 3.7 Evidence of Debt................................................ 6
ARTICLE 4
OTHER PAYMENTS..................................... 6
Section 4.1 Closing Fees.................................................... 6
Section 4.2 Commitment Fee.................................................. 6
Section 4.3 Costs and Fees.................................................. 6
Section 4.4 Calculations; Default Interest; Compounded Interest;
Place for Payment............................................... 7
Section 4.5 Increased Costs................................................. 7
ARTICLE 5
CONDITIONS TO LENDING, SECURITY AND
OTHER COVENANTS.................................... 8
Section 5.1 Conditions...................................................... 8
Section 5.2 Conditions Not Fulfilled........................................ 9
Section 5.3 Security and Power of Attorney.................................. 10
Section 5.4 Negative Pledge................................................. 10
Section 5.5 Contractual Right of Setoff..................................... 10
Section 5.6 Management of Interest Rate Risk................................ 11
Section 5.7 Representations and Consents of Northland and NCP-Seven......... 11
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS....................... 12
Section 6.1 Organization and Standing....................................... 12
Section 6.2 Authorization................................................... 12
Section 6.3 Enforceability.................................................. 12
Section 6.4 Consents or Approvals........................................... 12
Section 6.5 No Violation.................................................... 12
Section 6.6 Litigation...................................................... 13
Section 6.7 Financial Information; Taxes.................................... 13
Section 6.8 Title and Liens................................................. 13
Section 6.9 Business Authorizations......................................... 13
Section 6.10 Taxes.......................................................... 13
Section 6.11 Investment Company Act......................................... 14
Section 6.12 Federal Reserve Board ("FRB") Regulations...................... 14
Section 6.13 Drug Free Workplace Act........................................ 14
Section 6.14 Compliance with ERISA.......................................... 14
Section 6.15 No Commissions................................................. 15
</TABLE>
-i-
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<TABLE>
<S> <C> <C>
Section 6.16 Information Correct and Complete............................... 15
Section 6.17 Operating Rights............................................... 15
Section 6.18 Compliance With Other Laws..................................... 15
ARTICLE 7
FURTHER COVENANTS................................... 16
Section 7.1 Use of Proceeds (Loan Purpose).................................. 16
Section 7.2 Additional Acts................................................. 16
Section 7.3 Financial Statements and Reports................................ 16
Section 7.4 Reliance on Accountants......................................... 17
Section 7.5 Notices......................................................... 18
Section 7.6 Compliance with Laws............................................ 18
Section 7.7 Financial Covenants............................................. 18
Section 7.8 Maintenance and Inspection of Records........................... 20
Section 7.9 Employee Benefit Programs....................................... 20
Section 7.10 Indemnification................................................ 20
Section 7.11 Preservation of Existence and Property; Sale of Assets......... 21
Section 7.12 No Mergers; Change of Control Etc.............................. 22
Section 7.13 Payment of Claims.............................................. 22
Section 7.14 Insurance...................................................... 22
Section 7.15 Amendments..................................................... 22
Section 7.16 No Liens....................................................... 22
Section 7.17 Hazardous or Dangerous Wastes.................................. 23
Section 7.18 Maintenance of Deposit Accounts................................ 23
ARTICLE 8
EVENTS OF DEFAULT................................... 23
Section 8.1 Events of Default............................................... 23
Section 8.2 Acceleration and Remedies....................................... 24
ARTICLE 9
MISCELLANEOUS..................................... 25
Section 9.1 Notices, Etc.................................................... 25
Section 9.2 No Waiver; Remedies............................................. 25
Section 9.3 Accounting Terms................................................ 26
Section 9.4 Assignment and Appointment of Lead Agent........................ 26
Section 9.5 Governing Law; Venue............................................ 26
Section 9.6 Mandatory Arbitration........................................... 27
Section 9.7 FNEJV Delegation of All Powers.................................. 27
Section 9.8 Entire Agreement; Headings; Amendments; Severability;
Time; Counterparts.............................................. 28
</TABLE>
EXHIBITS:
Exhibit A - Notice of Borrowing, Interest Rate Change, and Certificate
Exhibit B - Prepayment Premium Calculation
Exhibit C - List of all Places of Business
Exhibit D - NCP-Seven Disclosures
Exhibit E - Form of Promissory Note
Exhibit F - RESERVED
Exhibit G - RESERVED
Exhibit H - RESERVED
Exhibit I - RESERVED
Exhibit J - RESERVED
Exhibit K - RESERVED
Exhibit L - Operating Rights
Exhibit M - Form of Computation Schedule
Exhibit N - Resolution
Exhibit O - RESERVED
Exhibit P - RESERVED
Exhibit Q - Assignment and Assumption Certificate
COMMERCIAL LOAN AGREEMENT
This COMMERCIAL LOAN AGREEMENT ("Agreement") is between NORTHLAND CABLE
PROPERTIES SEVEN LIMITED PARTNERSHIP, a Washington limited partnership
("NCP-Seven") and Bank of America National Trust and Savings Association, a
national banking association, doing
- ii -
<PAGE> 4
business as SEAFIRST BANK, as agent for itself and for each financial
institution which is properly defined as a "Bank" in the Definitions Addendum
attached hereto. This Agreement amends and restates the Commercial Loan
Agreement dated February 29, 1996, between NCP-Seven and Seafirst's corporate
predecessor, Seattle-First National Bank.
Whereas, NCP-Seven has requested Bank to renew the Existing Bank Debt
and advance to NCP-Seven additional credit, such that the aggregate principal
amount of $45,000,000 shall be available hereunder for the purposes set forth in
Section hereof, subject to the terms and conditions contained in this Agreement.
Now, therefore, in consideration of the mutual promises contained herein
and other good and valuable consideration, receipt of which is hereby
acknowledged, and in order to induce Bank to extend such credit, NCP-Seven and
Bank each hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions and Exhibits. Terms defined above or in the text
of this Agreement shall have the meanings set forth above and in such text.
Other capitalized terms shall have the meaning set forth in the Definitions
Addendum which is attached hereto and incorporated herein. All exhibits to this
Agreement are also incorporated herein.
ARTICLE 2
THE COMMITMENT
Section 2.1 Loans. Subject to the terms and conditions of this
Agreement, Bank agrees to make Advances to NCP-Seven on Business Days during the
Commitment Period in an aggregate principal amount not exceeding at any time
$45,000,000 (hereinafter, the "Commitment"), in two tranches, to be known as
"Tranche A" and "Tranche B." The Existing Bank Debt, in the amount of
$29,479,999.93, shall constitute a portion of the amounts outstanding under
Tranche A, and shall hereafter be evidenced by the Note and governed by the
terms of this Agreement. The remainder of Tranche A, in the principal amount of
$7,520,000.01, is made available for the acquisition by NCP-Seven of the Robin
Systems pursuant to Asset Purchase Agreement dated August 27, 1997, between
NCP-Seven and Robin Media Group, Inc.; and the remaining $8,000,000 of the
Commitment, constituting all of Tranche B, is made available for acquisition of
the Robin System and of other Cable Systems, and for Capital Expenditures for
Cable System enhancement and expansion. All Advances shall be made either as
Base Rate Loans or as LIBOR Rate Loans. Tranche B is available as a revolving
line of credit which NCP-Seven may borrow, prepay (subject to Section ) and
reborrow until the end of the Commitment Period, at which time the aggregate
amount outstanding shall be added to Tranche A and may not be reborrowed.
Subject to the terms and conditions of this Agreement, NCP-Seven may draw the
amount of the Commitment during the Commitment Period in one or more Advances
and shall execute and deliver a promissory note in the form attached as Exhibit
E to evidence all amounts advanced. If the aggregate amounts actually advanced
are less than the Commitment, NCP-Seven's liability for principal under the Note
shall not exceed the aggregate Advances.
Section 2.2 Restrictions on Acquisition Advances. All Advances shall be
subject to the conditions of Article 0. In addition, all Advances for the
acquisition of any one or more of the Robin Systems or any other Cable Systems
shall be conditioned on Bank's satisfaction that each of the following shall be
delivered to Bank either prior to, simultaneously with, or immediately upon the
completion of the Cable System acquisition being funded with such Advance:
(a) the following documents to be executed by the seller under
the Purchase Contract or by its counsel: (i) a subordination agreement in
substantially the same form as the Subordination Agreement subordinating all
amounts (if any) now or hereafter due from NCP-Seven to seller to all amounts
now or hereafter due from NCP-Seven to Bank; and (ii) all opinions delivered in
connection with the sale contemplated by said Purchase Contract, addressed and
delivered to Bank as well as to NCP-Seven, or in the alternative accompanied by
letters permitting Bank's reliance on such opinions;
(b) evidence of all approvals by Governmental Bodies necessary
for NCP-Seven to purchase, operate and grant a Lien on the Cable System,
including but not limited to evidence of the consents listed as required in the
opinions of seller's counsel;
-2-
<PAGE> 5
(c) termination statements and all other documents executed by
said sellers or other Persons deemed necessary by Bank in its sole discretion to
eliminate any Lien on or interest of third parties in the Cable System or other
Collateral;
(d) executed financing statements, fixture filings, security
agreements, deeds of trust, assignments of leases, assignments of licenses,
permits and contracts, consents thereto, and such other documents as the Bank
may request to further evidence or obtain a Lien on all property of every nature
related to the Cable System;
(e) reimbursement to Bank (but not to any Participants) of all
Costs and Fees incurred in connection with determining compliance with this
Section and in examining, determining, drafting, obtaining delivery of, and
filing and recording the documents contemplated hereunder. NCP-Seven agrees that
if such reimbursement is not submitted by NCP-Seven to Bank before distribution
of any Advance, Bank may make an Advance under the Commitment for such purpose;
(f) the certificate contemplated by Section (b) and such other
certificates, legal opinions and documents as Bank may request to update the
items received under Section in connection with Closing. As to the Cable Systems
and all rights and property acquired in connection therewith, the foregoing
shall include the making of all representations, warranties and agreements
contained herein, all in form satisfactory to the Bank;
(g) such other documents or evidence of such other actions as
Bank deems necessary, in its sole discretion, to obtain a first priority Lien on
all aspects of each Cable System.
Section 2.3 Borrowing Notice. NCP-Seven may obtain Advances on any
Business Day for a Base Rate Loan by providing a Borrowing Notice which must be
received by Agent at or before 11:30 a.m., Seattle time, on the day borrowing is
allowed. NCP-Seven may obtain a LIBOR Rate Loan by providing a Borrowing Notice
on any London Banking Day which is three London Banking Days before the date the
Advance is to be disbursed (unless either of the London Banking Days is not also
a Business Day, in which case the Borrowing Notice shall be submitted on the
immediately preceding Business Day). All Advances shall be discretionary if the
notice is given subsequent to these times. If for any reason Bank in its sole
discretion ever waives the requirement for, or timing for delivery of, a
Borrowing Notice, Bank may rely in good faith on telephonic, telex and oral
requests made by any Person purporting to be an officer designated in the
definition of Borrowing Notice.
The Borrowing Notice shall be irrevocable and constitute NCP-Seven's
representation and warranty that as of the date of the notice the certifications
set forth therein are true and correct. Subject to the conditions set forth in
this Agreement, Bank will disburse any Loan by check or by crediting the
proceeds to any account(s) of NCP-Seven with Bank, or to such other account as
NCP- Seven shall designate in the Borrowing Notice. Any such Advance shall be
conclusively presumed to have been made to or for the benefit of NCP-Seven when
made in accordance with a Borrowing Notice, or when such advance is deposited to
any such account(s) regardless of the fact that Persons other than those
authorized in the definition of "Borrowing Notice" may have actually executed
the Borrowing Notice or may have authority to draw against any such account(s).
NCP-Seven may also submit a Borrowing Notice to obtain a change in the
interest rate due on an outstanding Loan upon expiration of an Interest Period.
Section 2.4 Bank Records. Bank is authorized to record on a schedule or
computer-generated statement the date and amount of each Advance, all payments
on Obligations and all other matters relevant to the Obligations.
NCP-Seven shall review all statements (if any) delivered by Bank for
accuracy and notify Bank of any suspected error within 180 days after the date
of said statement. Any objection to any statement shall not excuse NCP-Seven
from paying all Obligations. Bank shall use good faith in determining the amount
of obligations such as those due under Section and shall always be entitled to
correct any error in its sole discretion (exercised in good faith), it being the
intent of the parties that NCP-Seven not be excused from paying any rightfully
owing Obligation because of any error. Without limiting the methods by which
Bank may be entitled by law to make demand (if any be necessary) for payment of
any Obligation, NCP-Seven agrees that any statement, invoice or payment notice
from Bank shall be deemed to be a demand for payment, which demand is subject to
Bank's right of correction.
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<PAGE> 6
ARTICLE 3
REPAYMENT AND INTEREST
Section 3.1 Repayment of Principal. On the last Business Day of each
September, December, March, and June beginning March 31, 1998, NCP-Seven shall
pay to Bank as installments of principal under the Note, the payment amount
which is set forth in the table appearing below. In all events, all remaining
principal and accrued interest due under the Note shall be due and payable in
full on June 30, 2006:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Quarters (Commencing 3/31/98) falling
during the following year: Quarterly payment amount:
- ---------------------------------------------------------------------------
<S> <C>
1998 $ 125,000
- ---------------------------------------------------------------------------
1999 $ 312,500
- ---------------------------------------------------------------------------
2000 $ 500,000
- ---------------------------------------------------------------------------
2001 $ 812,500
- ---------------------------------------------------------------------------
2002 $1,150,000
- ---------------------------------------------------------------------------
2003 $1,500,000
- ---------------------------------------------------------------------------
2004 $1,875,000
- ---------------------------------------------------------------------------
2005 $2,225,000
- ---------------------------------------------------------------------------
2006 (March 31 payment only) $2,750,000
- ---------------------------------------------------------------------------
</TABLE>
Section 3.2 Additional Payments of Principal/Excess Cash Flow. In
addition to the regularly scheduled payments of principal provided in Section
and notwithstanding any contrary term herein, NCP-Seven shall pay to Bank
commencing March 31, 1999 and continuing on March 31 of each year thereafter
until March 31, 2006, One-Half (1/2) of any (if any) Excess Cash Flow for the
year ending the preceding December 31.
Section 3.3 Payment of Interest. All Advances shall bear interest on the
principal balance outstanding from time to time from the date of the Advance
creating the Loan until the Loan is paid in full and interest accrued thereon
shall be payable on the Interest Payment Date. Each time NCP-Seven requests an
Advance under the Commitment and upon each expiration (before June 30, 2006) of
an Interest Period governing a previous Advance, NCP-Seven shall choose one of
the following-described interest rates to govern that Advance (but no other
Advances). In the event NCP-Seven does not specify an interest rate for any
Advance in the Borrowing Notice or upon the expiration of an Interest Period, or
in the event Bank makes an Advance to NCP-Seven under the Commitment without a
request therefor, the Loan shall then or thereafter bear interest at the Base
Rate. NCP-Seven shall specify one of the following interest rates:
(a) the Base Rate, for a Base Rate Loan; or
(b) the Adjusted LIBOR Rate, for a LIBOR Rate Loan, subject to
Section . The minimum principal amount of any LIBOR Rate Loan shall be
$1,000,000.00 and amounts at all times exceeding $1,000,000 shall be in
increments of $100,000. NCP-Seven may request Bank to give an Adjusted LIBOR
Rate quote for a specified loan amount and Interest Period. Bank will then quote
to NCP-Seven the available Adjusted LIBOR Rate. NCP-Seven shall have two hours
from the time of the quote to elect an Adjusted LIBOR Rate by delivering a
Borrowing Notice.
