<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 33-60776
Falcon Holding Group, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 95-4408577
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10900 Wilshire Boulevard, 15th Floor, Los Angeles, CA 90024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (310) 824-9990
- --------------------------------------------------------------------------
Former Name, former address and former fiscal year, if changed since last
report.
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The Exhibit Index is located at Page E-1.
<PAGE> 2
PART I - FINANCIAL INFORMATION
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
===========================================
<TABLE>
<CAPTION>
December 31, March 31,
1995* 1996
----------- ----------
(unaudited)
(Dollars in Thousands)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 15,050 $ 11,019
Receivables:
Trade, less allowance of $830,000 and $618,900 for possible losses 7,378 6,943
Affiliates 10,023 11,809
Other assets 5,419 5,008
Cable materials, equipment and supplies 4,038 4,170
Investment in affiliated partnerships and other investments 11,934 12,279
Property, plant and equipment, less accumulated depreciation
and amortization of $186,274,000 and $194,679,000 228,249 224,703
Franchise cost, less accumulated amortization of
$149,105,000 and $156,634,000 221,057 212,203
Goodwill, less accumulated amortization of
$5,246,000 and $6,557,000 63,516 62,583
Customer lists and other intangible costs, less
accumulated amortization of $5,539,000 and $5,994,000 6,521 5,729
Deferred loan costs, less accumulated amortization
of $3,282,000 and $3,918,000 12,073 11,425
--------- ---------
$ 585,258 $ 567,871
========= =========
LIABILITIES AND PARTNERS' DEFICIT
LIABILITIES:
Notes payable $ 669,019 $ 673,238
Accounts payable 5,811 2,993
Accrued expenses and other 35,274 26,728
Customer deposits and prepayments 1,058 1,208
Deferred income taxes 9,085 7,440
Minority interest 227 219
Equity in losses of affiliated partnerships in excess of investment 4,563 4,551
--------- ---------
TOTAL LIABILITIES 725,037 716,377
--------- ---------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PARTNERS' EQUITY 271,902 271,902
--------- ---------
PARTNERS' DEFICIT:
General partner (12,091) (12,183)
Limited partners (399,423) (408,418)
Unrealized gain (loss) on available-for-sale securities (167) 193
--------- ---------
TOTAL PARTNERS' DEFICIT (411,681) (420,408)
--------- ---------
$ 585,258 $ 567,871
========= =========
</TABLE>
*As presented in the audited financial statements.
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 3
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
===============================================
<TABLE>
<CAPTION>
Unaudited
------------------------
Three months ended
March 31,
------------------------
1995 1996
-------- --------
Restated
(Dollars in Thousands)
<S> <C> <C>
REVENUES $ 36,911 $ 46,203
-------- --------
OPERATING EXPENSES:
Service costs 10,784 12,756
General and administrative expenses 6,979 7,984
Depreciation and amortization 13,610 20,150
-------- --------
Total expenses 31,373 40,890
-------- --------
Operating Income 5,538 5,313
INTEREST EXPENSE, NET (13,321) (15,602)
OTHER INCOME (EXPENSE):
Other, net 13,166 1,180
Equity in net loss of investee
limited partnerships (1,379) 15
Minority interest in net loss of
consolidated subsidiary 28 8
-------- --------
NET INCOME (LOSS) $ 4,032 $ (9,086)
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE> 4
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
===============================================
<TABLE>
<CAPTION>
Unaudited
--------------------
Three months ended
March 31,
--------------------
1995 1996
-------- --------
(Dollars in thousands)
<S> <C> <C>
Net cash provided by operating activities $ 6,611 $ 10,211
-------- --------
Cash flows from investing activities:
Capital expenditures (4,399) (5,563)
Increase in intangible assets (322) (501)
Proceeds from sale of property, plant and equipment 4 102
Distributions from investee limited partnerships 2 17
Sale of available-for-sale securities 13,490 -
Investments in affiliated partnerships and other investments (669) -
-------- --------
Net cash provided by (used in) investing activities 8,106 (5,945)
-------- --------
Cash flows from financing activities:
Borrowings from notes payable 3,700 2,555
Repayment of debt (19,537) (10,864)
Deferred loan costs (1,465) 12
Contributions from partners 260 -
Minority interest capital contributions 130 -
-------- --------
Net cash used in financing activities (16,912) (8,297)
-------- --------
Net decrease in cash and cash equivalents (2,195) (4,031)
Cash and cash equivalents at
beginning of period 10,468 15,050
-------- --------
Cash and cash equivalents at
end of period $ 8,273 $ 11,019
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
=====================================================
NOTE 1 - BASIS OF PRESENTATION
Falcon Holding Group, L.P., a Delaware limited partnership (the
"Partnership" or "FHGLP"), owns and operates cable television systems serving
small to medium-sized communities and the suburbs of certain cities in 23 states
(the "Owned Systems"). The Partnership also controls, holds varying equity
interests in and manages certain other cable television systems for a fee (the
"Affiliated Systems" and, together with the Owned Systems, the "Systems"). The
Affiliated Systems operate cable television systems in 16 states. FHGLP is a
limited partnership, the sole general partner of which is Falcon Holding Group,
Inc., a California corporation ("FHGI").
The Partnership was organized on March 29, 1993 to assume the cable
system management operations of FHGI and executed an agreement with Falcon
Cablevision, Falcon Telecable, Falcon Cable Media and Falcon Community Cable,
L.P. (the "Owned Partnerships"), whereby the Partnership issued partnership
units in exchange for the direct and indirect ownership of more than 99 percent
of each of the Owned Partnerships (the "Consolidation"). For accounting
purposes, the Consolidation was accounted for as a reorganization of affiliates
under common control and reported in a manner similar to a pooling-of-interests.
