UNITED STATES
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
December 31, 1993
0-16690
(Date of earliest report)
(Commission File Number)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
(Exact name of registrant as specified in its
charter)
New York
13-3429969
(State or other jurisdiction (I.R.S.
Employer
of incorporation or organization)
Identification Number)
World Financial Center, South Tower, New York, New
York 10080-6108
(Address of Principal Executive Offices)(Zip
Code)
(212) 236-6577
(Registrant's telephone number, including area
code)
Not Applicable
(Former name or former address, if changed since last
report.)Item 5. Other Events
On December 31, 1993, the Registrant, Maryland Cable
Corp. ("Maryland Cable"), Maryland Cable Holdings Corp.
("Holdings") and ML Cable Partners entered into an Exchange
Agreement with Water Street Corporate Recovery Fund I, L.P. (the
"Water Street Fund") providing for the restructuring of Maryland
Cable. The Water Street Fund holds approximately 85% of the
outstanding principal amount of the 15-3/8% Senior Subordinated
Discount Notes due 1998 (the "Bonds") of Maryland Cable, which,
as described below, are currently in default.
Pursuant to the Exchange Agreement, the Water Street
Fund and the other holders of the Bonds would exchange their
Bonds and their Class B Common Stock of Holdings for all of the
partnership interests of a newly formed limited partnership
("Newco") that would acquire all of the assets of Maryland Cable,
subject to the liabilities of Maryland Cable. Registrant would
receive an aggregate of $2,670,000 in satisfaction of the
$3,600,000 in Subordinated Promissory Notes, plus accrued
interest, and the $5,379,823 in deferred management fees payable
to Registrant, and $100 for its Common Stock of Holdings. ML
Cable Partners, which is 99.99% owned by Registrant, would
receive payment in full of the $6,830,000 participation it holds
in the senior bank debt of Maryland Cable. In addition,
Registrant would be paid at closing a management fee for managing
Maryland Cable's cable systems (the "Systems") from January 1,
1994 to the closing date based on the gross revenues of the
Systems during that period. If prior to the closing the Water
Street Fund and the other holders of the Bonds transfer a
majority of the outstanding principal amount of the Bonds, the
Registrant would receive an additional payment equal to 5% of the
amount by which the Value (as defined) of the Systems exceeds
$180,000,000. The Exchange Agreement also provides for a payment
of $500,000 to MultiVision Cable TV Corp., the manager of the
Systems, in payment of the severance and other costs relating to
the termination of MultiVision as manager.
Closing of the restructuring is subject to numerous
conditions, including the holders of at least 99% of the
aggregate principal amount of the Bonds executing the Exchange
Agreement, the consent of the franchising authorities and the
Federal Communications Commission to the transfer of the Systems
to Newco, Newco borrowing $100,000,000 to be used to repay
Maryland Cable's senior bank debt, and the agreement from the
holders of the senior bank debt to accept payment of the
principal amount of the senior bank debt and accrued interest
thereon, and no additional fees, interest or other payments for
agreeing to extend the maturity of the senior bank debt beyond
December 31, 1993. If all closing conditions are satisfied, it
is anticipated that the closing would occur during the third
quarter of 1994.
If the holders of at least 99% of the aggregate
principal amount of the Bonds (and each holder of at least
$100,000 aggregate principal amount of the Bonds) do not agree to
exchange their Bonds for interests in Newco, or if agreement
cannot be reached with the holders of the senior bank debt,
Registrant, Maryland Cable and the Water Street Fund have agreed
to file and support a prepackaged bankruptcy of Maryland Cable to
effect the terms of the Exchange Agreement.
There is no assurance that the closing under the
Exchange Agreement will occur. Maryland Cable is in default
under its bank credit agreement, including a default in the
payment of the principal amount of the loan ($85 million) on
maturity on December 31, 1993. Unless and until an agreement is
reached between Maryland Cable and the holders of the senior bank
debt of Maryland Cable, those holders have the right to exercise
all remedies available to them, including the right to foreclose
on the assets of Maryland Cable, subject to receipt of any
required regulatory approvals. As a result of the default in
payment of the senior bank debt, there is also a default under
the Bonds.
A copy of the Exchange Agreement is attached as an
Exhibit to this Report.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
10.1 Exchange Agreement dated December 31, 1993.
<PAGE>
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.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: RP Opportunity Management,
L.P., General Partner
By: IMP Opportunity Management,
Inc.
Dated: January 12, 1994 By: /s/ Elizabeth McNey Yates
Elizabeth McNey Yates
Vice President
EXCHANGE AGREEMENT
December 31, 1993
The parties to this agreement are Maryland Cable
Partners, L.P., a Delaware limited partnership ("Newco"), ML
Media Opportunity Partners, L.P., a Delaware limited partnership
("ML Opportunity"), Maryland Cable Corp., a Maryland corporation
("Maryland Cable"), Maryland Cable Holdings Corp., a Maryland
corporation ("Holdings"), ML Cable Partners, a New York general
partnership ("ML Cable"), Water Street Corporate Recovery Fund I,
L.P. (the "Water Street Fund") and the other parties listed on
schedule 1.
The Water Street Fund and each of the parties listed on
schedule 1 (collectively, the "Holders") holds 15-3/8% Senior
Subordinated Discount Notes due 1998 ("Bonds") of Maryland Cable
and shares of Class B Common Stock ("Class B Shares") of
Holdings, in the amounts set forth on schedule 1. All of the
Holders together own the original principal amount of the Bonds
set forth on schedule 1 (or the aggregate percentage of the
amount outstanding set forth on schedule 1) and the number of
Class B Shares set forth on schedule 1 (or the aggregate
percentage of the outstanding Class B Shares set forth on
schedule 1).