Section 3.4 Additional LIBOR Rate Provisions. All LIBOR Rate Loans shall
be subject to the following additional provisions:
(a) Inability to Participate in Market. If Bank in good faith
cannot participate in the Eurodollar market for legal or practical reasons, the
Adjusted LIBOR Rate shall cease to be an interest rate option. Bank shall notify
NCP-Seven of and when it again becomes legal or practical to participate in the
Eurodollar market, at which time the Adjusted LIBOR Rate shall resume being
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<PAGE> 7
an interest rate option. If during the period an Interest Rate Risk Agreement is
in effect the Adjusted LIBOR Rate becomes unavailable, Bank agrees to make good
faith efforts to locate for NCP-Seven a reasonably equivalent substitute for the
Adjusted LIBOR Rate if and only if such substitute may be offered by Bank
without any reduction in Bank's rate of return on any and all Loans, without any
increase in its Costs and Fees and without violation of any Requirement of Law
or Bank policies or practices. NCP-Seven acknowledges and agrees that Bank is
only agreeing to attempt, in good faith, to locate a substitute rate and that
the foregoing does not impose on Bank any duty to supply a substitute and Bank
shall have no liability of any nature whatsoever for failing to supply a
substitute;
(b) Costs. NCP-Seven shall, as to LIBOR Rate Loans, reimburse
Bank for all Costs and Fees and Taxes and defend and hold Bank harmless from and
against any Claims and Losses which Bank may incur as a consequence of any
changes in the cost of participating in, or in the Requirements of Law
affecting, the Eurodollar market, including any additional reserve requirements,
except to the extent such costs are already calculated into the Adjusted LIBOR
Rate. This covenant shall survive Closing and the payment of the Obligations for
a period of six months; and
(c) Basis of Quotes. NCP-Seven acknowledges that Bank may or may
not in any particular case actually match-fund a LIBOR Rate Loan. FDIC
assessments, and Federal Reserve Board reserve requirements, if any are
assessed, will be based on Bank's best estimates of its marginal cost for each
of these items. Whether such estimates in fact represent the actual cost to Bank
for any particular dollar or Eurodollar deposit or any LIBOR Rate Loan will
depend upon how Bank actually chooses to fund the LIBOR Rate Loan.
Section 3.5 Prepayment. No prepayment of Tranche A, or of a LIBOR Rate
Loan under Tranche B, shall be made until NCP-Seven (a) delivers to Bank prior
written notice of its intent to prepay, which notice shall be given at least 10
Business Days before the date of prepayment and contain the amount to be
prepaid, and (b) pays any premium required below. Any prepayment of less than
the full amount outstanding (which partial prepayments may be made upon
compliance with (a) and (b)) shall be applied in the inverse order of maturity
and shall first be applied to Cost and Fees and any prepayment fees then due,
then to accrued interest, then to the principal of Tranche B, if any, and then
to the principal of Tranche A. Notwithstanding the foregoing, NCP-Seven need
not give the notice required by (a) above with respect to any prepayment
required by Section (but the premium required by (b) above and Section shall be
paid).
(a) No Premium Due. Base Rate Loans may be prepaid in whole or in
part without fee, premium or penalty.
(b) Premium Due. LIBOR Rate Loans may only be paid before the end
of an Interest Period or the Loan maturity date (whichever is earlier and from
time to time) in whole or in part upon NCP-Seven's payment to Bank of a
prepayment premium calculated as set forth in Exhibit B hereto, which exhibit is
incorporated by this reference. The prepayment premium shall be due under all
circumstances under which any such Loan is prepaid or discharged for any reason
before the scheduled maturity date of the Loan, including without limitation
prepayment by voluntary prepayment, by operation of law, by virtue of Bank's
collection efforts, or after acceleration or otherwise.
NCP-Seven agrees that the prepayment premium is intended as liquidated
damages to compensate Bank for its willingness to allow prepayment and to forego
its right to receive the interest contemplated hereunder for the full, stated
term of the Loan(s). NCP-Seven further acknowledges the inability of the parties
accurately to predict, among other things, the date on which any Advance may
occur, whether NCP-Seven will choose to obtain the full amount of the
Commitment, the investments available to Bank upon any prepayment to replace its
investment in any Loans, and, in general, the Losses Bank may suffer by reason
of prepayment. NCP-Seven hereby agrees that, in addition to the foregoing (but
not in lieu thereof), the prepayment premium represents the parties' reasonable
estimate of a fair or average compensation for the Loss Bank may sustain due to
payment before the date the Loans are due and that the prepayment premium is
fully enforceable according to its terms.
Section 3.6 Manner, Method, Place, Time and Application of Payment,
Reinstatement. All Obligations shall be paid in lawful currency of the United
States and in immediately available funds to Bank at its Seafirst Agency
Services Office located at 701 Fifth Avenue, Floor 16, Seattle, Washington. Any
payment received after 12:00 noon (Seattle time) shall be deemed to have been
received on the next Business Day, and the date for payment thereof shall be
extended to the next
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<PAGE> 8
succeeding Business Day (unless said day would be in the next calendar month, in
which case the date for payment shall be the immediately preceding Business
Day). However, NCP-Seven shall pay to Bank, on demand, default interest on said
payment for such extended time at the rate set forth in Section hereof. The
liability of NCP-Seven hereunder and under any Related Document shall be
reinstated and revived and the rights of Bank shall continue, with respect to
any amount at any time paid by or on behalf of NCP-Seven if such amount shall
thereafter be required to be restored, returned or forfeited by Bank pursuant to
Requirement of Law, and NCP-Seven's liability therefor shall continue as if such
amount had not been paid. NCP-Seven agrees that (a) if any for any reason any
amount due hereunder or under any Related Document is paid by cashier's,
certified or teller's check, there shall be no discharge of NCP-Seven's
obligation until said check be finally paid by the issuer thereof; and (b) the
provisions of RCW Section 62A.3-311 and any other applicable law becoming
effective on or after the Closing Date shall not entitle NCP-Seven to any accord
and satisfaction of any now or hereafter existing claim in any dispute between
Bank and NCP-Seven (or any of their respective successors and assigns), all of
which provisions and rights are hereby waived.
All payments under this Agreement shall be made without counterclaim,
set-off, condition or qualification and free and clear of and without deduction
for any Taxes, deductions or charges of any nature whatsoever. All payments
shall be applied first against Costs and Fees, then against indemnities,
increased costs and all amounts due hereunder other than principal and interest,
then against interest due on amounts in default, then against interest due on
amounts not in default, and then against principal.
Whenever any payment hereunder 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 interest or fees, as the case may be.
Section 3.7 Evidence of Debt. The books and records of Bank shall be
conclusive evidence, absent manifest error, of all amounts of principal,
interest, Costs and Fees advanced, outstanding or repaid pursuant to this
Agreement or any Related Document. NCP-Seven acknowledges that principal of all
Loans is to be paid as scheduled in Section and Bank agrees to provide invoices
to NCP-Seven for the amount of interest due on an Interest Payment Date. Any
failure to provide an invoice shall not relieve NCP-Seven of its obligation
timely to pay all amounts due hereunder or under any Related Document. If
NCP-Seven's payment is remitted as scheduled but before receipt of Bank's
invoice, and if there is a reasonable deficit between the interest paid and
invoiced, such deficit shall not be grounds for a default hereunder if the
deficit is immediately paid to Bank.
ARTICLE 4
OTHER PAYMENTS
Section 4.1 Closing Fees. NCP-Seven agrees to pay Bank on the Closing
Date an underwriting fee of $275,000, plus the agent's fee set forth in the Fee
Letter. NCP-Seven agrees that all such fees and all other fees in this Article
are fully earned and nonrefundable.
Section 4.2 Commitment Fee. NCP-Seven agrees to pay Bank a fee equal to
the percentage per annum as set forth below, depending upon the ratio of Total
Debt of NCP-Seven to its Annualized Cash Flow, of the daily undrawn portions of
Tranche A and Tranche B, accruing from Closing through December 1, 2000. This
fee shall be payable on the last day of each calendar quarter after Closing
through and including September 30, 2000, and on December 1, 2000, whether or
not the full Commitment is ever borrowed:
<TABLE>
- ------------------------------------------------------------------------
<S> <C>
Total Debt to Annualized Cash Flow Ratio Fee Rate
- ------------------------------------------------------------------------
Greater than or equal to 5.00 to 1 0.50% per annum
- ------------------------------------------------------------------------
Less than 5.00 to 1 0.375% per annum
- ------------------------------------------------------------------------
</TABLE>
Section 4.3 Costs and Fees. Upon demand therefor, NCP-Seven agrees to
pay to Bank all Costs and Fees Arising Out Of: the development, review,
execution, amendment, renewal, extension, forbearance (if any), refinance or
"work-out" restructuring of this Agreement or any Related Document; collecting
any Obligations; protecting, preserving and realizing upon any Collateral or
other security for such amounts; and enforcing this Agreement or any Related
Document; all whether or not suit is brought and including but not limited to
all Costs and Fees
-6-
<PAGE> 9
incurred in any court action, arbitration or mediation, on appeal, in any
bankruptcy (or state receivership or other insolvency or similar proceedings or
circumstances), in any forfeiture, and for any post-judgment collection
services. Except with respect to the development and execution of this
Agreement, NCP-Seven also agrees that after the occurrence of any Event of
Default, NCP-Seven shall also pay the foregoing Costs and Fees incurred by each
Participant. The Costs and Fees are part of the Obligations and are secured by
the Collateral.
NCP-Seven acknowledges that any legal counsel retained or employed by
Bank has acted and will hereafter act solely on Bank's behalf and not on
NCP-Seven's behalf, despite NCP-Seven's obligation to reimburse Bank for the
cost of such legal counsel, and that NCP-Seven has consulted or has had
sufficient opportunity to consult its own legal counsel with regard to this
Agreement.
Section 4.4 Calculations; Default Interest; Compounded Interest; Place
for Payment. Except as otherwise expressly set forth, all computations of
interest and fees under this Agreement or any Related Document shall be made on
the basis of a 360-day year and actual days elapsed. Interest shall accrue
during each period from but excluding the first day thereof to and including the
last day thereof. All amounts that are not paid when due under this Agreement
shall bear interest at the interest rate which is the sum of (a) the interest
rate due on the delinquent debt (or if no interest rate is stated for the amount
due, then interest shall be at the rate that would have been due on a Base Rate
Loan if one had been made on the date of Default) and (b) 3% per annum, all from
the time due until paid. All interest not paid when due shall be added to
principal and interest shall thereafter accrue on said increased principal
amount. All Obligations due under this Agreement shall be paid in the funds and
at the time and place set forth in Section . Each determination of an interest
rate by the Agent shall be conclusive and binding on NCP-Seven and the other
institutions constituting "Bank" in the absence of manifest error.
Section 4.5 Increased Costs. In the event that any Requirement of Law or
any change therein or interpretation thereof (or addition thereto):
(a) subjects Bank to or increases any Tax or withholding
obligation; eliminates or impairs any Tax deduction or credit or status, or
changes the basis of taxation of any payments to Bank on account of any portion
of the Obligations; requires Bank to account for any transaction contemplated by
this Agreement or by any Related Document differently than as of the date hereof
(including but not limited to transactions under the Interest Rate Risk
Agreement); or
(b) imposes, modifies, increases or determines applicable any
reserve, insurance premium (including without limitation deposit insurance
premium), deposit or similar requirements against any assets held by, deposits
with or for the account of or loans or commitments by, any office of Bank in
connection with any of the Loans; or
(c) affects the amount of capital required or expected to be
maintained by depository institutions generally or corporations controlling such
institutions and Bank determines the amount by which Bank or any corporation
controlling Bank is required or expected to maintain or increase its capital
because of or based upon the existence of any of the Obligations; or
(d) makes any Loan a "highly leveraged transaction" ("HLT") under
Requirements of Law (or NCP-Seven takes any action causing any Loan to become an
HLT under such law or Bank's internal policies generally applicable to
commercial borrowers similar to NCP- Seven) or makes advisable (in the opinion
of legal counsel to Bank), qualification, registration, filing or any other act
by Bank to avoid violation of or to effect compliance with any Requirement of
Law relating to underwriting, selling, distribution of, marketing or dealing in
securities; or
(e) imposes upon Bank any other condition with respect to any of
the Obligations; which, as a result thereof, (1) increases the cost to Bank of
making or maintaining the Loans, or (2) reduces the rate of return or the net
amount of any payment received by Bank in respect of the Loans (whether of
principal, interest, fees or otherwise), or (3) requires Bank to make any
payment on or calculated by reference to the gross amount of any sum received by
it in respect of any Loan, in each case by an amount which Bank in its sole
judgment deems material;
then and in any such case NCP-Seven shall pay to Bank five days following demand
therefor, such amount or amounts as will compensate Bank for any increased cost,
reduced rate of return, deduction or payment incurred or made by Bank or any
company controlling Bank, all as determined by Bank in its good faith
discretion, except for such increased cost or reduced rate of return arising
from changes in the rate of tax on the overall net or gross income of Bank, at
any of its or their offices, imposed by the jurisdiction or jurisdictions in
which Bank is organized, or is or should be
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<PAGE> 10
qualified to do business, or in which any such office is located. The demand for
payment by Bank shall be delivered to NCP-Seven and shall state the reason for
the demand, the amount thereof and the manner in which such amount has been
calculated. The statement of Bank as to the additional amounts payable pursuant
to this section shall be conclusive evidence of the amounts due hereunder absent
manifest error.
The protection of this section shall be available to Bank regardless of
any possible contention of invalidity or inapplicability of the relevant
condition, Requirement of Law or interpretation thereof. In the event that
NCP-Seven pays Bank the amount demanded and such amount or any part thereof is
subsequently returned to Bank as a result of the final determination of the
invalidity or inapplicability of the condition, Requirement of Law or
interpretation, then Bank shall remit to NCP-Seven the amount paid by NCP-Seven
which has actually been returned to Bank (together with any interest actually
paid to Bank on such returned amount), less Bank's allocated Costs and Fees
incurred in connection therewith or in connection with any Claim Arising Out Of
same.