ML Opportunity owns 18,000,000 shares of Common Stock
of Holdings (the "Common Shares"), which constitute all of the
outstanding shares of Common Stock of Holdings; ML Opportunity
holds Subordinated Promissory Notes of Holdings in the aggregate
principal amount of $3,600,000, together with accrued interest
thereon (collectively, the "Subordinated Notes"); and ML
Opportunity is owed by Maryland Cable as of December 31, 1993
deferred management fees (the "Deferred Fees") pursuant to the
Fee Sharing Agreement dated November 14, 1988 between ML
Opportunity and Maryland Cable (the "Fee Sharing Agreement").
ML Cable holds a $6,830,000 participation in the senior
bank debt of Maryland Cable pursuant to the Amended and Restated
Credit Agreement (the "Amended Credit Agreement") dated as of
September 6, 1991.
The general partner of Newco is Maryland Cable General
Partner, Inc., a Delaware corporation (the "General Partner"),
all of the outstanding stock of which is owned by the Water
Street Fund.
This agreement provides for (1) the exchange by the
Holders of their Bonds and Class B Shares for limited partnership
interests in Newco and shares of the General Partner, (2) the
repayment to ML Cable of $6,830,000, plus accrued interest
thereon, as part of the repayment of the debt under the Amended
Credit Agreement, (3) the exchange by ML Opportunity of the
Subordinated Notes and its right to the Deferred Fees for
$2,670,000 in cash, (4) the exchange by ML Opportunity of the
Common Shares for $100, and (5) a payment of $500,000 to
MultiVision Cable TV Corp. ("MultiVision"), the current manager
of the television systems (the "Systems") owned by Maryland
Cable, for severance and other expenses resulting from the
termination of its management of the Systems.
It is therefore agreed as follows:
1. Exchanges and Payments.
1.1 Holder Exchanges. At the Closing (as defined in
section 5), each Holder shall transfer and assign to Newco all of
its Bonds (including any accrued interest thereon) and all of its
Class B Shares in exchange for (a) the limited partnership
interest in Newco set forth beside such Holder's name on schedule
1, and (b) that number of shares of common stock of the General
Partner set forth beside such Holder's name on schedule 1.
1.2 Payments to ML Opportunity and Affiliates. At the
Closing, after the liquidations referred to in section 10.7, the
following payments shall be made:
(a) ML Opportunity shall be paid $2,670,000 in
cash in exchange for:
(1) the transfer and assignment to Newco of
all of the Subordinated Notes (including any accrued
interest thereon); and
(2) the transfer and assignment to Newco of
ML Opportunity's right to receive the Deferred Fees
(including any accrued interest thereon).
(b) ML Opportunity shall be paid $100 in exchange
for all of the Common Shares.
At the Closing, ML Cable shall also be paid the
$6,830,000 principal amount of its participation in the senior
bank debt of Maryland Cable under the Amended Credit Agreement,
together with accrued interest thereon, and any other amounts
payable to it under the Amended Credit Agreement.
In addition, MultiVision shall be paid $500,000 to
partially reimburse it for severance and other expenses resulting
from the termination of MultiVision as the manager of the
Systems. Payment shall be made to MultiVision at the Closing,
unless MultiVision enters into the Management Agreement pursuant
to section 3.2, in which case payment shall be made upon
termination of the Management Agreement.
2. Interim Management. As compensation for managing
the day-to-day operations of the Systems from the date of this
agreement through the Closing, Maryland Cable shall pay to ML
Opportunity at the Closing an amount equal to the excess of (a)
the percentage determined pursuant to the table below of the
Gross Revenues of the Systems for the period from the date of
this agreement through the Closing over (b) the amount paid to
MultiVision under the Cost Allocation Agreement with respect to
that period:
If the Closing Occurs in Percentage
March, 1994 4.70%
April, 1994 4.70%
May, 1994 4.70%
June, 1994 4.70%
July, 1994 4.70%
August, 1994 4.40%
September, 1994 4.10%
October, 1994 3.90%
November, 1994 3.75%
December, 1994 3.60%
or thereafter
In addition, Maryland Cable shall reimburse ML Opportunity for
all out-of-pocket expenses to third parties incurred by ML
Opportunity in managing the Systems. As used in this Agreement,
Gross Revenues means the gross revenues of the Systems from all
normal operating sources. Gross Revenues for any portion of a
month during the period from the date of this agreement through
the Closing shall be the pro-rata portion of the Gross Revenues
for the entire month based on the number of days in that month
during the period.
If there is a prepackaged bankruptcy as contemplated by
section 10.4, each date on the chart set forth above shall move
back one month.
3. Execution of Agreements.
3.1 Partnership Agreement. At the Closing, each of
the Holders shall execute a Partnership Agreement of Newco
substantially in the form attached hereto as exhibit A (the
"Partnership Agreement").
3.2 Management Agreement. At the Closing, either
Newco shall enter into a Management Agreement with a manager
other than ML Opportunity on such terms as they may agree upon or
Newco and ML Opportunity shall execute a Management Agreement
substantially in the form attached hereto as exhibit B (the
"Management Agreement"), providing, inter alia, for ML
Opportunity to manage the day-to-day operations of the Systems
for a management fee of 4.7% of the Gross Revenues of the Systems
plus reimbursement for all out-of-pocket expenses to third
parties incurred by it as manager. Newco shall notify ML
Opportunity at least 30 days prior to the Closing whether Newco
will enter into a Management Agreement with ML Opportunity. At
the Closing, Maryland Cable's participation under the Agency and
Cost Allocation Agreement dated as of January 20, 1988, as
amended, shall terminate.
3.3 Releases. At the Closing, (1) each of the Holders
and ML Opportunity shall execute a general release in favor of
Newco, Maryland Cable and Holdings, (2) Newco, Maryland Cable and
Holdings shall execute general releases in favor of ML
Opportunity and each of the Holders, (3) each of the Holders
shall execute a general release in favor of ML Opportunity,
except that the release shall exclude any actions by ML
Opportunity in the management of Maryland Cable of a type that if
such action had been taken by the general partner of ML
Opportunity the general partner would not have been entitled to
indemnification for such action under the Partnership Agreement
of ML Opportunity, and (4) ML Opportunity shall execute a general
release in favor of each of the Holders, all of such releases
(the "General Releases") to exclude only claims for breach of
covenant in, or breach of any representation or warranty that
survives the Closing under, this agreement and the other
agreements contemplated by this agreement.
4. Refinancing. The Water Street Fund shall use
reasonable efforts to arrange for Newco to borrow $100,000,000 in
senior bank debt on terms reasonably satisfactory to the Water
Street Fund. ML Opportunity shall cooperate with the Water
Street Fund in all reasonable respects in connection with the
refinancing.
5. Closing. The closing of the transactions
contemplated by this agreement (the "Closing") shall take place
at the offices of Proskauer Rose Goetz & Mendelsohn, 1585
Broadway, New York, New York upon at least 10 days prior notice
given by Newco within 30 days after the conditions specified in
section 11 have been fulfilled (or at such other place or time as
ML Opportunity and the holders of a majority in principal amount
of the total outstanding Bonds may agree upon in writing). The
date on which the closing is held is referred to in this
agreement as the "Closing Date."
5.1 Closing Deliveries. At the Closing:
(a) each Holder shall deliver to Newco (i) its
Bonds, together with an assignment properly executed, (ii)
certificates evidencing its Class B Shares, together with a stock
power properly executed, and (iii) an executed counterpart of the
Partnership Agreement;
(b) ML Opportunity shall deliver to Newco (i) the
Subordinated Notes, together with an assignment properly
executed, (ii) an assignment of the Deferred Fees, (iii)
certificates evidencing the Common Shares, together with a stock
power properly executed, and (iv) if applicable, an executed
counterpart of the Management Agreement;
(c) Newco or the General Partner shall deliver to
each Holder (i) a fully executed counterpart of the Partnership
Agreement, and (ii) a stock certificate evidencing its shares in
the General Partner; and
(d) If applicable, Newco shall deliver to ML
Opportunity an executed counterpart of the Management Agreement.
In addition, the General Releases shall be
delivered.
6. Representations and Warranties of the Holders.
Each of the Holders severally and only as to itself represents
and warrants to the other parties hereto that:
6.1 Authority. Such Holder has the full right, power
and authority to execute and deliver this agreement and to
perform its obligations hereunder; its execution, delivery and
performance of this agreement have been duly and validly
authorized by all necessary corporate or partnership action; and
this agreement constitutes a valid and binding obligation of such
Holder, enforceable against it in accordance with its terms.
6.2 Consents. The execution, delivery and performance
of this agreement by such Holder will not (i) conflict with its
certificate of incorporation or by-laws or certificate of
partnership or partnership agreement, as the case may be; (ii)
conflict with, or result in a breach or termination of or
constitute a default under, any lease, agreement, commitment or
other instrument, or any order, judgement or decree, by which it
is bound; (iii) constitute a violation by it of any law
applicable to it; or (iv) result in the creation of any lien,
claim, charge or encumbrance ("Lien") upon its Bonds or Class B
Shares. No consent, approval or authorization of, or
designation, declaration or filing with, any governmental
authority is required on its part in connection with the
execution, delivery and performance of this agreement, except for
the filings referred to in section 10.1.
6.3 Title. The Bonds and Class B Shares listed on
schedule 1 opposite such Holder's name are all of the Bonds and
Class B Shares owned by such Holder and its affiliates (as
defined in the rules under the Securities Act of 1993, as
amended). Such Holder has valid and marketable title to, and is
the sole legal and beneficial owner of, its Bonds and Class B
Shares, and will transfer these Bonds and Class B Shares to
Newco, free and clear of any Lien.
6.4 Sophisticated Investor. Such Holder has such
knowledge and experience in finance and business matters that it
is capable of evaluating the merits and risks of accepting the
Newco partnership interests under the terms and conditions of
this agreement and has adequate information concerning the
business and financial condition of Maryland Cable and Newco to
make an informed decision regarding the acquisition of the Newco
partnership interests and has, based on such information such
Holder has deemed appropriate, made its own analysis and decision
to enter into this agreement. Such Holder acknowledges and
agrees that it has been provided an opportunity to obtain from
each of Maryland Cable and Newco, and has so obtained, copies of
such documents and the information as it has deemed appropriate
in making its own evaluation of the Newco partnership interests
and the potential for any recovery based upon the Newco
partnership interests and its decision to enter into this
agreement. Such Holder is an "accredited investor" as described
in Rule 501 of the Securities Act of 1933, as amended (the
"Securities Act").
6.5 No Distribution. Except as contemplated by this
agreement, such Holder is acquiring the Newco partnership
interests for investment purposes only and such Holder is not
acquiring the Newco partnership interests with a view to the
public distribution thereof. Such Holder acknowledges that the
Partnership Agreement restricts transfer of the Newco partnership
interests and that the Newco partnership interests have not been
registered under the Securities Act and such interests may not be
transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
7. Representations and Warranties of ML Opportunity.
ML Opportunity represents and warrants to the other parties
hereto that:
7.1 Authority. It has the full right, power and
authority to execute and deliver this agreement and to perform
its obligations hereunder; its execution, delivery and
performance of this agreement have been duly and validly
authorized by all necessary partnership action; and this
agreement constitutes a valid and binding obligation of it,
enforceable against it in accordance with its terms.