ARTICLE 5
CONDITIONS TO LENDING, SECURITY AND
OTHER COVENANTS
Section 5.1 Conditions. The obligation of Bank to make any Loan is
subject to fulfillment by NCP-Seven of all of the following conditions:
(a) Bank shall have received on or before Closing the following,
each addressed to Bank and dated on or as of Closing, in form and substance
satisfactory to Bank:
(i) copies of (a) the current partnership agreement of
NCP-Seven and Limited Partnership Certificate evidencing filing with the State
of Washington, (b) a list of real property owned, used, leased or to be acquired
in connection with the Robin Systems acquisition or such other Cable System to
be acquired, or in connection with any part of the NCP System and legal
descriptions for each such property; (c) a list and copy of Operating Rights
which are material to the operation, maintenance, ownership or use of the NCP
System, including without limitation a list and copy of Operating Rights which
are material to the operation, maintenance, ownership or use of all Cable
Systems to be acquired at or about Closing; (d) a list of all other Contractual
Obligations of the NCP System which are material to the operation, maintenance,
ownership or use of said system, identifying the name of the contract, date,
contracting parties and the nature of the contract, including without limitation
(and supplying the same identifying information) a list of all Contractual
Obligations which are material to the operation, maintenance, ownership or use
of all Cable Systems to be acquired at or about Closing; and (e) a copy of the
Purchase Contract for all Cable Systems to be acquired at or about Closing. All
lists and copies shall be certified by NCP- Seven to be true, correct and
current and shall have been delivered to Bank's counsel at least two Business
Days prior to Closing;
(ii) Executed originals in form and substance satisfactory
to Bank of this Agreement and each Related Document and evidence satisfactory to
Bank of their due adoption by NCP-Seven and/or all other parties and the
incumbency of the persons signing same;
(iii) an opinion of independent counsel selected by
NCP-Seven (subject to Bank's reasonable approval) in form and substance
satisfactory to Bank covering such matters as Bank or its counsel may reasonably
request, including but not limited to the matters addressed in Sections 0
through 0, 0(2), 0, 0, 0, 0 and 0, and opinions that (a) FNEJV Agreement is
enforceable according to its terms; that no Requirement of Law or Contractual
Obligation of Northland, FNEJV, any joint venturer of FNEJV, or NCP-Seven
requires the further consent or agreement of FNEJV to this Agreement or any
Related Document or to any matter now or hereafter Arising Out Of same; and that
the Persons executing and delivering the FNEJV Agreement and the Resolution are
each duly authorized and empowered to do so and that no consent, signature or
approval of any other Person is required to make the FNEJV Agreement or the
Resolution legally valid and binding on FNEJV and each joint venturer thereof;
and (b) the security interests, assignments and deeds of trust reflected in the
Agreement or Related Documents create a valid and perfected security interest or
lien of Bank on the NCP System and federal law or FCC regulations prohibit
NCP-Seven from assigning or granting further interests as security to Bank; an
opinion from special counsel, after a review of Federal Communication Commission
files, in the form (after updating and expansion to include the current NCP
System and each community now served) set forth in the opinion of Arent, Fox,
Kintner, Plotkin & Kahn dated September 13, 1996 rendered in connection with the
debt renewed hereby, and including additional opinions that said counsel has no
actual knowledge of any
-8-
<PAGE> 11
violation by any part of the NCP System of federal law or FCC regulations,
except any violation that would not have a Material Adverse Effect, and has no
knowledge after investigation of public records and due inquiry of any FCC or
federal copyright office judgments, decrees, orders, investigations or
proceedings issued or commenced against NCP-Seven, Northland, FNEJV or any FCC
licenses relating to the NCP System. NCP-Seven hereby requests and instructs
each of its foregoing counsel to issue said opinions;
(iv) the amounts specified to be paid on the Closing Date
pursuant to Section 0, the letters from and to NCP-Seven's accountants specified
in Section 0; establishment of the deposit accounts contemplated by Section 0,
and proof of insurance required hereunder or under any Related Document;
(v) for acquisitions of Cable Systems other than that of
the Robin Systems, a pro forma compliance certificate in form satisfactory to
Bank showing that NCP-Seven will be in compliance with this Agreement
immediately after such acquisition(s), after combining existing and acquired
Cable System(s), taking into account historical results for the acquired Cable
System(s) for the most recently completed quarter preceding Closing, adjusting
the revenues and expenses of the acquired Cable System(s) to reflect operations
as if owned by NCP-Seven for the period in question;
(vi) amendments of all Related Documents as necessary to
reflect the fact that all Liens of Bank which previously existed in the sole
name of Seafirst are now held by Seafirst as agent for itself and all other
financial institutions constituting a "Bank," and that such Liens now secure the
Obligations;
(vii) from Northland an executed Amendment to
Subordination Agreement; and
(viii) such other documents, interpretations, instruments,
approvals or opinions as Bank or its counsel may reasonably request; and
(b) The representations and warranties contained herein and in
each Related Document shall be correct, accurate and complete on and as of
Closing as though made on and as of such date and no Event of Default and no
condition or event which, with the giving of notice or lapse of time or both,
would become an Event of Default, shall have occurred and be continuing on
Closing and Bank shall have received a certificate signed by an authorized
official of NCP-Seven, dated the date of Closing, to that effect.
Section 5.2 Conditions Not Fulfilled. If the above conditions are not
fulfilled or if the Commitment or any portion thereof is not borrowed (because
of nonfulfillment of conditions or otherwise), neither Bank nor NCP-Seven shall
be responsible to each other or any other Person for any Loss Arising Out Of
same, except that NCP-Seven shall reimburse Bank for any Costs and Fees or Taxes
incurred by Bank (other than any tax measured by the Bank's net or gross
income). If any condition of this Agreement to Closing or for Advances for
acquisition of any Cable System, including but not limited to the conditions
contained in Sections and , is waived in whole or in part by the Bank in its
sole discretion, such condition(s) shall be fully satisfied within 30 days of
Closing or the Advance.
Section 5.3 Security and Power of Attorney. As security for the prompt
payment and performance of all Obligations, NCP-Seven hereby agrees to grant or
has granted to Bank a first Lien in all collateral described herein or in the
Deeds of Trust whether now or hereafter owned by NCP-Seven and whether located
in Washington, Texas, Georgia or elsewhere (collectively, the "Collateral"). The
Collateral shall include but not be limited to a Lien on all rights of NCP-Seven
in all now or hereafter existing real and personal property of every nature
whatsoever Arising Out Of the NCP System. Without limitation, the Collateral
shall include:
o a blanket security interest on all personal property assets,
including but not limited to all Accounts;
o deeds of trust on all real property owned in fee and on all
interests of NCP-Seven as lessee of real property;
o assignments of all interests of NCP-Seven as lessor or lessee
of real or personal property;
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<PAGE> 12
o assignments of all Operating Rights which may be assigned under
applicable law (and, with respect to Operating Rights that may not be
assigned, a list of such Operating Rights and the law prohibiting
assignment);
o assignment of the Programming Contract; and
o once NCP-Seven has any rights in or acquires such property, all
personal and real property Arising Out Of the Cable Systems acquired at
or after Closing, if purchased using proceeds of Loans.
NCP-Seven agrees to execute and deliver to Bank, whenever requested, such
security instruments as Bank deems necessary, in its sole discretion, for the
creation, continuation and preservation of its Liens and to ensure the priority
of each Lien on the Collateral. NCP-Seven hereby irrevocably appoints Bank as
its attorney-in-fact, solely for the purpose of executing on NCP-Seven's behalf
any financing statements or other security documents deemed necessary by Bank to
carry out the purposes of this Section, which appointment shall be coupled with
an interest and shall continue so long as this Agreement remains in effect or
any Obligations remain outstanding, whichever is later.
Section 5.4 Negative Pledge. Until payment in full of all Obligations,
NCP-Seven shall not allow any Collateral to be transferred or encumbered, except
as expressly authorized in Section or elsewhere in this Agreement or in any
Related Document concerning the Collateral or to secure the Obligations.
Section 5.5 Contractual Right of Setoff. Upon any Event of Default,
NCP-Seven hereby grants to Bank a contractual right from time to time to setoff
(and take from), whether now or hereafter existing, any and all deposits
(general or special, time or demand, provisional or final) and any and all other
property directly or indirectly owned by NCP-Seven (whether owned alone or with
others) at any time in the possession (for any reason) of Bank or any of its
affiliates, and apply the same to any Obligation (in such order and amounts as
Bank may determine it its sole discretion). Notwithstanding the foregoing and
with respect to amounts Bank determines to apply to Base Rate Loans and LIBOR
Rate Loans, Bank acknowledges NCP-Seven's request that amounts first be applied
to Base Rate Loans to avoid "breakage" expenses of LIBOR Rate Loans, and Bank
agrees to make such application when such would not otherwise be adverse to the
interests of Bank (all as determined by Bank). This contractual right of setoff
shall be in addition to Bank's banker's lien and its common law rights of
setoff, and may be exercised in Bank's discretion without notice or demand and
without regard to concepts of maturity and mutuality. If exercise of this or
Bank's setoff right causes any deposit to be withdrawn before any scheduled
withdrawal date, NCP-Seven shall pay any early withdrawal or other penalty in
addition to the Obligations.
Section 5.6 Management of Interest Rate Risk. NCP-Seven acknowledges
that the floating rates of interest that it has requested Bank to make available
to NCP-Seven hereunder create an exposure of NCP-Seven to interest rate risk
arising from changes in future interest rates and, consequently, an exposure to
Bank of the occurrence of an Event of Default. As a separate covenant to induce
Bank to make available the long-term nature of the credit extended hereunder and
in lieu of a request by Bank for security in addition to the Collateral or other
different terms for the Loans, NCP-Seven hereby agrees to execute and deliver to
Bank such Interest Rate Risk Agreements as are necessary to achieve no later
than 60 days after Closing fixed interest rates (through Interest Rate Risk
Agreements) for the interest that will accrue on one-half the outstanding
principal balance of Tranche A through the second anniversary of the date such
fixing is accomplished, which Interest Rate Risk Agreements shall continue in
full force and effect from the date of the Interest Rate Risk Agreement(s)
through the second anniversary of the date such fixing is accomplished.
NCP-Seven shall fully perform the Interest Rate Risk Agreement(s) and shall
provide any deposits and pay all charges, fees and other sums as are required by
the Interest Rate Risk Agreement in the amounts and at the times set forth
therein. If an Interest Rate Risk Agreement is entered into with Seafirst or
another Bank, all charges and fees and all other amounts due under such Interest
Rate Risk Agreements shall be part of the Obligations and shall be secured by
the Collateral.
Section 5.7 Representations and Consents of Northland and NCP-Seven.
Each of Northland and NCP-Seven hereby represents, warrants and agrees that (a)
this Agreement and each Related Document are each enforceable according to their
respective terms, and that each amendment thereto and any waivers thereof (if
any) will be enforceable according to their terms, without any consent (except
the consent contained in the Resolution and/or FNEJV Agreement) by FNEJV; (b)
that all amounts of every nature due FNEJV under the Constituent Documents or
any other agreement have been paid in full to FNEJV except for any distributions
due upon liquidation of NCP-
-10-
<PAGE> 13
Seven, that NCP-Seven has no other Contractual Obligation to pay any amount of
money to FNEJV and that NCP-Seven shall not, without first having FNEJV execute
a subordination agreement in substantially the form of the Subordination
Agreement, incur any such Contractual Obligation or pay (with or without a
Contractual Obligation) any amount of money to FNEJV until the Obligations have
been paid in full; and (c) that FNEJV has to date fulfilled all of its duties
under the Constituent Documents. The foregoing representations and warranties
shall survive Closing and continue until all obligations have been paid in full.
Each of NCP-Seven and Northland hereby consent to all terms of the FNEJV
Power and Northland hereby accepts all powers and duties thereunder and agrees
to keep FNEJV fully informed of all actions taken by Northland or any agent or
sub-agent thereunder (but only to the extent of any duties of Northland or said
agents or sub-agents to FNEJV).
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS
The warranties, representations and covenants contained in this
Agreement or in any Related Document shall be deemed to have been relied upon by
Bank regardless of any investigation made by Bank or on its behalf and shall
survive the Closing and continue until all Obligations have been paid in full.
NCP-Seven hereby represents, warrants, covenants and agrees with Bank that:
Section 6.1 Organization and Standing. NCP-Seven is a limited
partnership duly organized and validly existing under the laws of the State of
Washington and has the power to own its property and carry on its business as
now being conducted and as proposed to be conducted with use of the Loan
proceeds; is duly qualified and authorized to do business and is in good
standing in every state, county, city or other jurisdiction in which the nature
of its business and property makes such qualification necessary including but
not limited to the State of Washington; the name "NORTHLAND CABLE PROPERTIES
SEVEN LIMITED PARTNERSHIP" is the exact, true and current name of NCP-Seven;
NCP-Seven has filed with the Washington Department of Licensing a Certificate of
Trade Name for "Northland Cable Television," the only business or assumed trade
names under which NCP-Seven has done, does or may do business and has made all
similar filings required or advisable in Texas, Georgia and all other
jurisdictions (if any) in which NCP-Seven does business, the addresses of all
places of business of NCP-Seven are as set forth in Exhibit C; NCP- Seven has
not changed its name, been the surviving corporation in a merger, acquired any
business, or changed its principal executive office to a location outside
Washington within five years and one month prior to the date hereof, except for
its acquisitions of the assets of the NCP System (all of which were asset
acquisitions) except as set forth in Exhibit D; and that NCP-Seven is in
compliance with all Requirements of Law (unless noncompliance would not have a
Material Adverse Effect).
Section 6.2 Authorization. All action under the Constituent Documents of
NCP-Seven and all action of all managing and other partners of NCP-Seven
necessary for the authorization, execution, delivery and performance of this
Agreement and each Related Document has been duly taken. NCP-Seven has full
power and authority (under all Requirements of Law, Contractual Obligations,
Constituent Documents and otherwise) to execute, deliver and perform this
Agreement and each Related Document to which NCP-Seven is a party and to perform
and observe their terms and conditions.
Section 6.3 Enforceability. This Agreement and each of the Related
Documents are legal, valid and binding agreements of NCP-Seven, each enforceable
against it in accordance with its terms, except to the extent that the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the rights of creditors generally.
Section 6.4 Consents or Approvals. Except as set forth in Exhibit D, no
consent, approval, permission, authorization, order or license of any Person
with an ownership interest in NCP-Seven or with a Lien on any asset of
NCP-Seven; or of any trustee, issuer or holder of any Debt or Contractual
Obligation of NCP-Seven; or of any Governmental Body; is necessary or advisable
in connection with the execution and delivery of this Agreement, the Related
Documents or any transaction contemplated thereby, except as may have already
been obtained and copies of which certified by NCP-Seven have been delivered to
Bank on or prior to Closing.
Section 6.5 No Violation. There is no Constituent Document or any
Requirement of Law or any Contractual Obligation binding on NCP-Seven which
would be contravened by the execution
-11-
<PAGE> 14
and delivery of this Agreement and the Related Documents or by the performance
of any provision or condition thereof. The execution, delivery and performance
of this Agreement and each Related Document, the consummation of the
transactions contemplated therein, and compliance with the terms and conditions
thereof do not conflict with or result in a breach of any of the provisions and
conditions of any Constituent Document or Contractual Obligation of NCP-Seven or
of any Requirement of Law or constitute a default thereunder or result in the
creation or imposition of any Lien (except in favor of Bank) upon any of the
assets of NCP-Seven pursuant to the terms of any such Constituent Document,
Contractual Obligation or Requirement of Law. NCP-Seven is not now, and in the
future NCP-Seven agrees there shall be no, default under any Constituent
Document, Requirement of Law, Debt or under any Contractual Obligation with
respect to which obligation the default would have a Material Adverse Effect.
Section 6.6 Litigation. Other than as disclosed in Exhibit D or the
financial statements referenced in Section 0, there is no pending or threatened
Tax or Claim or other dispute of any nature whatsoever concerning, affecting or
relating to NCP-Seven before or by any Governmental Body, which (a) could have a
Material Adverse Effect; or (b) could result in a judgment or order against
NCP-Seven (in excess of insurance coverage) for more than $300,000.00 in any one
case or in the aggregate. NCP-Seven is not in default under any Requirement of
Law that could result in any such Tax or Claim.
Section 6.7 Financial Information; Taxes. The balance sheet of NCP-Seven
as at December 31, 1996, and the related statements of operations and partners'
capital of NCP-Seven for the fiscal year then ended, copies of which have been
furnished to Bank, fairly present the financial condition of NCP-Seven as at
such date and the results of operations of NCP-Seven for the period then ended,
all in accordance with GAAP. NCP-Seven did not have on such date and does not
now have any contingent liabilities for Taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in that balance
sheet and in the notes to those financial statements or except as disclosed in
Exhibit D. Since that date and except as disclosed to Bank in writing, there has
been no change that would have a Material Adverse Effect. The ratio of the Total
Debt of NCP- Seven to its Annualized Cash Flow does not as of Closing, and shall
not as of fiscal year ending December 31, 1997, exceed 5.75 to 1.
Section 6.8 Title and Liens. (1) NCP-Seven is vested with good and
marketable title to each of the properties and assets reflected in its balance
sheet referred to in Section (except such as have been since sold or otherwise
disposed of in the ordinary course of business), all of which are owned by
NCP-Seven free and clear of Liens except (a) Liens to be discharged with
proceeds of the Loans; (b) Liens which are shown on said balance sheet or on
Schedule B to any policy of title insurance accepted by Bank in its discretion,
(c) property tax liens for Taxes not yet delinquent; (d) Liens disclosed on
Exhibit D hereto; and (e) purchase money Liens taken in consideration of Debt
incurred and permitted pursuant to Section (iii) and (iv) hereof; and (2) upon
execution of all the following and the Assignments, and filing of the UCCs and
recording of the Deeds of Trust in the places contemplated by those documents,
Bank will have a first priority Lien on all Collateral enforceable as security
for the Obligations and no other Person will have any Lien in the Collateral
except as otherwise provided in this Agreement. Notwithstanding the foregoing,
Bank acknowledges that real estate collateral instruments covering real property
in the State of Georgia shall not be recorded unless either (A) it is determined
to Bank's satisfaction that Georgia's intangibles tax does not attach to such
recording, or is calculated solely on the market value of the property affected,
or (B) an Event of Default shall occur.