7.2 Consents. Except as set forth on schedule 7.2,
the execution, delivery and performance of this agreement by it
will not (i) conflict with its certificate of partnership or
partnership agreement; (ii) conflict with, or result in a breach
or termination of or constitute a default under, any lease,
agreement, commitment or other instrument, or any order,
judgement or decree, by which it is bound; (iii) constitute a
violation by it of any law applicable to it; or (iv) result in
the creation of any Lien upon the Subordinated Notes, the
Deferred Fees or the Common Shares. No consent, approval or
authorization of, or designation, declaration or filing with, any
governmental authority is required on its part in connection with
the execution, delivery and performance of this agreement, except
for the filings referred to in section 10.1.
7.3 Title. It has valid and marketable title to, and
is the sole legal and beneficial owner of, the Subordinated Notes
and the Common Shares, free and clear of any Lien, and has the
right to receive the Deferred Fees, free and clear of any Lien,
except in each case for liens in favor of the lenders under the
Amended Credit Agreement, which Liens will terminate on the
Refinancing.
8. Representations and Warranties of Newco. Newco
represents and warrants to the other parties hereto that:
8.1 Organization. It is a limited partnership duly
organized and validly existing under the laws of the state of
Delaware, with all requisite power and authority to own, operate
and lease its property and to conduct the business in which it is
currently engaged and in which it proposes to be engaged after
the Closing, and is qualified as a limited partnership under the
laws of each jurisdiction where its ownership, operation or lease
of property or the conduct of its business requires (and, after
the Closing, will require) such qualification.
8.2 Authority. It has the full right, power and
authority to execute and deliver this agreement and to perform
its obligations hereunder; its execution, delivery and
performance of this agreement have been duly and validly
authorized by all necessary partnership action; and this
agreement constitutes a valid and binding obligation of it,
enforceable against it in accordance with its terms.
8.3 Consents. Except as set forth on schedule 8.3,
the execution, delivery and performance of this agreement by it
will not (i) conflict with its certificate of partnership or
partnership agreement; (ii) conflict with, or result in a breach
or termination of or constitute a default under, any lease,
agreement, commitment or other instrument, or any order,
judgement or decree, by which it is bound; or (iii) constitute a
violation by it of any law applicable to it. No consent,
approval or authorization of, or designation, declaration or
filing with, any governmental authority is required on its part
in connection with the execution, delivery and performance of
this agreement, except for the filings referred to in section
10.1.
9. Representations and Warranties of Maryland Cable
and Holdings. Maryland Cable and Holdings jointly and severally
represent and warrant to the other parties hereto that:
9.1 Organization. It is a corporation duly organized,
validly existing and in good standing under the laws of the state
of Maryland, with all requisite power and authority to own,
operate and lease its property and to conduct the business in
which it is currently engaged and in which it proposes to be
engaged.
9.2 Authority. It has the full right, power and
authority to execute and deliver this agreement and to perform
its obligations hereunder; its execution, delivery and
performance of this agreement have been duly and validly
authorized by all necessary corporate action; and this agreement
constitutes a valid and binding obligation of it, enforceable
against it in accordance with its terms.
9.3 Consents. Except as set forth on schedule 9.3,
the execution, delivery and performance of this agreement by it
will not (i) conflict with its certificate of incorporation or
by-laws; (ii) conflict with, or result in a breach or termination
of or constitute a default under, any lease, agreement,
commitment or other instrument, or any order, judgement or
decree, by which it is bound; or (iii) constitute a violation by
it of any law applicable to it. No consent, approval or
authorization of, or designation, declaration or filing with, any
governmental authority is required on its part in connection with
the execution, delivery and performance of this agreement, except
for the filings referred to in section 10.1.
9.4 SEC Documents. (a) Maryland Cable has heretofore
delivered to the Holders true and complete copies of its (i)
Annual Report for the year ended December 31, 1992, and (ii)
Quarterly Reports for the fiscal quarters ended March 31,
June 30, and September 30, 1993 (together with the Annual Report,
the "SEC Documents"). As of their respective dates, the SEC
Documents did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial
statements of Maryland Cable included in such reports were
prepared in accordance with generally accepted accounting
principles applied on a consistent basis, subject in the case of
the interim statements to year-end audit adjustments, and fairly
present in all material respects the financial position of
Maryland Cable and the results of its operations and changes in
financial position for the respective periods covered thereby.
9.5 Compliance with Law. Maryland Cable conducts its
business in compliance with all applicable laws, regulations or
ordinances, except for violations that would not have a material
adverse effect upon the business, financial condition, assets,
liabilities, or prospects of Maryland Cable.
9.6 Title to Assets. Except as set forth on schedule
9.6, Maryland Cable has good and marketable title to all of its
assets, free and clear of any Lien other than, in the case of
real property, easements and encumbrances that do not materially
interfere with the use of such real property.
9.7 Holdings. Holdings engages in no business and has
no assets other than its stock of Maryland Cable and no
liabilities other than liabilities pursuant to the Amended Credit
Agreement, liabilities with respect to the Subordinated Notes and
liabilities to ML Opportunity as described in section 13.