Section 6.9 Business Authorizations. NCP-Seven possesses all patents,
patent rights and licenses, trademarks, trademark rights, tradenames and
tradename rights and copyrights required to conduct its business as now
conducted without conflict with the rights or privileges of any Person.
Section 6.10 Taxes. NCP-Seven has filed and shall continue to file all
Tax returns that are required to be filed (except for extensions applied for and
disclosed to Bank), has paid and provided for all Taxes which are due and
payable or for which provision should be made (other than Taxes the amount of
which is currently being contested in good faith and by appropriate proceedings
and with respect to which reserves to which Bank has Consented have been
provided on the books of NCP-Seven). No Tax Liens have been filed and, to the
knowledge of NCP-Seven, no Claims are being asserted with respect to any Taxes.
Section 6.11 Investment Company Act. NCP-Seven is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended; is not subject to regulation
under the Public Utility Holding Company Act
-12-
<PAGE> 15
of 1935, the Federal Power Act, the Interstate Commerce Act, or any Requirement
of Law which regulates the incurring by NCP-Seven of indebtedness for borrowed
money, including without limitation, Requirements of Law relative to common or
contract carriers or for the sale of electricity, gas, steam, water, telephone,
telegraph or other public utility services.
Section 6.12 Federal Reserve Board ("FRB") Regulations. NCP-Seven is not
engaged and shall not engage, principally or as one of its important activities,
in the business of extending credit for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of such terms under
Regulation U. No part of the proceeds of the Loans shall be used for
"purchasing" or "carrying" "margin stock" as so defined or for any purpose that
violates, or would be inconsistent with, the provisions of the regulations of
the Federal Reserve Board. If requested by Bank, NCP-Seven will furnish to Bank
a statement in conformity with the requirements of federal Regulation U to the
foregoing effect. Further, NCP-Seven is and shall remain in compliance with FRB
Regulation B (12 CFR Part 202) in connection with any credit extended now or
hereafter by NCP-Seven.
Section 6.13 Drug Free Workplace Act. If any portion of NCP-Seven's
gross income, now or hereafter, directly or indirectly stems from any contract
of $25,000 or more for the procurement of property or services awarded by a
"Federal agency," as defined in the federal Drug-Free Workplace Act of 1988
("Act"), NCP-Seven (or any part thereof which is a "contractor" within the
meaning of the Act) has not made and shall not make any false certification to
said agency, has not violated nor shall not violate such certification in any
manner, and has complied and shall at all times fully comply with said Act.
Section 6.14 Compliance with ERISA. NCP-Seven is in substantial
compliance with ERISA and the Code as to each Plan.
As to each Plan maintained by NCP-Seven:
(a) Such Plan has been maintained in substantial compliance with
all statutes, orders, rules and regulations, including but not limited to ERISA
and the Code, applicable to such Plan;
(b) No "reportable event," as such term is used in Section 4043
of ERISA, or "prohibited transaction," as such term is used in Section 406 of
ERISA or Section 4975 of the Code, or "accumulated funding deficiency," as such
term is used in Section 412 or Section 4971 of the Code (whether or not such
accumulated funding deficiency has been waived), has heretofore occurred with
respect thereto;
(c) Each such Plan designed to be a qualified plan since its
adoption and to date qualifies and has qualified under Section 401(a) of the
Code, and each trust, if any, established under each such Plan is exempt from
taxation pursuant to Section 501(a) of the Code;
(d) Each such Plan has been administered and enforced
substantially in accordance with its terms, no dispute is pending or threatened
with respect thereto, and substantially all contributions due from employees
thereunder, if any, have been made; and
(e) No condition exists that could constitute grounds for
termination of any such Plan.
NCP-Seven has not incurred any material liability under Title IV of
ERISA (which remains unsatisfied as of the date hereof) arising in connection
with the complete or partial termination of, or complete or partial withdrawal
from, any Plan covered or previously covered by Title IV of ERISA; and no
condition exists or event has occurred which would be reasonably likely to
result in the imposition of any such liability upon NCP-Seven nor has NCP-Seven
been notified that any such Plan is in reorganization or is insolvent within the
meaning of sections 4241 and 4245 of ERISA, respectively.
For purposes of this Section and as referenced in Sections , and , the
term "NCP-Seven" shall include NCP-Seven and any corporation, partnership, sole
proprietorship or other entity if NCP-Seven and such other entity or entities
are (i) corporations which are members of a controlled group of corporations as
defined in Section 414(b) of the Code, (ii) trades or businesses (whether or not
incorporated) which are under common control as defined in Section 414(c) of the
Code, (iii) members of an affiliated service group as defined in Section 414(m)
or 414(o) of the Code, or (iv) any combination of the foregoing.
-13-
<PAGE> 16
Section 6.15 No Commissions. NCP-Seven has not made any agreement or
taken any action, other than pursuant to the Fee Letter, that may have caused
any Person to become entitled to a commission or finder's fee as a result of or
in connection with any Loan and in connection therewith, NCP-Seven agrees to
indemnify Bank and hold Bank harmless from any and all Losses Arising Out Of any
Claims by Persons relating to any such commission or fee.
Section 6.16 Information Correct and Complete. No information, exhibit,
or report furnished by NCP-Seven to Bank or to any other Person in connection
with this Agreement or any of the Related Documents contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statement contained therein not misleading. NCP-Seven has disclosed to
Bank all information about NCP-Seven which would be of material interest to a
reasonably prudent lender. There is no presently known fact (other than facts
relating to the cable television industry generally as opposed to such facts
applied to NCP-Seven in particular) which could have a Material Adverse Effect
that has not been disclosed to Bank in writing.
Section 6.17 Operating Rights. NCP-Seven, by assignment, ownership or
otherwise, possesses or has the right to use, or will so possess and have within
two Business Days of Closing, all Operating Rights necessary, used or useful for
the ownership, maintenance and operation of the NCP System, each of which
Operating Rights, the lack of which would have a Material Adverse Effect, is in
full force and effect. Each Operating Right, the lack of which would have a
Material Adverse Effect, is accurately listed in Exhibit L. That listing
specifies the title, date, parties and nature of each Operating Right and true
and correct copies of each listed Operating Right have been delivered to the
Bank.
Section 6.18 Compliance With Other Laws. NCP-Seven is in compliance with
all Requirements of Law with respect to which any noncompliance could have a
Material Adverse Effect. Without limiting the foregoing, NCP-Seven specifically
represents and warrants that it complies with all Requirements of Law enforced
or promulgated by the Federal Communications Commission ("FCC") (with respect to
which any noncompliance would have a Material Adverse Effect) and has had
validly issued to it all FCC licenses, authorizations and consents necessary to
own and operate the NCP System, has filed all required reports with the FCC, has
maintained its FCC required public file in accordance with FCC rules and has
validly registered with the FCC each of the communities served by the NCP System
with the FCC. A full and complete list of such communities and their respective
FCC community code numbers is set forth in Exhibit D. Without limiting the
foregoing, NCP-Seven further represents and warrants that it is currently in
compliance with its obligations in connection with FCC rules and regulations
regarding the cumulative leakage index ("CLI") standards and maintains adequate
CLI monitoring equipment, maintains appropriate records, promptly corrects any
radiation leakage and makes all other repairs discovered in connection therewith
or related thereto, and has paid all fines or other amounts due Arising Out Of
any previous failure to comply with such rules or standards.
NCP-Seven further represents and warrants that all towers and
appurtenances thereto owned or leased by NCP-Seven comply with Federal Aviation
airspace regulations, and that it has filed all statements of account and paid
all copyright fees required by federal law or regulation or necessary to hold
and maintain a compulsory license for the carriage of the signals of broadcast
television and AM and FM radio stations carried by or relevant to the operation
of any and all parts of the NCP System.
ARTICLE 7
FURTHER COVENANTS
Until all Obligations are paid in full, NCP-Seven hereby covenants and
agrees that unless Bank otherwise Consents, NCP-Seven shall:
Section 7.1 Use of Proceeds (Loan Purpose). Take all steps necessary to
cause the Loan proceeds to be used solely for the purpose of (a) renew the
Existing Bank Debt and pay fees and costs associated therewith; (b) the
acquisition of the Robin Systems and other Cable Systems, and (c) Capital
Expenditures for the NCP System, and no other purpose.
Section 7.2 Additional Acts. Upon demand by Bank, execute and deliver
all instruments and documents (including but not limited to Uniform Commercial
Code continuation statements) and perform all such other acts as Bank may
reasonably request to carry out the transactions and establish or preserve the
lien status and priority contemplated by this Agreement or any Related
-14-
<PAGE> 17
Document. NCP-Seven shall also use its best efforts to obtain and then shall
furnish to Bank upon demand all approvals of Governmental Bodies or other
Persons as may be required in the future from time to time for NCP-Seven to
conduct its business or to perform its obligations under this Agreement and any
Related Document.
Section 7.3 Financial Statements and Reports. With each of the
statements submitted pursuant to (a) and (b) below, deliver to Bank a report
(current as of the date of the other materials submitted) containing: the number
of subscribers in the NCP System (detailed per cable system in a manner
reasonably requested by Bank); a breakdown of the subscriptions into
subscriptions for basic services regulated under 47 U.S.C. Section 543 and other
services offered in connection therewith ("Basic Package") and those for greater
revenue producing services ("Premium Services"); the number (reasonably
approximated in accordance with industry standards) of homes or apartments
passed by the system; and, on an annual basis (delivered with the statements
delivered under (c) below), a description of all differences between the
internal projected budget for the year in question and the actual expenditures
for such year.
NCP-Seven shall also deliver to Bank in form and detail reasonably
satisfactory to Bank the following which, if NCP-Seven now or hereafter has
subsidiaries, shall be prepared on a consolidated basis:
(a) Quarterly. As soon as reasonably possible and in any event
within 45 days after the close of each calendar quarter, NCP-Seven's internally
prepared (1) balance sheet as of the end of such period, and (2) statements of
operations and partners' capital for such period and for the portion of the
fiscal year ended with such period, all in reasonable detail and subject to
year-end audit adjustments. Upon reasonable request, NCP-Seven shall also supply
to Bank the foregoing for any month during the term of this Agreement;
(b) Annually. As soon as reasonably possible and in any event
within 90 days after the close of each fiscal year of NCP-Seven, the
consolidated (1) balance sheet of NCP-Seven as at the end of such fiscal year
setting forth in comparative form the corresponding figures as at the end of the
preceding fiscal year, and (2) statements of operations and partners' capital
and statements of cash flows for such fiscal year of NCP-Seven setting forth in
comparative form the corresponding figures for the previous fiscal year,
prepared in conformity with GAAP applied on a basis consistent with that of the
preceding year or containing disclosure of the effect on financial position or
results of operations of any change in the application of accounting principles
during the year.
Such balance sheet and income statements shall be accompanied by an
unqualified report and opinion of independent public accountants of recognized
standing approved by Bank, which report and opinion shall be in accordance with
generally accepted auditing standards relating to reporting or, if qualified,
the opinion shall not be qualified due to any limitation in scope of the
examination or due to any departure from any GAAP, and shall be accompanied by a
statement of such accountants that, in making the audit necessary for the
certification of such financial statements and such report, such accountants
have obtained no knowledge of any Event of Default under Article or under any
other evidence of indebtedness or of any event which, with notice or lapse of
time, or both, would constitute an Event of Default under Article or under any
other evidence of indebtedness or, if in the opinion of such accountants any
such Event of Default or other event shall exist, shall include a statement as
to the nature and status thereof;
(c) Certificates. As soon as reasonably possible, and in any
event within 45 days after the close of each of the first three fiscal quarters
in the case of (1) and (3) below and within 90 days after the close of each
fiscal year in the case of (2) and (3) below, submit (1) a quarterly certificate
executed by the President, chief financial officer, the Treasurer, or any
financial vice president of Northland ("Certifying Officer") certifying
compliance by NCP-Seven with the requirements of Section on each Determination
Date, stating whether any noncompliance occurred on another day during the
period in question and containing the calculations used to document compliance
with Section ; (2) an annual certificate executed by the Certifying Officer
certifying compliance with Section for the year in question and containing the
calculations used to document compliance therewith (including without limitation
compliance with the Excess Cash Flow covenant); and (3) a statement of the
Certifying Officer that such officer has no knowledge of any Event of Default
under Article or of any event which, with notice or lapse of time, or both,
would constitute an Event of Default under Article , or if in the opinion of the
Certifying Officer any such Event of Default or other event shall exist, shall
include a statement as to the nature and status thereof. Each such certificate
shall be accompanied by an attached schedule in the form attached as Exhibit M
setting forth in reasonable detail the computations necessary to ascertain
-15-
<PAGE> 18
compliance;
(d) Governmental Filings. Copies of all reports or other
materials delivered or required to be delivered from time to time by NCP-Seven
to the limited partners pursuant to the Constituent Documents or filed by or
with respect to NCP-Seven with any Governmental Body. To the extent the
foregoing are delivered or filed in the ordinary course of business, NCP-Seven
shall supply the Bank's copies of FCC filings only upon request by Bank, and of
other filings only on a quarterly basis; for any item filed or delivered other
than in the ordinary course, such shall be delivered to Bank at the same times
as delivered or filed (or required to be delivered or filed) to the limited
partners or Governmental Body; and
(e) Other Reports. Such other statements, list of property and
accounts, budgets, forecasts or reports regarding NCP-Seven that Bank may
reasonably request.
Section 7.4 Reliance on Accountants. Obtain from its accountants a
letter acknowledging that use of the 1996 audit report may be extended to Bank
in connection with its decision to enter into this Agreement and make the Loans,
and deliver to its accountants (with a copy to Bank) a letter advising them that
(a) Bank will rely on the future audited financial statements in making,
extending and modifying the Loans; and (b) that the accountants shall name Bank
in the audit engagement contract as an intended beneficiary of each audit
relating to any of the statements referenced in Section and, even if not so
named, performance of the audit by the accountants shall constitute the
accountants' agreement that Bank shall be an intended beneficiary. NCP-Seven
also agrees to provide written notice to Bank of any change in the identity of
NCP-Seven's accountants within 10 days of such change;
Section 7.5 Notices. Promptly give written notice to Bank of the
occurrence of, and the occurrence of any material development in, any (a) Event
of Default or any event which, upon a lapse of time or notice or both, would
become an Event of Default; (b) any Tax or Claim or other dispute of any nature
whatsoever concerning, or any change in any Requirement of Law, affecting or
relating to NCP-Seven before or by any Governmental Body, which (i) could have a
Material Adverse Effect; or (ii) could result in a judgment or order against
NCP-Seven (in excess of insurance coverage) for more than $150,000.00 in any one
case or $500,000.00 in the aggregate; and (c) any labor controversy which has
resulted in or which threatens to result in a strike which could have a Material
Adverse Effect.
Section 7.6 Compliance with Laws. Conduct its operations in compliance
with all now or hereafter existing Requirements of Law including but not limited
to laws and regulations referenced in Section hereof and ERISA (for purposes of
ERISA compliance, "its operations" shall include all operations of "NCP-Seven"
as defined in Section of this Agreement), FLSA, Tax and withholding laws,
environmental laws and laws concerning hazardous, dangerous or other wastes
(including but not limited to the laws listed in the definition of "Claims"),
land use and zoning, energy and industrial facilities siting, and occupational
health and safety laws.
-16-
<PAGE> 19
Section 7.7 Financial Covenants. Maintain, at all times until Bank's
obligation to make Advances has terminated and until all Obligations are paid in
full, the following on a consolidated basis and also comply with the following:
(a) Total Debt/Annualized Cash Flow. The ratio of the Total Debt
of NCP-Seven to its Annualized Cash Flow shall not exceed the ratio indicated
below as of Closing and for the corresponding fiscal quarters indicated below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
<S> <C>
Measured as of Total Debt to Annualized Cash Flow Ratio
- --------------------------------------------------------------------------------------------------------
Closing through September 30, 1998 5.75 to 1
- --------------------------------------------------------------------------------------------------------
December 31, 1998 through September 30, 1999 5.50 to 1
- --------------------------------------------------------------------------------------------------------
December 31, 1999 through September 30, 2000 5.00 to 1
- --------------------------------------------------------------------------------------------------------
December 31, 2000 through September 30, 2001 4.50 to 1
- --------------------------------------------------------------------------------------------------------
December 31, 2001 and thereafter 4.00 to 1
- --------------------------------------------------------------------------------------------------------
</TABLE>
(b) Annualized Cash Flow to Proforma Debt Service. The ratio of
NCP-Seven's Annualized Cash Flow to Proforma Debt Service shall equal or exceed
1.20 to 1;
(c) Interest Coverage Ratio. The ratio of (i) the Cash Flow of
NCP-Seven to (ii) the interest expense on Total Debt of NCP-Seven shall be at
least 1.75 to 1 through quarter ending September 30, 1999, and at least 2.00 to
1 for all quarters thereafter, all calculated for the most recently ended fiscal
quarter.
(d) Fixed Charge Coverage Ratio. The ratio of:
(i) the Cash Flow of NCP-Seven for each fiscal year, plus
cash in excess of $500,000 on hand as of January 1 of such fiscal year,
plus availability (if any) under Tranche B as of January 1 of such
fiscal year; to
(ii) Fixed Charges for such fiscal year;
shall be at least 1.00 to 1, all calculated for the most recently ended fiscal
year, beginning year ending December 31, 1998.
(e) Investments and Capital Expenditures. Except for the
acquisition of the Robin Systems and the other Cable Systems to be acquired
using Tranche B, not make any (i) loan or advance to any person or purchase or
otherwise acquire the capital stock, assets or obligations of, or any interest
in, any person; (ii) investment outside the ordinary course of business except
investments in certificates of deposit maturing within one year from the date of
acquisition from any one or more of the top 100 commercial banks in the United
States, in prime commercial paper with maturities of less than one year, or in
obligations issued or guaranteed by any Governmental Body of the United States;
and (iii) any expenditures for fixed assets or other Capital Expenditures which
exceed the following amounts in the following years:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Year Amount
- ------------------------------------------------------------------
<S> <C>
1997 $1,750,000
- ------------------------------------------------------------------
1998 $3,000,000
- ------------------------------------------------------------------
1999 $3,000,000
- ------------------------------------------------------------------
2000 $2,250,000
- ------------------------------------------------------------------
2001 $2,250,000
- ------------------------------------------------------------------
2002 $2,500,000
- ------------------------------------------------------------------
2003 $2,500,000
- ------------------------------------------------------------------
</TABLE>
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<PAGE> 20
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Year Amount
- ------------------------------------------------------------------
<S> <C>
- ------------------------------------------------------------------
2003 $2,500,000
- ------------------------------------------------------------------
2004 $2,500,000
- ------------------------------------------------------------------
2005 $2,500,000
- ------------------------------------------------------------------
2006 $2,500,000
- ------------------------------------------------------------------
</TABLE>
The foregoing amounts may not be carried forward into another year without the
Consent of Bank, except that if the amount of an expenditure is budgeted or
otherwise planned to be made in a given year but, because of weather or other
reasonably unavoidable developments, is not spent until the first quarter of the
next year, up to $200,000.00 of such amount may be carried forward into said
first quarter but no other quarter.
(f) Distributions and Capital Structure Etc. Not declare or pay,
or set apart any funds for the payment of any dividends or distributions to any
partner (or former partner) or for any purpose whatsoever. Without the prior
Consent of Bank, NCP-Seven also shall not issue, redeem, retire, purchase or
otherwise acquire for value any partnership interests of or effect any change in
the structure of NCP-Seven;
(g) Contingent Obligations. Not create or incur Contingent
Obligations except as disclosed pursuant to Section and except as required in
the ordinary course of business of the NCP System by issuers of Operating
Rights;
(h) Debt. Not create, incur, commit or become liable for any Debt
except (i) any Loan or other Debt to Bank; (ii) existing Debt reflected on the
balance sheet referenced in Section or to which Bank Consents; (iii) unsecured,
short-term Debt arising from current operations by purchasing on credit goods,
services, supplies, or merchandise and not constituting borrowings; (iv) so long
as there is no Default, new Debt for the deferred purchase price or capital
lease of real or personal property used in NCP-Seven's business, but not
exceeding the aggregate sum of $500,000.00 at any time; and (v) so long as there
is no Default, obligations incurred to obtain surety bonds necessary in the
ordinary course of its business up to an aggregate limit of $500,000.00
outstanding at any time; and
(i) Guaranties, Etc. Not assume, guaranty, endorse or otherwise
become directly or contingently liable or surety for, or obligated to purchase,
pay or provide funds for payment of, any Debt of any other Person, except (i)
guarantees and Contingent Liabilities in favor of Bank; (ii) endorsement of
negotiable instruments for deposit or collection or by similar transactions in
the ordinary course of business; and (iii) performance guarantees or indemnities
entered into in the ordinary course of business.
Section 7.8 Maintenance and Inspection of Records. Maintain adequate and
complete records of the Collateral and adequate and complete records and books
of account in accordance with GAAP, which books shall reflect all financial
transactions of NCP-Seven. At the Bank's expense, NCP-Seven shall also permit
any of Bank's representatives to visit and inspect any of the properties of
NCP-Seven, to examine the Collateral and all its books of account, records,
reports and other papers, to make copies and extracts therefrom, and to discuss
its affairs, finances and accounts with the officers of Northland and the
general partners of FNEJV, employees and independent public accountants of
NCP-Seven and/or Northland and/or FNEJV (and by this provision Northland, FNEJV
and NCP-Seven authorize said accountants to discuss the finances and affairs of
NCP-Seven with Bank or its accountants or other agents) all at such reasonable
times and as often as may be reasonably requested. Upon reasonable notice, Bank
may also conduct a periodic audit of NCP-Seven at Bank's expense. The foregoing
includes without limitation the right of Bank to inspect and obtain the records
and information required to be maintained or made available by NCP- Seven
pursuant to RCW Section 25.10.050 and RCW Section 25.10.210.
Section 7.9 Employee Benefit Programs. Conduct its operations so that
the representations, warranties and covenants in Section 0 with respect to any
Plan continue to be true during the term of this Agreement. For purposes of this
Section 0, "its operations" shall include all operations of "NCP-Seven" as
defined in Section 0.
Section 7.10 Indemnification. Indemnify and hold harmless Bank from and
against any and all Claims (whether known or unknown) and Losses now or
hereafter Arising Out Of (a) any
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<PAGE> 21
inaccuracy when made of any representation or warranty by NCP-Seven or
Northland contained in this Agreement or any Related Document, (b) the
execution, delivery, performance, breach, enforcement (including affirmative
suits and the defense of any Claim or liability whatsoever), collection,
administration, and any amendment of this Agreement or of any Related Document;
(c) any noncompliance by NCP-Seven with Section 0 regarding hazardous and other
wastes; and (d) and noncompliance by NCP-Seven with any Requirement of Law,
including but not limited to laws concerning securities and forfeiture; it being
the intention of the parties that this Agreement shall be construed and applied
to protect and indemnify Bank against any and all risks Arising Out Of (a)
through (d) above or otherwise involved in making, maintaining and enforcing the
Loans and realizing upon the Collateral, all of which risks are hereby assumed
by NCP-Seven, including, without limitation, any and all risks of the acts or
omissions, whether rightful or wrongful, of any present or future de jure or de
facto Governmental Body ("Government Acts"). Notwithstanding the foregoing,
NCP-Seven shall not be required to indemnify Bank (1) for any Claims or Losses
directly and actually caused by the willful misconduct of Bank or by its gross
negligence as to Claims and Losses which could have been prevented but for such
gross negligence or (2) for any Claims by one Bank against another, not
attributable to actions or inactions of NCP-Seven or Northland. Nothing in this
section is intended to limit or shall limit any obligation of NCP-Seven to Bank,
including but not limited to the repayment obligations of NCP-Seven contained in
Article 0.
Within 5 days of demand by Bank, NCP-Seven shall reimburse Bank for
Costs and Fees incurred in connection with investigating or defending against
any of the foregoing. If any Claim Arising Out Of any of the foregoing is
brought against Bank, NCP-Seven, to the extent determined by Bank as necessary
or advisable in order to protect Bank's rights hereunder, shall resist and
defend such Claim or cause the same to be resisted and defended by counsel
designated by NCP- Seven (which counsel shall be satisfactory to Bank). The
obligations of NCP-Seven under this section shall survive payment in full of
NCP-Seven's obligations under this Agreement and the Related Documents, but the
obligations of NCP-Seven under this section shall terminate as to any Claims the
prosecution of which are not commenced within one year of such payment in full
(or if the stay of a bankruptcy proceeding intervenes to prevent the prosecution
of such Claim, then within the later of one year after payment in full or six
months after the lifting of such stay).
Section 7.11 Preservation of Existence and Property; Sale of Assets.
Preserve and maintain its existence, rights, franchises and privileges in the
jurisdiction of its formation and qualify and remain qualified as a foreign
corporation (or other Person) in each jurisdiction where the failure to so
qualify could have a Material Adverse Effect. NCP-Seven shall take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable to the normal conduct of its business, and shall comply with all
Contractual Obligations and Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, have a Material Adverse
Effect. NCP-Seven shall not dissolve, terminate or substantially alter its
existence of current business nor engage in any activity that is not in either
the ordinary course of NCP-Seven's current business or the ordinary scope of
business engaged in by other cable operators.
NCP-Seven shall also cause its business to be carried on and conducted
in the ordinary course and cause the Collateral to be maintained, preserved and
kept in accordance with Requirements of Law and in good repair, working order
and condition (except for ordinary wear and tear) and cause all needful and
proper repairs, renewals and replacements thereof to be made. Without the
Consent of Bank, NCP-Seven shall not sell, lease or otherwise dispose of
("Disposition") a significant portion (in the reasonable opinion of Bank) of its
property and assets and/or Collateral until payment in full of all Obligations,
except that nothing in this section shall prevent NCP-Seven from selling,
leasing, abandoning or otherwise disposing of any property to a Person other
than Northland, FNEJV or any of their affiliates (a) in accordance with any Lien
in favor of Bank if such be expressly allowed by said Lien, or (b) if such
property is not a substantial portion of the assets of NCP-Seven and if such
property is no longer of use in the business of NCP-Seven and such sale,
abandonment or other disposition is in the ordinary course of business, is in
the best interests of NCP-Seven and will not materially adversely effect Bank.
Any Consent of Bank given in connection with the preceding sentence shall not be
unreasonably withheld or delayed. Without limiting the circumstances in which
Consent to a Disposition may be reasonably withheld, NCP-Seven agrees it shall
automatically be deemed reasonable for Bank to withhold its Consent (in its sole
discretion) if (a) all proceeds of or payment for the Disposition are not
remitted to Bank as a condition to the Disposition; or (b) Bank reasonably
believes the Disposition might impair the value of Bank's Collateral (given, for
example, a comparison of (a) the sum of the proposed Disposition proceeds and
the identity, nature and value of the remaining Collateral with (b) the Bank's
Collateral before the proposed Disposition) or NCP-Seven's financial condition
or ability timely to pay and perform all of the Obligations.
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<PAGE> 22
With respect to any Contractual Obligations contracted by Northland for
the direct or indirect benefit of NCP-Seven in common or shared with other
partnerships or Persons managed, owned (in full or in part) or operated by
Northland ("Affiliates"), and with respect to any other Contractual obligations,
services, property or equipment of every nature whatsoever supplied, shared or
in any way related to any Affiliate, Northland hereby agrees to use its best
commercially reasonable efforts to continue to supply all of the foregoing to
NCP-Seven or to Bank, and to cause any Affiliate controlled by Northland (and to
use its best efforts to cause any other Affiliate), to continue to supply all of
the foregoing to NCP-Seven or to Bank after any default, all on the same terms
and conditions as the foregoing was supplied to NCP-Seven before the default.
Northland further agrees not to resign as Managing General Partner and, so long
as it may legally do so, to continue to serve as Managing General Partner of
NCP-Seven under the terms and conditions set forth in the Constituent Documents
as they exist on the date hereof, upon request of Bank made after any default.
Section 7.12 No Mergers; Change of Control Etc. Not, without the Consent
of Bank, merge, consolidate, reorganize, liquidate, dissolve, enter into or form
a new partnership or joint venture or other combination, or otherwise dispose
of, terminate or change the partnership structure of NCP-Seven. Any change in
control of NCP-Seven shall constitute an Event of Default. "Change in control"
shall mean any event or action whatsoever that causes: (a) FNEJV to revoke or
attempt to revoke or in any manner impair the enforceability of Section 0 hereof
or the FNEJV Agreement or the Resolution, or (b) Northland to cease being the
sole Managing General Partner (as defined in the partnership agreement dated
9/30/87 of NCP-Seven which is part of the Constituent Documents) of NCP-Seven,
(c) the addition of another general partner of NCP-Seven which partner purports
to have any right or power now held in any manner by Northland or FNEJV; or (d)
or constitutes any sale, disposition or other transfer of any nature by
Northland of its ownership interest in NCP-Seven. Each of NCP-Seven and
Northland acknowledge that Bank shall be a third party beneficiary of the
promises made by Northland and/or FNEJV in the Constituent Documents and in all
management agreements between Northland or FNEJV and NCP-Seven, including but
not limited to the agreements referenced in the Subordination Agreement.
Section 7.13 Payment of Claims. Promptly pay or otherwise satisfy and
discharge all Debt, Contractual Obligations and Claims against it as and when
the same become due and payable, other than any thereof whose validity, amount
or collectability is being contested in good faith and for which reserves to
which Bank has Consented have been set aside.
Section 7.14 Insurance. Maintain for itself such insurance against loss
or damage to its tangible property of the kinds customarily insured against by
Persons similarly situated, with reputable companies or with the United States
government or any agency or instrumentality thereof, in such amounts and by such
methods as shall be adequate or by a reasonably prudent amount of
self-insurance, and will at all times maintain or cause to be maintained in full
force and effect, with reputable companies and in such amounts and by such
methods as shall be adequate, public liability insurance against loss or damage
to it for bodily injury or death in or about any premises occupied by it, and
liability insurance against loss or damage to it for bodily injury or death or
injury to property occurring by reason of the operation by it of any motor
vehicle or other equipment. To the extent the foregoing insurance is not also
required by any security agreement of which Bank is a beneficiary, the
requirements of this section shall be in addition to those of such security
agreement.
Upon demand from time to time, NCP-Seven shall furnish to Bank
certificates of insurance or (at NCP-Seven's option) duplicate policies
evidencing such coverage together with evidence to the satisfaction of Bank that
Bank is shown as loss payee to the extent of its insurable interest.
Section 7.15 Amendments. Not modify, supplement or amend the Constituent
Documents (except for ministerial changes and except to add or eliminate a
limited partner) in any respect whatsoever, and not accept the benefit of any
waiver of any provision or condition of the foregoing, without the Consent of
Bank.
Section 7.16 No Liens. Not create, assume or suffer to exist (excluding
Liens listed on Exhibit D hereto or permitted under Section 0) any Lien
(including the lien of an attachment, judgment or execution) or security
interest in any of its property, real or personal, whether now owned or
hereafter acquired, except:
(a) Liens or charges for current Taxes which are not delinquent
or remain payable without any penalty, or the validity of which is contested in
good faith by appropriate proceedings upon stay of execution of the enforcement
thereof and for which reserves Consented
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<PAGE> 23
by Bank have been established;
(b) Deposits or pledges securing (1) statutory obligations; (2)
surety or appeal bonds; (3) bonds for release of attachment, stay of execution
or injunction; or (4) performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, incurred and maintained in the
ordinary course of NCP-Seven's business;
(c) Easements, rights of way, covenants, restrictions and other
encumbrances affecting NCP-Seven's property, whether or not currently existing,
to which Bank Consents and which (1) do not directly or indirectly constitute a
Lien securing an obligation for the payment of money and (2) have no Material
Adverse Effect;
(d) Minor irregularities in the title to any such property which
have no Material Adverse Effect and to which Bank Consents; and
(e) other Liens securing Debt which does not exceed $500,000 in
the aggregate outstanding.