10. Further Agreements.
10.1 Filings. (a) As soon as practicable after the
expiration of the 45-day period referred to in section 10.4,
Newco and Maryland Cable shall file with the Federal
Communications Commission (the "Commission") and with any
municipal or county authorities that have issued the franchises
for the Systems (the "Municipal Authorities") from which consent
to the transactions contemplated by this agreement must be
obtained an application or applications requesting consent to
such transactions. Maryland Cable shall also apply for
extensions of each of the franchises for the Systems as
reasonably requested by Newco. All of the parties hereto shall
with due diligence take all reasonable steps necessary to
expedite the processing of such application or applications and
to secure the consents or approvals being sought. All costs and
expenses (including the reasonable fees and disbursements of
counsel) in connection with the preparation and processing of any
such applications shall be borne exclusively by Maryland Cable.
(b) As soon as practicable after the expiration
of the 45-day period referred to in section 10.4, ML Opportunity,
Maryland Cable, Holdings, the Water Street Fund and any other
Holder shall make any filings required to comply with the Hart-
Scott-Rodino Antitrust Improvements Act and shall with due
diligence take all reasonable steps, and provide any information
requested, to expedite the processing of such filings.
10.2 Execution by other Holders. Initially this
agreement is being executed by Newco, ML Opportunity, Maryland
Cable, Holdings, ML Cable and the Water Street Fund. ML
Opportunity, Maryland Cable, Holdings and the Water Street Fund
shall use reasonable efforts to cause each of the other holders
of the Bonds to execute this agreement and become a Holder within
45 days after the date of this agreement.
10.3 Schedules and Exhibits. Within 30 days after the
date of this agreement, the parties shall prepare and deliver the
schedules and exhibits to this agreement. The parties shall
negotiate in good faith the terms of each of the exhibits to this
agreement. If the terms of any schedule to this agreement are
not reasonably acceptable to the Water Street Fund, the Water
Street Fund may terminate this agreement by notice to the other
parties given within five days after the delivery of the
schedules.
10.4 Prepackaged Bankruptcy. If within 45 days after
the date of this agreement (a) each of the other holders of the
Bonds who holds at least $100,000 aggregate principal amount of
the Bonds has not executed this agreement and become a Holder or
the holders of at least 99% of the principal amount of the total
outstanding Bonds have not executed this agreement and become
Holders, or (b) Maryland Cable is unable to obtain the agreements
from the lenders referred to in section 10.5 without the payment
of any fees, additional interest or other amounts to the lenders,
then as soon as practicable thereafter the parties shall prepare
all necessary documentation and shall cause Holdings and Maryland
Cable to file and shall use reasonable efforts to solicit all
necessary consents and approvals for, and to obtain the
confirmation and approval of, a prepackaged bankruptcy of
Holdings and Maryland Cable to effect the terms of this
agreement, provided that the prepackaged bankruptcy of Holdings
and Maryland Cable shall be filed only if ML Opportunity and the
Water Street Fund believe that the numerosity and other
requirements for a prepackaged bankruptcy are reasonably likely
to be met. If the requirements for a prepackaged bankruptcy of
Maryland Cable are met but the requirements for a prepackaged
bankruptcy of Holdings are not met, the parties shall use
reasonable efforts to effect a prepackaged bankruptcy of Maryland
Cable only to effect the terms of this agreement and shall modify
the structure in section 10.7 to the extent necessary to do so.
Maryland Cable and the Water Street Fund shall jointly determine
whether to establish in such prepackaged bankruptcy a separate,
unimpaired class for holders of Bonds who hold less than $100,000
aggregate principal amount of the Bonds and/or are unable to make
the representations in sections 6.4. and 6.5.
10.5 Consent Under Amended Credit Agreement. Maryland
Cable shall use reasonable efforts to obtain the agreement from
the lenders under the Amended Credit Agreement, on terms
satisfactory to the Holders, to (1) defer the maturity of the
debt under the Amended Credit Agreement from December 31, 1993 to
the Closing Date, (2) cancel the Warrants issued pursuant to the
Amended Credit Agreement, without any payment by Maryland Cable,
and (3) release all claims against Maryland Cable and all liens,
security interests or mortgages on the assets of Maryland Cable
upon consummation of the transactions contemplated by this
agreement and payment in full of the debt under the Amended
Credit Agreement.
10.6 Other Consents and Releases. Maryland Cable shall
use reasonable efforts to obtain all consents and approvals
referred to in section 9.3, on terms and conditions reasonably
acceptable to the holders of a majority of the Bonds. Newco
shall use reasonable efforts to obtain from the suppliers of
programming pursuant to the programming agreements listed on
schedule 10.6 either releases of ML Opportunity as a guarantor of
the obligations of Maryland Cable under such agreements or
terminations of those agreements. If Newco is unable to obtain a
release or termination of any agreement, from and after the
Closing, Newco shall indemnify and hold harmless ML Opportunity
from any loss, liability, damage or expense (including, but not
limited to, reasonable attorney's fees) resulting from its
guaranty of Maryland Cable's obligations under any such
programming agreement.
10.7 Liquidation and Assignment.
(a) At the Closing, Newco shall contribute the
Bonds, the Subordinated Notes and the right to receive the
Deferred Fees to Holdings and immediately thereafter Holdings
shall contribute the Bonds, the Subordinated Notes and the right
to receive the Deferred Fees to Maryland Cable.
(b) Immediately after the consummation of the
contributions referred to in section 10.7(a), Maryland Cable
shall be liquidated and all of its assets shall be assigned to
Holdings, subject to all of its liabilities, pursuant to the Plan
of Dissolution and Complete Liquidation of Maryland Cable in the
form attached hereto as Exhibit C, the Assignment in the form
attached hereto as Exhibit D, and the Assumption Agreement in the
form attached hereto as Exhibit E.
(c) Immediately after the liquidation of Maryland
Cable has been consummated, Holdings shall be liquidated and all
of its assets shall be assigned to Newco, subject to all of its
liabilities, pursuant to the Plan of Dissolution and Complete
Liquidation of Holdings in the form attached hereto as Exhibit F,
the Assignment in the form attached hereto as Exhibit G, and the
Assumption Agreement in the form attached hereto as Exhibit H.