Section 7.17 Hazardous or Dangerous Wastes. Not use, generate,
manufacture, produce, store, release, discharge, dispose of or transport any
Hazardous Substance or allow any other person or entity to do so, except as
allowed by and in full compliance with all applicable laws and regulations.
Section 7.18 Maintenance of Deposit Accounts. Maintain all deposit
accounts for business operations with Bank and shall retain Bank (commencing at
Closing and continuing until payment in full of the Obligations) to provide all
other depository, discount and trust services provided to NCP- Seven from time
to time by third parties, other than escrow services as required under the
Purchase Contracts. The foregoing shall not apply to deposit accounts maintained
in the locale of the systems within the NCP System for the initial and temporary
deposit (before transfer to a Bank deposit account) of subscriber payments.
ARTICLE 8
EVENTS OF DEFAULT
Section 8.1 Events of Default. Without regard to previous knowledge or
any forbearance of Bank, the following shall be defaults under this Agreement
and the terms "Event of Default," "default" or "Default" shall mean any one or
more of the following events:
(a) Payment Default. NCP-Seven shall fail to pay or cause to be
paid within three days of when due any portion of any Obligation; or
(b) Security Exposure. Any Lien(s) of Bank in any material
portion of the Collateral shall, for any reason, be impaired or cease to exist
as valid and binding first priority Liens; any portion of the Collateral shall
be materially adversely affected (as determined by Bank) by any uninsured Loss
or theft or become the subject of or affected by any condemnation, forfeiture,
seizure or similar Claim; or any guarantor of any part of the Obligations shall
attempt to withdraw the guaranty or maintain it has been discharged or impaired;
or
(c) Breach of Other Covenants of Failure of any Condition.
NCP-Seven shall fail to perform, keep or observe any provision (not involving a
payment obligation) or condition, contained in this Agreement and any such
failure shall remain unremedied for 10 days after written notification thereof
shall have been given to NCP-Seven by Bank; notwithstanding the preceding
clause, if the Default is of a nature that is not susceptible to cure within 10
days and if NCP-Seven commences to cure the Default within said period,
NCP-Seven shall not be deemed to be in Default if it diligently prosecutes said
cure thereafter to completion and, notwithstanding such diligence, cures said
Default by the 30th day after the date of said notice; or
(d) Breach of Representation or Warranty. Any representation or
warranty made by NCP-Seven (or any of its representatives) under or in
connection with this Agreement or any Related Document shall prove to have been
untrue or misleading when made or becomes untrue in any material respect and,
unless such breach constitutes a violation of law, Bank is materially adversely
affected (as determined by Bank) thereby; or
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<PAGE> 24
(e) Cross Defaults (Payment and Other). NCP-Seven shall default
in a principal amount of $250,000 or more in the payment of any Debt of
NCP-Seven to any Person, including but not limited to default under other
agreements with Bank. NCP-Seven shall be in any default under any Related
Document or in any material default under any agreement with any Person, except
that the defaults in this sentence shall not be an Event of Default hereunder
until expiration of, without cure, any period for cure contained in the Related
Document; or
(f) ERISA. A Plan shall fail to maintain the minimum funding
standard required by Section 412 of the Code for any Plan Year or a waiver of
such standard is sought or granted under Section 412(d) of the Code; a Plan is,
shall have been or is likely to be terminated or the subject of termination
proceedings under Title IV of ERISA; or NCP-Seven (for purposes of this
paragraph, "NCP-Seven" shall have the meaning set forth in Section 0 of this
Agreement) has incurred or is likely to incur a liability to or on account of a
Plan in connection with the complete or partial termination of, or complete or
partial withdrawal from, any Plan covered or previously covered by Title IV of
ERISA, which liability or material risk of liability, in the opinion of Bank,
will have a Material Adverse Effect; or
(g) Bankruptcy, etc. NCP-Seven shall consolidate, dissolve or
liquidate or take an equivalent action or an involuntary petition shall have
been filed under any federal or state bankruptcy, reorganization, insolvency,
moratorium or similar statute against NCP-Seven, or a custodian, receiver,
trustee, assignee for the benefit of creditors or other similar official shall
be appointed to take possession, custody or control of the property of
NCP-Seven, unless such petition or appointment is set aside or withdrawn or
ceases to be in effect within 60 days from the date of said filing or
appointment; or NCP-Seven shall become insolvent or admit in writing its
inability to pay its debts as they mature, or shall file any petition or action
for relief relating to any bankruptcy, reorganization, insolvency or moratorium
law, or any other law or laws for the relief of, or relating to, debtors; or
NCP-Seven shall make an assignment for the benefit of creditors or enter into an
agreement of composition with its creditors; or NCP-Seven shall fail generally
to pay its debts as they become due; or NCP-Seven shall fail to promptly have
discharged any judgment, execution, garnishment or attachment of such
consequence as could impair the ability of NCP-Seven to carry on its operations
as presently conducted or to fulfill its obligations under this Agreement or the
Related Documents; or
(h) Change in Control or Authority. The occurrence of a change in
control as defined in Section ; or if any material (in the opinion of Bank)
permit, license or other authority of any nature from any Governmental Body now
or hereafter required in connection with the conduct of NCP-Seven's business or
its performance hereunder or under any Related Document shall not be obtained or
shall be revoked, withdrawn or withheld or otherwise fail to remain in full
force and effect; or
(i) Judgments. A judgment or order (not fully covered by
insurance) for the payment of money in excess of $400,000 or its equivalent in
another currency is entered against NCP-Seven or any of its assets, and such
judgment is not appealed and stayed within 10 days of entry or imposition
thereof; or Bank reasonably deems itself insecure.
Section 8.2 Acceleration and Remedies. Upon any Event of Default Bank
may terminate the Commitment and any other obligation hereunder or under any
Related Document. With respect to any Event of Default, (i) in any such event
described in Section 0, all Obligations shall automatically be due and payable
without notice or demand or any action whatsoever by Bank; and (ii) in all other
Events of Default Bank may, upon notice (of any nature allowed by law) to NCP-
Seven, declare all Obligations (or any part thereof), to be forthwith due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by NCP-Seven.
In addition, upon any Event of Default, Bank may without prior notice or
demand, exercise any and all rights available to it under this Agreement or any
Related Document, in equity or by applicable law, including but not limited to
(at the sole option of Bank), all actions that could be taken by a secured party
under the Washington, Georgia or Texas Uniform Commercial Codes (even if all
would not apply but for this contract). No action taken by Bank shall be deemed
to be an election of remedies by Bank, it being the intent of the parties that
Bank shall be entitled repeatedly to exercise all remedies separately or
concurrently and in any manner allowed by law.
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<PAGE> 25
ARTICLE 9
MISCELLANEOUS
Section 9.1 Notices, Etc. Except as otherwise provided in this Agreement
or as otherwise allowed to Bank by law, all notices, requests, demands or other
communications shall be in a writing addressed to the respective party at the
address given below or to such other address as the parties may from time to
time specify in writing. Notice shall be deemed to have been given when (a)
personally delivered, (b) given by a telex or machine-confirmed facsimile, or
(c) after placement in the U.S. mails as certified or registered, return receipt
requested, first-class postage prepaid, the receipt indicates delivery or
refusal or failure to accept delivery:
If to NCP-Seven, Northland or NORTHLAND CABLE PROPERTIES SEVEN
FNEJV LIMITED PARTNERSHIP
1201 Third Avenue #3600
Seattle, Washington 98101
Telecopy: (206) 623-9015
Telephone: (206) 621-1351
Attn: James Penney
John S. Whetzell
With a copy to: John E. Iverson
Ryan Swanson & Cleveland
1201 Third Avenue #3400
Seattle, WA 98101
Telecopy: (206) 583-0359
Telephone: (206) 464-4224
If to Bank: SEAFIRST BANK
Seafirst Agency Services
701 Fifth Ave., 16th Floor
Seattle, Washington 98104
Attention: Ken Puro
Telecopy: (206) 358-0971
Telephone: (206) 358-0138
NCP-Seven and Northland each agree to forward all notices received by either to
FNEJV (if notice to FNEJV be required by FNEJV or applicable law).
Section 9.2 No Waiver; Remedies. No failure on the part of Bank to
exercise, and no delay in exercising, any right under this Agreement or any
Related Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any of the aforesaid preclude any other or
further exercise thereof or the exercise of any other right from time to time
and as often as Bank may deem expedient and without notice (except any notice
which is specifically required by written agreement). The remedies provided in
this Agreement or the Related Documents are cumulative (and may be exercised
singly or concurrently) and are not exclusive of any remedies provided by law or
in equity, now or hereafter existing.
Section 9.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP except as otherwise
stated herein.
Section 9.4 Assignment and Appointment of Lead Agent. This Agreement
shall not be assignable by NCP-Seven without Bank's Consent. Bank may, with the
prior consent of NCP- Seven, which consent shall not be unreasonably withheld or
delayed, sell, transfer, assign, negotiate, pledge, hypothecate, syndicate or
participate all or any portion of this Agreement or any Related Document, except
that (a) each Person obtaining any interest in this Agreement or any Related
Document shall be subject to all terms and conditions contained herein or in any
Related Document regarding Bank, and (b) Bank shall provide to NCP-Seven the
name and address of any Participant at least 10 days before any transfer
thereto, but any failure to provide such shall not affect the validity of the
transfer or the rights of the Participant. In connection with any disposition
made by the Bank or in connection with any examination of Bank, Bank may
disclose to the proposed transferee or regulatory authority any information
regarding NCP-Seven which is in Bank's possession or which NCP-Seven is required
to deliver to Bank, all at Bank's own expense. Bank may also disclose such
information to its affiliates which affiliates, unless otherwise agreed by NCP-
Seven, shall hold the information in confidence (except for disclosure thereof
to regulators and
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<PAGE> 26
other appropriate agents [e.g., legal counsel] of the affiliate). NCP-Seven
shall have no liability to any participant or assignee of Bank to reimburse or
indemnify such institution for any Costs and Fees incurred in its assignment or
participation, including in any due diligence activities associated therewith.
Notwithstanding the foregoing, Seafirst agrees to retain at least 40% of
Advances made hereunder until they are paid in full and each Participant agrees,
by virtue of taking an interest in this Agreement or any Related Document (all
of which are hereby made subject to this Section 0), that Seafirst shall be the
agent of each Participant for purposes of dealing with NCP-Seven and its agents,
it being the request of NCP-Seven to deal with one lender only and not with
numerous lenders. Seafirst and not any Participant shall be the sole party
authorized or obligated to provide any consent or approval required,
contemplated or authorized by this Agreement or any Related Document. Seafirst
may, however, in its discretion or as required by any other section of this
Agreement or other agreements (including without limitation agreements with
Participants), consult with, take into consideration or be guided by the views
of Participants determining whether to provide such consents or approvals. In
any such agreement between Seafirst and Participants, a minimum of 100% (of Pro
Rata Shares) approval shall be required for any consent, modification, or waiver
which would (i) subject Bank to any additional obligations; (ii) reduce the
principal of, interest on, or any fees under the Loan Documents; (iii) postpone
any date fixed for any payment of principal of, or interest on, the Obligations
or any fees under this Agreement, or otherwise change the amortization or
maturity of the Obligations; (iv) consent to the assignment or transfer by NCP-
Seven of any of its rights and obligations under this Agreement and other Loan
Documents; (v) waive any Event of Default and its consequences; or (vi) release
any Collateral, other than that which is sold or disposed of in the ordinary
course of business; and a minimum of 67% approval shall be required for any
other consent, modification or waiver. Nothing in this paragraph shall create
any duties of Seafirst to any Participant that are not expressly set forth in
another writing signed by Seafirst, it being the intention of this paragraph
only to designate with whom NCP-Seven will deal and not to impose or create
duties of Seafirst to Participants.
Section 9.5 Governing Law; Venue. This Agreement and each Related
Document shall be deemed to have been made in Washington and the validity of
such documents, their construction, interpretation and enforcement, and the
rights of Bank in any Collateral, shall be determined under, governed by and
construed in accordance with the laws of Washington. Notwithstanding the
foregoing, if the laws of another state govern or provide additional rights to
Bank regarding said Collateral, such laws shall apply to the extent required or
desired by Bank in its sole discretion. In any court proceeding (if any, given
Section 0 below), NCP-Seven agrees to submit to the jurisdiction of the state or
federal court selected by Bank, and venue of any action concerning this
Agreement or any Related Document shall be in King County, Washington. NCP-Seven
hereby irrevocably waives to the fullest extent permitted by law any objection
which it may now or hereafter have to the laying of such venue and any claim
that any such forum is an inconvenient forum. Nothing in this Section shall
impair the right of Bank to bring any action or proceeding against NCP-Seven or
its property in the courts of any other county or jurisdiction and NCP-Seven
irrevocably submits to the nonexclusive jurisdiction of the appropriate courts
(as selected by Bank) of the jurisdiction in which NCP-Seven is organized or any
place where any property or any office of NCP-Seven is located.
NCP-Seven warrants that the name and address of its registered agent for
service of process set forth in Exhibit C hereto is true and correct and agrees
not to change its registered agent without prior written notice to Bank.
Section 9.6 Mandatory Arbitration. At the request of either Bank or
NCP-Seven, any Claim or controversy between Bank and NCP-Seven, Arising Out Of
this Agreement or any Related Document, or Arising Out Of any alleged tort,
shall be settled by arbitration in Seattle, Washington. The United States
Arbitration Act shall apply even though this Agreement is otherwise governed by
Washington law. The proceedings shall be administered by the American
Arbitration Association under its commercial rules of arbitration. Any
controversy over whether an issue is arbitrable shall be determined by the
arbitrator(s). Judgment upon the arbitration award may be entered in any court
having jurisdiction over the parties. The institution and maintenance of an
action for judicial relief or pursuit of an ancillary or provisional remedy
shall not constitute a waiver of the right of either party, including the
plaintiff, to submit the controversy or claim to arbitration if such action for
judicial relief is contested. For purposes of the application of the statute of
limitations, the filing of an arbitration pursuant to this subsection is the
equivalent of the filing of a lawsuit, and any Claim or controversy which may be
arbitrated under this subsection is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether any such
claim or controversy is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis.
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<PAGE> 27
The parties consent to the joinder of any guarantor, hypothecator, or other
party having an interest relating to the Claim or controversy being arbitrated
in any proceedings under this Section.
Notwithstanding any contrary provision of this Agreement, no controversy
or Claim shall be submitted to arbitration without the consent of all parties if
at the time of the proposed submission, such controversy or Claim arises from or
relates to an Obligation secured by real property.
No provision of this Section shall limit the right of Bank to exercise
self-help remedies such as set-off, foreclosure, retention or sale of
Collateral, or obtaining any ancillary, provisional, or interim remedies from a
court of competent jurisdiction before, after, or during the pendency of any
arbitration proceeding. The exercise of any such remedy does not waive the right
of either party to request arbitration.
Section 9.7 FNEJV Delegation of All Powers. FNEJV, by executing the
FNEJV Agreement, Northland, by executing the Agreement and Consent that appears
at the end of this Agreement, and NCP-Seven, by executing this Agreement, and
all of the foregoing, by receiving the benefits of this Agreement, each hereby
agree as follows, and warrant to Bank that the FNEJV Agreement remains in full
force and effect:
(a) FNEJV does hereby direct and irrevocably delegate to
Northland and empower Northland with all of the powers and authorities
referenced in (b) below and for the same purpose does further hereby
constitute and appoint Northland as agent of and/or attorney-in-fact for
FNEJV with full power, authority and consent to act from time to time
for and on behalf of FNEJV for the following purposes and without notice
to or consultation with FNEJV or any joint venturer thereof, all as
Northland shall act through its agents John S. Whetzell, President, and
James A. Penney, Vice President and/or General Counsel, or either of
them or their successors in office. The power of attorney contained
herein shall be a special power coupled with an interest; and
(b) after the execution and delivery of this Agreement and any or
all of the other Related Documents (collectively, "Loan Documents"),
Northland shall be empowered from time to time without further
authorization by or consent of FNEJV or any joint venturer thereof and
before, during or after any Default, and in its own name or as agent for
FNEJV or as attorney-in-fact for FNEJV:
(i) to amend, supplement, extend, renew and/or replace any
or all Loan Documents; to restructure, work-out, compromise,
release and settle any obligation; to exercise all power,
authority and discretion of FNEJV with respect to any matter now
or hereafter relating to any Loan Document; to employ agents and
sub-agents for the purpose of exercising all or any part of the
power and authority granted herein, all of which agents and
sub-agents shall also be agents of FNEJV; to accept service of
process and all other process for FNEJV and each joint venturer
thereof, or any of them; and to otherwise deal in all respects
whatsoever with the Bank alone and without the further consent or
joinder or approval of FNEJV, it being the intent of this Section
0 that until payment and performance in full of the Obligations
the Bank shall deal exclusively with Northland for all purposes
whatsoever and that FNEJV and each joint venturer thereof shall
be legally bound by all actions of Northland Arising Out Of this
Section 0 or by Bank in reliance on said section; and
(ii) to take all such other and further action and do such
things as are incidental to any of the foregoing, including but
not limited to, the making, execution, signing, sealing,
acknowledgment, publication, filing and delivery of any contract,
agreement, deed, deed of trust, affidavit, loan application, loan
commitment, evidence of debt, note, bond, mortgage, pledge,
hypothecation, security agreement, financing statement,
guarantee, certificate, statement, estoppel certificate,
assignment, license, permit, approval, receipt, release and such
other and further instruments, certificates, documents or
agreements or other papers as Northland may deem necessary from
time to time in order to accomplish the actions or transactions
set forth in and contemplated by the provisions of the Loan
Documents as amended from time to time, all as empowered hereby
or as agent for or in the name, place, and stead of FNEJV.
Section 9.8 Entire Agreement; Headings; Amendments; Severability; Time;
Counterparts. This Agreement constitutes the entire Agreement between the
parties regarding the terms hereof and supersedes any and all other agreements
relating to the subject matter of this Agreement, oral
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<PAGE> 28
or written, among any or all of the parties (except for the Related Documents).
The headings of the various sections and subsections in this Agreement and in
each Related Document are for convenience of reference only and do not
constitute a part of the respective agreement and shall not affect the meaning
or construction of any provision thereof. No amendment, waiver or forbearance of
any provision of this Agreement or of any Related Document shall be effective
unless the same shall be in a writing signed by Bank. Any such waiver or
forbearance shall only be effective for the specific purpose and in the specific
instance given and not for other or subsequent purposes or instances and no
forbearance or waiver shall affect Bank's right to refuse further forbearances
or waivers. If any portion of this Agreement or of any Related Document is held
to be invalid or unenforceable, the remaining portions and provisions and
conditions thereof shall remain in full force and effect except for Bank's
obligations under the Commitment. Time is of the essence of this Agreement and
each Related Document. The signature pages of the Agreement may be executed in
counterparts.
NOTICE: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
Each of the undersigned represents and warrants that each of the
officers signing on behalf of the undersigned, respectively, has been duly
authorized to execute and deliver this Agreement on behalf of the undersigned.
Dated and effective as of December 1, 1997.
NORTHLAND CABLE PROPERTIES SEVEN SEAFIRST BANK,
LIMITED PARTNERSHIP, a national banking association
a Washington limited partnership
By: Northland Communications By ______________________________
Corporation, General and Managing Mike Loken,
General Partner Vice President
By ____________________________________
James A. Penney, Vice President, on
behalf of Northland Communications
Corporation as Managing General
Partner and as agent for FN Equities
Joint Venture, Administrative General
Partner
AGREEMENT and CONSENT
Northland hereby makes the representations and warranties and agreements
contained in and agrees and consents to the terms and conditions of Sections
0,0, 0, 0, 0, and 0 of the foregoing Commercial Loan Agreement, each of which
sections are incorporated herein by this reference. Northland further agrees
that at the request of either Bank or Northland, any Claim or controversy
between Bank and Northland Arising Out Of this Agreement or any Related
Document, or Arising Out Of any alleged tort, shall be settled by arbitration in
Seattle, Washington under the terms and conditions of Section 0 of said
Commercial Loan Agreement, which section is incorporated herein.
This agreement and consent shall be binding upon Northland individually and in
addition to its agreements as general partner of NCP-Seven. Dated as of this 1st
day of December, 1997.
NORTHLAND COMMUNICATIONS
CORPORATION, a Washington corporation
By _______________________________________
James A. Penney, Vice President
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<PAGE> 29
DEFINITIONS ADDENDUM
This Definitions Addendum is an attachment to and part of that certain
Commercial Loan Agreement dated as of December 1, 1997 ("Agreement"). Except as
otherwise stated in the Agreement, the following terms shall have the following
meanings:
"Accounts" means all of NCP-Seven's receipts, accounts, drafts,
acceptances, contract rights of and for moneys and performances due or to become
due, chattel paper, and other forms of receivables, now owned or later acquired,
which derive from or arise out of the conduct of NCP- Seven's business, sale of
its inventory, or the furnishing of services, together with all guaranties and
security interests for, and the cash and noncash proceeds of, all the foregoing.
"Adjusted LIBOR Rate" shall mean for any day that per annum rate equal
to the sum of (a) the LIBOR Margin, (b) the Assessment Rate, and (c) the
quotient of (i) the LIBOR Rate as determined for such day, divided by (ii) the
Reserve Adjustment. The Adjusted LIBOR Rate shall change with any change in the
LIBOR Rate on the first day of each Interest Period and on the effective date of
any change in the Assessment Rate or Reserve Adjustment. The "LIBOR Margin"
shall be 2.625% per annum from Closing through the date on which NCP-Seven
reports results for the first quarterly Determination Date, and thereafter shall
be as set forth below depending upon the ratio of Total Debt of NCP-Seven to its
Annualized Cash Flow, which ratio shall initially be measured on the
Determination Date immediately preceding the date of the Advance creating the
LIBOR Rate Loan, and shall thereafter be measured on each Determination Date
during the Interest Period. Any change in the ratio causing the LIBOR Margin to
increase or decrease shall become effective on the Determination Date on which
the change occurs:
<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C>
Total Debt to Annualized Cash Flow Ratio LIBOR Margin
- ------------------------------------------------------------------------------------------------
Greater than or equal to 5.50 to 1 2.625% per annum
- ------------------------------------------------------------------------------------------------
Less than 5.50 to 1 but greater than or equal to 5.00 to 1 2.375% per annum
- ------------------------------------------------------------------------------------------------
Less than 5.00 to 1 but greater than or equal to 4.50 to 1 2.125% per annum
- ------------------------------------------------------------------------------------------------
Less than 4.50 to 1 but greater than or equal to 4.00 to 1 1.875% per annum
- ------------------------------------------------------------------------------------------------
Less than 4.00 to 1 but greater than or equal to 3.00 to 1 1.50% per annum
- ------------------------------------------------------------------------------------------------
less than 3.0 to 1 1.125% per annum
- ------------------------------------------------------------------------------------------------
</TABLE>
"Advance" shall mean the disbursement of loan proceeds under the Note.
An Advance shall not constitute a "payment order" under R.C.W. Section
62A.4A-103.
"Agent" means Seafirst or any successor agent for Bank.
"Agreement" means this Commercial Loan Agreement, as the same may be
amended, extended, restated or renewed from time to time.
"Amendment to Subordination Agreement" means an amendment to the
Subordination Agreement changing its reference to the Obligations under this
Agreement rather than merely to the Existing Bank Debt, and providing that no
management fees may be paid by NCP-Seven to Northland (a) if Event of Default
shall have occurred and be continuing, or any event which, upon a lapse of time
or notice or both, would become an Event of Default; or (b) in excess of five
percent of NCP-Seven's gross service revenues for the immediately preceding
fiscal year.
"Annualized Cash Flow" means the product of Quarterly Cash Flow for the
fiscal quarter in question times four (4).
"Arising Out Of" means directly or indirectly arising out of, related
to, arising in connection with, or resulting or stemming from.
"Assessment Rate" means as of any day the minimum annual percentage
rate, if any, established by the Federal Deposit Insurance Corporation (or any
successor) for the assessment due from members of the Bank Insurance Fund (or
any successor) in effect for the assessment period during which said day occurs
based on deposits maintained at such members' offices located
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<PAGE> 30
outside of the United States.
"Assignment" means the Assignment dated September 15, 1993, made by
NCP-Seven to Seafirst, as amended from time to time.
"Bank" shall mean Seafirst, and any of its Participants, successors and
assigns. If there be a Participant, it shall have all rights and duties of
"Bank" except as set forth in Section 0 or as otherwise expressly set forth in
the Agreement.
"Base Rate" shall mean, on any given day:
(a) the greater of (i) the Reference Rate, or (ii) the sum of the
Fed Funds Rate plus 0.5%; plus
(b) the Base Rate Margin.
"Base Rate Loan" means any Loan accruing interest at the Base Rate.
"Base Rate Margin" shall be 1.75% per annum from Closing through the
date on which NCP-Seven reports results for the first quarterly Determination
Date, and thereafter shall be as set forth below depending upon the ratio of
Total Debt of NCP-Seven to its Annualized Cash Flow, which ratio shall initially
be measured on the Determination Date immediately preceding the date of the
Advance creating the Base Rate Loan, and shall thereafter be measured on each
Determination Date during the Interest Period. Any change in the ratio causing
the Base Rate Margin to increase or decrease shall become effective on the
Determination Date on which the change occurs:
<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C>
Total Debt to Annualized Cash Flow Ratio Base Rate Margin
- ------------------------------------------------------------------------------------------------
Greater than or equal to 5.50 to 1 1.50% per annum
- ------------------------------------------------------------------------------------------------
Less than 5.50 to 1 but greater than or equal to 5.00 to 1 1.25% per annum
- ------------------------------------------------------------------------------------------------
Less than 5.00 to 1 but greater than or equal to 4.50 to 1 1.00% per annum
- ------------------------------------------------------------------------------------------------
Less than 4.50 to 1 but greater than or equal to 4.00 to 1 0.75% per annum
- ------------------------------------------------------------------------------------------------
Less than 4.00 to 1 but greater than or equal to 3.00 to 1 0.375% per annum
- ------------------------------------------------------------------------------------------------
less than 3.0 to 1 0.00% per annum
- ------------------------------------------------------------------------------------------------
</TABLE>
"Borrowing Notice" means the notice form attached and incorporated
herein as Exhibit A appropriately completed and executed by any officer of
Northland who, for transactions described in No. 1 of the notice (requesting
advances), is the President or Treasurer, each of whom is severally authorized
to request advances and direct the disposition of any such advances until
written notice from NCP-Seven of the revocation of such authority is received by
Bank. For transactions described in No. 2 of the notice (selecting interest
rates), execution of the Borrowing Notice shall be by any officer of Northland
who is the President, Treasurer, or any financial vice president, each of whom
is severally authorized to select such rates.
"Business Day" means any day other than (i) a Saturday, Sunday or legal
holiday, (ii) a day on which commercial banks in Seattle, Washington are
authorized or required by law or executive order to close; or (iii) a day on
which Bank is closed.
"Cable System" means each cable television system, and all other assets
and property to be purchased by NCP-Seven, pursuant to a Purchase Contract.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including that
portion of capitalized leases which is capitalized on the balance sheet of
NCP-Seven) by NCP-Seven during that period that, determined in accordance with
GAAP, are required to be included in or reflected by the property, plant or
equipment or similar fixed asset accounts reflected in the balance sheet of
NCP-Seven, but excluding expenditures in respect of permitted acquisitions of
Cable Systems that would otherwise be deemed "Capital Expenditures" hereunder.
"Cash Flow" means the total of all operating revenues, including
interest income, of NCP- Seven, less all operating expenses (other than all
management fees subordinated to the Bank under
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<PAGE> 31
the Subordination Agreement), all as determined according to GAAP.
"Claims" means any and all administrative, legal or other actions,
suits, appeals, settlements, consent decrees, investigations, liabilities
(including without limitation all liabilities of every nature from environmental
laws or laws concerning hazardous, dangerous or other wastes, including without
limitation 42 U.S.C. Section 9601 et. seq. (CERCLA); 42 U.S.C. Section 6901 et.
seq. (SWDA/RCRA); 42 U.S.C. Section 7401 et. seq. (CAA); 42 U.S.C. Section 1251
et. seq. (FWPCA/CWA); 42 U.S.C. Section 300(f) et. seq. (PHSA/SDWA); 15 U.S.C.
Section 2601 et. seq. (TSCA); Ch. 90.48 RCW (WPCA) ; Ch. 70.105D RCW (MTCA); Ch.
70.105 RCW (HWMA) ; Ch. 70.94 RCW (WCAA); Ch. 90.56 RCW (OHSSPRA); Ch. 88.46 RCW
(VOSPRA), all as amended from time to time, demands, penalties, fines and Taxes.
"Closing" and "Closing Date" shall mean the date this Agreement and the
Related Documents are executed and delivered to Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" has the meaning set forth in Section 0.
"Commitment" has the meaning set forth in Section 0.
"Commitment Period" means the period commencing on Closing and ending
December 1, 2000.
"Consent" means a written document containing the approval of and
executed by the Person to be bound by the document.
"Consent to Assignment" means the Consents to Assignment required under
the Security Agreement.
"Contingent Obligation" means, with respect to any Person, any guarantee
of Debt or any other obligation of any other Person or any assurance with
respect to the financial condition of any other Person, whether direct, indirect
or contingent, including, without limitation, any purchase or repurchase
agreement or keepwell, take-or-pay, through-put or other arrangement of whatever
nature having the effect of assuring or holding harmless any Person against loss
with respect to any obligation of such other Person; provided, however, that the
term "Contingent Obligation" shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined in good faith
by the Person subject to such obligation.
"Constituent Documents" means the Amended and Restated Agreement of
Limited Partnership of Northland Cable Properties Seven Limited Partnership
among Northland, FN Equities Joint Venture, a California joint venture, Richard
I. Clark, the original limited partner, and the remaining parties thereto as
limited partners, dated as of September 30, 1987, as amended from time to time,
and other partnership agreement governing or affecting NCP-Seven.
"Contractual Obligation" means, with respect to any Person, each
provision of this Agreement, each Related Document and all provisions of all
other agreements, contracts, instruments and undertakings to which such Person
is a party or by which it or any of its property is or purports to be bound.
"Costs and Fees" means all out-of-pocket or incurred costs, attorneys'
fees (including without limitation, fees of in-house counsel and of paralegals
and clerks), fees of accountants, collection and other agents and all other fees
and expenses of every nature whatsoever now or hereafter incurred from time to
time, including without limitation all expenses related to the Collateral
(including without limitation, all appraisal, filing and recording fees), all as
incurred by Bank in good faith and in its reasonable discretion (collectively
"Costs and Fees").
"Debt" means all consolidated obligations, on a GAAP basis, included in
the liability section of a balance sheet of NCP-Seven including, without
limitation and without duplication of such amounts, and regardless of whether
such items would otherwise not be shown on the liability side of a balance
sheet:
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<PAGE> 32
(a) Guaranties. All obligations guaranteed or assumed by
NCP-Seven, directly or indirectly in any manner, or endorsed (other than
for collection and deposit in the ordinary course of business) or
discounted by NCP-Seven with recourse, including all debt guaranteed by
NCP-Seven through any agreement, contingent or otherwise;
(b) Contingent Reserves. The aggregate amount of reserves
established on the books of NCP-Seven with respect to contingent
liabilities (except reserves which are properly treated as deductions
from assets);
(c) Leases. All obligations for the payment of money or other
property pursuant to capital leases under which NCP-Seven is leasing
real or personal property; and
(d) Partnership Debts. All obligations of any partnership or
joint venture of which NCP-Seven is a member, if NCP-Seven is legally
liable for such obligations.