Upon the liquidation of Holdings into Newco, the Bonds, the
Subordinated Notes, the right to the Deferred Fees, the Common
Shares and the Class B Stock shall all be cancelled.
10.8 Conduct of Business. Between the date hereof and
the Closing Date, Maryland Cable shall operate its business in
the ordinary course consistent with prior practices, except as
contemplated by this agreement and except for changes required by
or resulting from The Cable Television Consumer Protection and
Competition Act of 1992.
10.9 Employees.
(a) Employment and Severance. Any employee of
Maryland Cable who is employed by Newco shall be employed on
substantially the same terms and conditions of employment and
with employee benefits substantially similar to those provided to
such employees by Maryland Cable immediately prior to the
Closing. Newco shall give each of the employees of Maryland
Cable that it employs past service credit for purposes of
eligibility and vesting under all employee benefit plans and
payroll practices for employees of Newco established by Newco at
or after the Closing. In accordance with Maryland Cable's
policies, as described on schedule 10.9, Newco shall pay
severance and accrued vacation to any employees of Maryland Cable
that (i) Newco does not employ on the Closing, (ii) Newco
terminates within 90 days after the Closing, or (iii) Newco
offers to employ but who declines employment with Newco.
(b) Spinoff of Multivision 401(k) Plan.
(1) The employees of Maryland Cable
participate in the MultiVision Cable TV Corp. 401(k) Plan
(the "401(k) Plan"). Effective on the Closing, Newco shall
establish a plan intended to qualify under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code"),
and a trust maintained thereunder intended to be exempt from
federal income taxation under Section 501 of the Code
("Newco's Plan") for the benefit of employees of Maryland
Cable who become employees of Newco on the Closing Date
("Covered Employees"). Within 120 days after the Closing
(or as soon as practicable thereafter), MultiVision shall
cause the trustee of the 401(k) Plan to transfer to the
funding agent of Newco's Plan, for the benefit of Covered
Employees, an amount, in cash, equal to the total account
balances (whether or not vested), including actual
investment earnings through the date of transfer, held under
the 401(k) Plan for the Covered Employees, except for any
amounts as to which withdrawal requests have been duly
submitted prior to such transfer and which shall be paid by
the 401(k) Plan to Covered Employees prior to such transfer
in accordance with ERISA and the Code and the terms of the
401(k) Plan (the "Transferred Assets"). Maryland Cable and
Newco agree that the Transferred Assets shall not in any
event be less than the amount required under Section 414(1)
of the Code and the regulations thereunder.
(2) With respect to the transfer of the
Transferred Assets to Newco's Plan as contemplated herein,
ML Opportunity and Newco agree to notify the Internal
Revenue Service ("IRS"), no later than 90 days following the
Closing (or as soon as practicable thereafter), pursuant to
Section 6058(b) of the Code, of the contemplated transfer
(and to notify any other agency of the United States
government entitled by law to such notice) and to provide
such further information or documents as the IRS (or other
agency) may require. ML Opportunity and Newco agree to use
reasonable efforts to obtain any necessary IRS (or other
agency) approval without material modification of the
transactions contemplated hereby.
(3) Newco's Plan shall provide, as of the
date of such transfer, benefits for each Covered Employee
which are not less than such Covered Employees respective
account balances (including any net earnings or losses
accrued thereon from the Closing Date to the actual date of
transfer) under the 401(k) Plan as of the date of such
transfer. As soon as practicable following the Closing,
Newco agrees to take all actions necessary to obtain a
favorable determination letter from the IRS with respect to
Newco's Plan. Newco agrees to indemnify and hold harmless
the 401(k) Plan, ML Opportunity, Multivision and other
affiliates of Multivision and each of their trustees and
fiduciaries from and against any losses, liabilities,
claims, damages, costs and expenses relating to (i) the
failure by Newco to obtain such favorable determination
letter, and (ii) any liability or obligation arising in
connection with the transferred accounts of the Covered
Employees in Newco's Plan.
(4) Pending the transfer of the Transferred
Assets, the accounts of the Covered Employees shall remain
in the trust fund for the 401(k) Plan and ML Opportunity
shall cause the trustee of the 401(k) Plan to pay any
current benefits or make any distributions to Covered
Employees as they become due.
(5) ML Opportunity and Newco agree to
provide each other with such records and information as they
may reasonably request relating to their respective
obligations under this section or the administration of the
401(k) Plan or Newco's Plan.
(c) Medical Benefits. Maryland Cable
participates with MultiVision and ML Media Partners, L.P. in the
MultiVision medical plan, which plan is to a large extent self-
insured. As of the Closing Date and without any waiting period,
Newco shall provide all Covered Employees (and their dependents)
with medical benefit coverage under plan(s) maintained or
established by Newco. As to any Covered Employee (or a dependent
thereof) who was covered by MultiVision's medical plan as of the
Closing, Newco shall waive any pre-existing condition exclusions
and waiting periods contained in Newco's medical plan (except to
the extent that such exclusions would have then applied or
waiting periods were not satisfied under MultiVision's medical
plan) and credit or otherwise consider any monies paid (or
accrued) under Multivision's medical plan by Covered Employees
(or their dependents) prior to the Closing Date toward any
deductibles, co-pays or other maximums under Newco's medical plan
for the first plan year after the Closing Date. Newco shall be
responsible for satisfying its obligations under Section 601 et
seq. of ERISA and Section 4980B of the Code to provide
continuation coverage ("COBRA") to any Covered Employee in
accordance with law. In the event that MultiVision is unable to
provide COBRA coverage to employees not employed by Newco on the
Closing Date, the parties shall make mutually acceptable
arrangements for such coverage to be provided. On and after the
Closing Date, Newco shall be responsible for claims incurred
under the MultiVision medical plan relating to the period prior
to the Closing to the extent funds provided by Maryland Cable to
such plan before the Closing are not sufficient to satisfy such
claims.
10.10 Other Action. No party to this agreement
shall take any action that would result in any of its
representations and warranties not being true as of the Closing
date. Each of the parties to this agreement shall use reasonable
efforts to cause the fulfillment at the earliest practicable date
of all of the conditions to the obligations of the parties to
consummate the transactions contemplated by this agreement, and
ML Opportunity shall use reasonable efforts to cause Holdings and
Maryland Cable to perform their respective obligations under this
agreement. ML Cable, as a lender under the Amended Credit
Agreement, shall consent to the transactions contemplated by this
agreement and shall not take any actions inconsistent with the
terms of this agreement.
10.11 Further Assurances. At any time and from
time to time after the Closing, each of the parties shall,
without further consideration, execute and deliver such
additional instruments of transfer, and shall take such other
action as Newco may request, to carry out the transactions
contemplated by this agreement.
11. Conditions Precedent to Closing.
11.1 Conditions Precedent to Obligations of Each Party.
The obligation of each of the parties to consummate the
transactions contemplated by this agreement is subject to the
fulfillment, at or prior to the Closing, of each of the following
conditions (any of which may be waived in writing by ML
Opportunity and the Holders of a majority in principal amount of
the total outstanding Bonds):
(a) Newco shall have received, without any
condition or qualification materially adverse to such party or,
in the case of the Holders, materially adverse to the proposed
operations of Newco, all necessary consents and approvals
referred to in section 10.1 to the transactions contemplated by
this agreement (but it shall not be a condition that any
extension of any franchise be obtained);
(b) there shall not be in effect an injunction or
restraining order issued by a court of competent jurisdiction in
an action or proceeding against the consummation of the
transactions contemplated by this agreement and there shall not
be pending any action or proceeding seeking such an injunction or
order or which, if adversely determined, would likely have a
material adverse effect on the business, financial condition,
assets, liabilities or prospects of Maryland Cable and Newco;
(c) ML Cable shall have been paid the amounts
referred to in section 1.2;
(d) The Default Interest Notes issued pursuant to
the Amended Credit Agreement (including any accrued interest
thereon) shall have been extinguished by the holders thereof
without any payment by Maryland Cable, the warrants issued
pursuant to the Amended Credit Agreement shall have been
cancelled without any payment by Maryland Cable and Newco shall
have completely discharged all of Maryland Cable's obligations
under the Amended Credit Agreement, without payment of any fees,
additional interest or other amounts to the lenders for deferring
the maturity date of the debt or otherwise in respect of the
satisfaction of this condition; and
(e) each representation and warranty of Maryland
Cable and Holdings shall be true in all material respects at and
as of the time of the Closing with the same effect as though that
representation and warranty had been made again at and as of that
time.
11.2 Additional Conditions Precedent to Obligations of
Holders. The Holders' obligations to consummate the transactions
contemplated by this agreement is subject to the fulfillment, at
or prior to the Closing, of each of the following conditions (any
of which may be waived in writing by the Holders of a majority in
principal amount of the total outstanding Bonds):
(a) each representation and warranty of ML
Opportunity under this agreement shall be true in all material
respects at and as of the time of the Closing with the same
effect as though that representation and warranty had been made
again at and as of that time;
(b) ML Opportunity shall have performed and
complied in all material respects with each obligation, covenant
and condition required by this agreement to be performed or
complied with by it prior to or at the Closing;
(c) Newco shall have borrowed at least
$100,000,000 pursuant to the refinancing as provided in section 4
on terms reasonably satisfactory to the Water Street Fund; and
(d) the Holders shall have received certificates
of the general partner of ML Opportunity, dated the Closing Date,
certifying to the fulfillment of the conditions set forth in
sections 11.2(a) and 11.2(b).
11.3 Additional Conditions Precedent to Obligations of
ML Opportunity. ML Opportunity's obligation to consummate the
transactions contemplated by this agreement is subject to the
fulfillment, at or prior to the Closing, of each of the following
conditions (any of which may be waived in writing by ML
Opportunity):
(a) each representation and warranty of each of
the Holders and Newco under this agreement shall be true in all
material respects at and as of the time of the Closing with the
same effect as though that representation and warranty had been
made again at and as of that time;
(b) each of the Holders and Newco shall have
performed and complied in all material respects with each
obligation, covenant and condition required by this agreement to
be performed or complied with by it prior to or at the Closing;
and
(c) it shall have received certificates of an
appropriate officer of each Holder and of the general partner of
Newco, dated the Closing Date, certifying to the fulfillment of
the conditions set forth in sections 11.3(a) and 11.3(b).
12. Transaction Costs. If the transactions
contemplated by this agreement are consummated, Maryland Cable
shall pay all of the costs of the refinancing referred to in
section 4 and all of the reasonable costs and expenses incurred
by each of the parties in connection with the transactions
contemplated by this agreement, including, but not limited to,
the restructuring fee to Daniels & Associates, Maryland Cable's
financial advisor, legal fees of Proskauer Rose Goetz &
Mendelsohn, Wiley, Rein & Fielding and Meyers, Billingsley,
Shipley, Curry, Rodbell & Rosenbaum, P.A., as counsel to Maryland
Cable and ML Opportunity, legal fees of Wachtell, Lipton, Rosen &
Katz, as counsel to the Water Street Fund, and Dow, Lohnes and
Albertson, as regulatory counsel to the Holders, legal fees of
the current bank lenders and the new lenders and accounting fees
of Deloitte & Touche. If the transactions contemplated by this
agreement are not consummated, each party shall bear its own
costs in connection with the transactions contemplated by this
agreement.