"Deed(s) of Trust" means all (individually and collectively) deeds of
trust delivered pursuant to Section 0, each as amended from time to time.
"Default" or "Event of Default" has the meaning set forth in Section 0
hereof.
"Determination Date" means the Closing Date and the last Business Day of
each September, December, March and June thereafter through and including June
30, 2006.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Excess Cash Flow" means the Cash Flow (as defined herein and in the
following sentence) for each year beginning January 1, 1997, less all management
fees subordinated to Bank under the Subordination Agreement and less all
authorized distributions made pursuant to Section 0 and less all authorized
Capital Expenditures made pursuant to Section 0 for said calendar year. For
purposes of calculating the operating expenses component of "Cash Flow" when
calculating Excess Cash Flow, such expenses shall include Proforma Debt Service
for the next fiscal year (as opposed to the actual debt service for the fiscal
year with respect to which the Excess Cash Flow is being calculated).
"Existing Bank Debt" means Debt incurred pursuant to the Commercial Loan
Agreement dated February 29, 1996, between NCP-Seven and Seafirst.
"Fed Funds Rate" means the fixed rate of interest per annum quoted as
the "Federal Funds" rate by Garvin Guybutler on the display designated as "Page
5" on the Telerate Service (or such other page on that service or such other
service designated by Garvin Guybutler for the display of its Federal Funds rate
quote, or if not quoted by Garvin Guybutler, then by a comparable secondary
market source acceptable to Bank), on the Determination Date.
"Fee Letter" means the letter dated November 25, 1997, addressed to Gary
Jones of Northland, from Ken Puro of Seafirst.
"Fixed Charges" means the sum of interest expenses, principal payment on
any Debt (excluding payment of Excess Cash Flow made pursuant to Section 0),
Capital Expenditures, plus management fees paid for any given fiscal year.
"FLSA" means the Fair Labor Standards Act of 1938, as amended from time
to time, and the regulations promulgated pursuant thereto.
"FNEJV" means FN Equities Joint Venture, a California joint venture, as
general and Administrative General Partner of NCP-Seven.
"FNEJV Agreement" shall mean the FNEJV Agreement dated September 15,
1993, between FNEJV and John S. Simmers.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles as in effect from time to time in the United
States and as consistently applied by NCP-Seven.
"Governmental Body" means any foreign or domestic government; court;
federal, state,
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<PAGE> 33
county, municipal or other department, commission, board, bureau, agency,
administrator, public authority, instrumentality; arbitrator; mediator; or other
governmental regulator or authority.
"Hazardous Substance" means any substance or matter (or nonmatter) of
every nature whatsoever regulated in any manner by laws, rules or regulations,
standards or guidelines concerning environmental matters, hazardous, dangerous
or other wastes of every nature whatsoever, including but not limited to all
laws and regulations referenced in the definition of "Claims" and all laws and
regulations concerning radiation and other matters relevant to cable television
systems.
"Interest Payment Date" means (a) for a Base Rate Loan, the last
Business Day of each September, December, March and June; and (b) for a 1, 2, or
3-month LIBOR Rate Loan, the last Business Day of the Interest Period, and for a
6-month LIBOR Rate Loan the 90th day and the last Business Day of the Interest
Period; and (c) for all Loans, the maturity date of each Loan, including
maturity by acceleration.
"Interest Period" means the period commencing on the date of any Advance
and ending on the date set forth below, subject to acceleration after an Event
of Default. For any LIBOR Rate Loan, the end of the Interest Period shall be the
last day of the one, two, three or six month period designated by NCP-Seven in a
Borrowing Notice (so long as such period ends on or before June 30, 2006). For
any Base Rate Loan, the end of the Interest Period shall be June 30, 2006,
unless NCP- Seven shall cause the period to expire earlier by submitting a
Borrowing Notice requesting an Adjusted LIBOR Rate for said loan (and thereby
converting the Base Rate Loan to a LIBOR Rate Loan). Notwithstanding the
foregoing, in the event that the last day of any Interest Period would fall on a
day other than an International Banking Day, the Interest Period shall be
extended to the next succeeding International Banking Day (unless said day would
be in the next calendar month in which case the date for payment shall be the
immediately preceding International Banking Day) if such is not later than June
30, 2006.
"Interest Rate Risk Agreement" means, individually and collectively,
each mutually agreeable interest rate hedging or risk agreement entered into by
NCP-Seven pursuant to Section 0, including but not limited to any interest rate
swaps, basis swaps, forward rate agreements, forward price agreements, caps,
floors, collars, swaptions, or interest rate options.
"International Banking Day" means a Business Day that is also a London
Banking Day.
"LIBOR Rate" means for any Interest Period the per annum rate,
calculated on the basis of actual number of days elapsed over a year of 360
days, for U.S. Dollar deposits for a period equal to the Interest Period
appearing on the display designated as "Page 3750" on the Telerate Service (or
such other page on that service or such other service designated by the British
Banker's Association for the display of that Association's Interest Settlement
Rates for U.S. Dollar deposits) as of 11:00 a.m., London time, on the day which
is two London Banking Days prior to the first day of the Interest Period. If
there is no period equal to the Interest Period on the display, the LIBOR Rate
shall be determined by straight-line interpolation to the nearest month (or week
or day if expressed in weeks or days) corresponding to the Interest Period
between the two nearest neighboring periods on the display. Bank shall endeavor
to notify NCP-Seven of the LIBOR Rate used in connection with a LIBOR Rate Loan
on the date the rate is established, but Bank shall have no liability for any
failure timely to so notify NCP-Seven.
"LIBOR Rate Loan" means any Loan accruing interest at the Adjusted LIBOR
Rate.
"Lien" means, with respect to any Person, any security interest, pledge,
mortgage, charge, option, assignment, hypothecation, encumbrance, attachment,
garnishment, sequestration, forfeiture, execution or other voluntary or
involuntary lien upon or affecting the revenues of such Person or any real or
personal property in which such Person has or hereafter acquires any interest,
except (i) Liens for Taxes which are not delinquent or which remain payable
without penalty or the validity or amount of which is being contested in good
faith by appropriate proceedings and, if the Lien exceeds $50,000, reserves
Consented to by Bank; (ii) Liens imposed by law (such as mechanics' liens)
incurred in good faith in the ordinary course of business which are not
delinquent or which remain payable without penalty or the validity or amount of
which is being contested in good faith by appropriate proceedings and, if the
Lien exceeds $50,000, reserves Consented to by Bank; and (iii) deposits or
pledges under workmen's compensation, unemployment insurance, social security,
bids, tenders, contracts (except for repayment of borrowed money), or leases, or
to secure statutory obligations or surety or appeal bonds or to secure
indemnity, performance or other similar bonds given in the ordinary course of
business.
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<PAGE> 34
"Loan" or "Loans" means any Advances made pursuant to the Commitment, as
amended, extended or renewed from time to time.
"London Banking Day" means any day other than a Saturday, Sunday, or
other day on which commercial banks in London, England, are authorized or
required by law or executive or regulatory order to close or a day on which
London banks are closed.
"Loss" or "Losses" means any and all Costs and Fees, losses,
liabilities, deficiencies, obligations, damages and other expenses of every
nature, including without limitation interest and penalties.
"Material Adverse Effect" means any material adverse effect on (a) the
validity or enforceability of this Agreement or any of the Related Documents,
(b) the value of any of the Cable Systems, (c) NCP-Seven's financial condition
or operations, or (d) the ability of NCP-Seven to fulfill its obligations under
this Agreement or any of the Related Documents.
"NCP-Seven" means Northland Cable Properties Seven Limited Partnership,
a Washington limited partnership.
"NCP System" means all of the cable television reception and
distribution systems (including without limitation headends, trunk cables,
feeder cables, microwave transmission and reception facilities, drops and
associated electronic equipment), wherever located (including but not limited to
Washington, Georgia and Texas), which are now or hereafter directly or
indirectly owned or operated (or are legally capable of being operated) by
NCP-Seven, including without limitation, each Cable System (once owned or
operated) and all "Systems" as defined in and subject to the Constituent
Documents. The NCP System shall include but not be limited to the cable
television systems serving the communities listed in Exhibit D which is attached
and incorporated herein.
"Northland" means Northland Communications Corporation, a Washington
corporation, as general partner and as Managing General partner of NCP-Seven
and, where indicated, individually.
"Note" means the promissory note in substantially the form attached as
Exhibit E evidencing the Loans, all as amended, extended and renewed from time
to time.
"Obligations" means the Note, all Costs and Fees, all indemnifications
and all other amounts of every nature whatsoever now or hereafter due or to
become due Bank under this Agreement or under any Related Document, as amended,
renewed, extended or replaced from time to time, and any obligations of
NCP-Seven under any Interest Rate Risk Agreements entered into between NCP-
Seven and Seafirst or any other Bank.
"Operating Rights" means all licenses, permits, franchises, agreements
with public utilities and microwave transmission companies, pole attachment,
use, access and rental and utility agreements, agreements with broadcasters for
retransmission or concerning "must-carry" status, and all other contracts and
authorities with, from, granted or authorized by any Governmental Body or Person
used or useful in or necessary to the ownership, maintenance or operation of any
of NCP Systems. Operating Rights shall include the Programming Contract.
"Participant" means one or more entities to whom Bank transfers an
interest in this Agreement or any Related Document. References to Bank shall be
deemed to include all Participants. The interest of each Participant (and
Seafirst) shall be an undivided interest in all rights under this Agreement and
each Related Document equal to the percentage of the outstanding principal
balance of the Obligations funded by that Participant (hereafter the "Pro Rata
Share"), and each Participant's (including Seafirst's) obligation under the
Commitment shall be limited to its Pro Rata Share of the Commitment. Each
Participant shall become a Participant upon execution by both such Participant
and Seafirst, and delivery to Seafirst, of an Assignment and Assumption
Certificate in the form of Exhibit Q attached.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or any other entity or organization,
including a state, government or political subdivision or an agency or
instrumentality thereof.
"Plan" means (i) any "employee welfare benefit plan" (as such term is
defined in Section 3(1) of ERISA); (ii) any "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA) or a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA); (iii) any employee benefit
plan maintained in connection with any trust described in Section 401(c)(9) of
the Code; or (iv) a combination of such plans; if such plan or plans is
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maintained or contributed to, or at any time during the five calendar years
preceding the date of this Agreement was maintained or contributed to, by
NCP-Seven or under which NCP-Seven has or, during the term of this Agreement,
will have any liability. For purposes of this paragraph, the term "NCP-Seven"
shall include NCP-Seven and any corporation, partnership, sole proprietorship or
other entity if NCP-Seven and such other entity or entities are (i) corporations
which are members of a controlled group of corporations as defined in Section
414(b) of the Code, (ii) trades or businesses (whether or not incorporated)
which are under common control as defined in Section 414(c) of the Code, (iii)
members of an affiliated service group as defined in Section 414(m) or 414(o) of
the Code, or (iv) any combination of the foregoing.
"Proforma Debt Service" shall mean that amount reasonably projected by
NCP-Seven as necessary to make all payments required on the Total Debt when due.
For purposes of making the projection for an entire year, NCP-Seven shall
determine an assumed amount of interest due for the year in question by using
the interest rate in effect on the Determination Date for a Base Rate Loan. For
LIBOR Rate Loans, NCP-Seven shall use the interest rate in effect on the
Determination Date.
"Programming Contract" means the contract between Northland and
NCP-Seven dated August 1, 1993, including only those amendments approved in
writing by Bank.
"Purchase Contract" means each contract between NCP-Seven and the
current owner of a Cable System for purchase of such Cable System.
"Quarterly Cash Flow" means Cash Flow for the fiscal quarter ending on
the Determination Date on which Cash Flow is to be measured, all as shown on the
most recent financial statements and certificates delivered pursuant to Section
0.
"Reference Rate" means the rate of interest publicly announced from time
to time by Seafirst in San Francisco, California, as its "Reference Rate." The
Reference Rate is set based on various factors, including Seafirst's costs and
desired return, general economic conditions, and other factors, and is used as a
reference point for pricing some loans. Seafirst may price loans to its
customers at, above, or below the Reference Rate. Any change in the Reference
Rate shall take effect at the opening of business on the day specified in the
public announcement of a change in the Reference Rate.
"Related Documents" means (individually and collectively) the Borrowing
Notices, Note, Deeds of Trust, Security Agreement, UCCs, Assignment, Consents to
Assignment, Assignment of Leases, Subordination Agreement, Interest Rate Risk
Agreement, Programming Contract, Resolution, FNEJV Agreement, Certificate And
Indemnity Agreement Regarding Hazardous Substances and all other certificates,
documents or agreements now or hereafter Arising Out Of or executed in
connection with or pursuant to any of the foregoing, including all amendments
thereto and restatements thereof.
"Requirement of Law" means, with respect to any Person, the articles or
certificate of incorporation and bylaws, the partnership or limited liability
company agreement or other organizational or governing documents of such Person,
and any law, treaty, rule, guideline, standard (including but not limited to
accounting standards and GAAP), order, restriction, directive, judgment, decree,
injunction, writ, or regulation, or a final and binding determination of an
arbitrator, mediator, or a determination of any Governmental Body, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject. With respect to Bank, Requirement
of Law shall include a Requirement of Law or request of a central bank or
financial, monetary or other supervisory authority (whether or not having the
force of law).
"Reserve Adjustment" means as of any day the remainder of one minus that
percentage (expressed as a decimal) which is the highest of any such percentages
established by the Board of Governors of the Federal Reserve System (or any
successor) for required reserves (including any emergency, marginal, or
supplemental reserve requirement) regardless of the aggregate amount of deposits
with said member bank and without benefit of any possible credit, proration,
exemptions, or offsets for time deposits established at offices of member banks
located outside of the United States or for eurocurrency liabilities, if any.
"Resolution" means the resolution of Borrower included in Exhibit N.
"Robin Systems" means the Cable Systems, being purchased from Robin
Media Group, Inc., a Nevada corporation, located in the Georgia towns of Toccoa,
Royston, Franklin Springs, Canon, Lavonia, and Bowersville, and unincorporated
areas of the Georgia counties of Stephens, Franklin,
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<PAGE> 36
and Hart.
"Seafirst" means Bank of America National Trust and Savings Association,
a national banking association, doing business as Seafirst Bank, including its
universal successors.
"Security Agreement" means the Security Agreement and Assignment dated
September 15, 1993, as such agreement is amended from time to time.
"Subordination Agreement" means the Subordination Agreement by Northland
in favor of Bank dated September 15, 1993, as such agreement is amended from
time to time, and such other subordination agreements as are executed in
connection herewith, including but not limited to a subordination agreement from
certain affiliates of NCP-Seven.
"Subsidiary" or "Subsidiaries" means any corporation of which at least
50% of the outstanding stock having ordinary voting powers to elect a majority
of the board of directors of such corporation (irrespective of whether or not at
the time stock of any other class of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by NCP-Seven and/or one or more of
its Subsidiaries.
"Taxes" means for any Person any federal or state tax, assessment, duty,
levy, withholding liability, impost and other charges of every nature whatsoever
imposed by any Governmental Body on such Person or on any of its property or
because of any, revenue, income, sales, use, product, employee or franchise, and
any interest or penalty with respect to any of the foregoing.
"Total Debt" means all Debt of NCP-Seven for money borrowed from
financial institutions, including but not limited to the Loans and any other
loans from time to time from the Bank to NCP-Seven.
"Tranche A" means $37,000,000 of the Commitment, which is available to
be drawn down for the purposes set forth in Section 0. in up to two Advances, at
or within one day of Closing.
"Tranche B" means $8,000,000 of the Commitment, which is available to be
drawn down, on a revolving basis, for the purposes set forth in Section 0. in
multiple Advances, during the Commitment Period.
"UCCs" means the Uniform Commercial Code financing statements to be
executed at Closing.
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