13. Repayment of Expenses. The Water Street Fund and
the Holders acknowledge and agree that Maryland Cable may
reimburse ML Opportunity for $176,413 of the actual expenses to
third parties, including, but not limited to, legal fees, paid by
ML Opportunity on behalf of Maryland Cable and Holdings, and that
if such amount is not reimbursed prior to the Closing, such
amount shall be reimbursed at the Closing.
14. Termination. If the closing has not occurred by
September 30, 1994, any party may terminate this agreement by
notice to the others. The holders of a majority in principal
amount of the total outstanding Bonds may terminate this
agreement, by notice given to ML Opportunity and Maryland Cable
within 30 days after the event giving rise to the termination
occurs, if Maryland Cable loses the franchise for any System and
that loss has a material adverse effect on the business or
financial condition of Maryland Cable or if Maryland Cable files
a petition in voluntary bankruptcy or for the appointment of a
receiver or trustee under any provision of any bankruptcy or
similar law (other than a prepackaged bankruptcy as contemplated
by section 10.4) or a petition in respect of bankruptcy,
receivership, trusteeship or similar relief shall have been filed
against Maryland Cable and not dismissed within 60 days after
such filing; upon any such termination, none of the parties shall
have any liability of any kind arising out of this agreement
other than any liability resulting from its breach of this
agreement prior to termination.
15. Miscellaneous.
15.1 Survival of Representations and Warranties. All
representations, warranties and agreements in this agreement
shall survive the Closing notwithstanding any investigation at
any time by or on behalf of any party, and shall not be
considered waived by the consummation of the transactions
contemplated by this agreement with knowledge of any breach or
misrepresentation by any party; provided, however, that the
representations and warranties of ML Opportunity, Maryland Cable
and Holdings shall not survive the Closing.
15.2 Notices. Any notice or other communication under
this agreement shall be in writing and shall be considered given
when delivered personally, one day after being sent by recognized
overnight courier or four days after being mailed by registered
mail, return receipt requested, to the parties at the addresses
set forth below (or at such other address as a party may specify
by notice to the other):
<PAGE>
If to Newco:
c/o the Water Street Fund
85 Broad Street
New York, New York
Attn: Barry Volpert
If to ML Opportunity, ML Cable, Maryland Cable or
Holdings:
c/o RP Companies, Inc.
350 Park Avenue
New York, New York
Attn: I. Martin Pompadur
If to any Holder, to the address set forth below
such Holder's name on schedule 1.
15.3 No Representations; Amendment. There are no
representations or warranties by any party except as set forth in
this agreement. This agreement may be amended by the written
agreement of ML Opportunity, Maryland Cable and the holders of a
majority of the Bonds.
15.4 Headings. The section headings of this agreement
are for reference purposes only and are to be given no effect in
the construction or interpretation of this agreement.
15.5 Governing Law. This agreement shall be governed
by and construed in accordance with the law of the state of New
York applicable to agreements made and to be performed in New
York.
15.6 Jurisdiction. The courts of the state of New York
and the United States District Court for the Southern District of
New York shall have exclusive jurisdiction over the parties with
respect to any dispute or controversy between them arising under
or in connection with this agreement or the transactions
contemplated by this agreement. A summons or complaint in any
such action or proceeding may be served by mail in accordance
with
section 15.2.
15.7 Separability. If any provision of this agreement
is
invalid or unenforceable, the balance of this agreement shall
remain in effect.
15.8 Reasonable Efforts. Whenever any party is
required
to take reasonable efforts, such party shall not be required to
make any payment.
15.9 Assignment. Except as provided in the following
sentence, no party may assign any of its rights or delegate any
of
its duties under this agreement without the consent of the
others.
No Holder may sell or transfer any of its Bonds or Class B Stock
unless the purchaser executes an instrument agreeing
unconditionally to be bound by all of the terms and conditions of
this agreement and making the representations and warranties set
forth in section 6. If the Water Street Fund and any other
Holders
sells (or enters into an agreement to sell) or otherwise
transfers
control (or enters into an agreement to transfer control) of an
aggregate of 50.1% or more of the total outstanding amount of the
Bonds to one or more related persons, as a further condition to
the
transaction, section 1.2 of this agreement shall be amended to
provide for an additional payment to ML Opportunity at the
Closing
in an amount equal to 5% of the excess of the Value of the
Systems
over $180,000,000 (or if the transaction is consummated after the
Closing, the additional payment shall be made upon the
closing of the transaction). For purposes of this section,
the Value of the Systems shall be the sum of (a) <PAGE>
$162,406,000 times the
percentage of the face amount of the Bonds
at which the Bonds are sold, plus (b) $90,000,000.
MARYLAND CABLE PARTNERS, L.P.
By: Maryland Cable General
Partner, Inc., its General
Partner
By:___________________________
ML MEDIA OPPORTUNITY PARTNERS,
L.P.
By: MEDIA MANAGEMENT OPPORTUNITY
PARTNERS
By: RP OPPORTUNITY MANAGEMENT,
L.P.
By: IMP OPPORTUNITY MANAGEMENT,
INC.
By:
MARYLAND CABLE HOLDINGS CORP.
By:
MARYLAND CABLE CORP.
By:
ML CABLE PARTNERS
By:
<PAGE>
The following holders of the Bonds agree to become parties
to the foregoing Exchange Agreement.
____________________________
____________________________
____________________________