As noted in its latest Annual Report on Form 10-K, on December 28, 1995
the Partnership completed its acquisition of all of the direct and indirect
ownership interests in Falcon First, Inc., a Delaware corporation ("Falcon
First" or "First"), which it did not already own. Falcon First, through
wholly-owned subsidiaries, owns cable television systems in Georgia, Alabama,
Mississippi and New York. Prior to the transaction, the Partnership had managed
the First cable systems for a fee and held an indirect, minority interest in its
former parent company, Falcon First Communications, L.P. Falcon First was
previously managed by the Partnership and, as such, classified as an "Affiliated
Partnership" in prior periods. Commencing December 28, 1995. Falcon First has
been included as an Owned Partnership, and its systems included as Owned
Systems.
The acquisition was accounted for by the purchase method of accounting,
whereby the purchase price was allocated to the assets and liabilities assumed
based on the estimated fair values at the date of acquisition. Due to the
proximity of the acquisition date to December 31, 1995, no operating results
were included for Falcon First for 1995 except for the management fees received
by FHGLP pursuant to its prior management agreement with First. As a result, the
historical results of operations for 1995 are not comparable to the 1996
results, which include the operations of First.
-5-
<PAGE> 6
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
=====================================================
The following table sets forth certain pro forma combined operating
data assuming that the acquisition of First by the Partnership had occurred on
January 1, 1995:
<TABLE>
<CAPTION>
Unaudited
------------------------------------------------------
Three months ended March 31, 1995 Three months
------------------------------------------------------ ended
Historical Falcon Pro Forma Pro Forma March 31,
as Restated First Adjustments (1) Combined 1996
----------- -------- ----------------------------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
OPERATIONS STATEMENT
DATA
Revenues $ 36,911 $ 7,683 $ (379) $ 44,215 $ 46,203
Service, general and
administrative costs and
expenses 17,763 3,816 (379) 21,200 20,740
Depreciation and amortization 13,610 5,052 1,413 20,075 20,150
-------- -------- -------- -------- --------
Operating income 5,538 (1,185) (1,413) 2,940 5,313
Interest income (expense), net (13,321) (3,249) 815 (15,755) (15,602)
Other income (expense), net 11,815 (99) 2,954 14,670 1,203
-------- -------- -------- -------- --------
Net income (loss) $ 4,032 $ (4,533) $ 2,356 $ 1,855 $ (9,086)
======== ======== ======== ======== ========
CASH FLOWS STATEMENT DATA
Net cash provided by
operating activities $ 6,611 $ 2,841 $ 591 $ 10,043 $ 10,211
Net cash provided by (used in)
investing activities 8,106 (724) - 7,382 (5,945)
Net cash used in
financing activities (16,912) - - (16,912) (8,297)
-------- -------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents (2,195) 2,117 591 513 (4,031)
Cash and cash equivalents
at beginning of period 10,468 3,749 - 14,217 15,050
-------- -------- -------- -------- --------
Cash and cash equivalents
at end of period $ 8,273 $ 5,866 $ 591 $ 14,730 $ 11,019
======== ======== ======== ======== ========
</TABLE>
(1) The pro forma adjustments relate to the elimination of management
fee income and expense between the Partnership and Falcon First; to adjustments
to depreciation and amortization expense to reflect the acquisition; to
adjustments to interest expense to reflect the effects of the refinancing that
took place on December 28, 1995: and to record estimated future tax benefits
related to Falcon First.
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<PAGE> 7
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONCLUDED)
====================================================
NOTE 2 - INTERIM FINANCIAL STATEMENTS
The interim financial statements for the three months ended March 31,
1996 and 1995 are unaudited. These condensed interim financial statements should
be read in conjunction with the audited financial statements and notes thereto
included in the Partnership's latest Annual Report on Form 10-K. In the opinion
of management, such statements reflect all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the results
of such periods. The results of operations for the three months ended March 31,
1996 are not necessarily indicative of the results for the entire year.
NOTE 3 - MINORITY INTEREST
Included in the operations of Falcon Telecable, one of the Owned
Partnerships, are the results of operations of Lake Las Vegas Cablevision, L.P.,
a Delaware limited partnership, a joint venture owned 66 2/3% by Falcon
Telecable. The minority interest reflects the 33 1/3% of the venture that Falcon
Telecable does not own.
NOTE 4 - SUBSEQUENT EVENTS
On April 10, 1996, the Partnership executed a contract to sell certain
Owned Systems located in Georgia and acquired from Falcon First in December 1995
to Teleview, Inc. for $15 million. These cable systems served approximately
9,500 homes subscribing to cable service at March 31, 1996. Closing of the sale
is dependent upon franchise and regulatory transfers and consents, and is
expected to occur during the third quarter.
NOTE 5 - RECLASSIFICATIONS
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
NOTE 6 - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
As a result of the December 28, 1995 acquisition of the stock of Falcon
First, Inc., the Partnership has restated the consolidated Statement of
Operations for the three months ended March 31, 1995 to reflect FHGLP's equity
in the net losses of Falcon First, Inc. which were not previously recorded. Such
losses were not previously recorded because FHGLP recorded losses only to the
extent of its obligation as the ultimate general partner of Falcon First
Communications, L.P., which previously owned 100% of the stock of Falcon First,
Inc. The effect of the restatement was to increase equity in net loss of
Affiliated Partnerships and net loss for the three months ended March 31, 1995
by $1,256,000 and to increase partner's deficit by $10,513,000 to reflect the
full effect of the restatement through December 31, 1995.
-7-
<PAGE> 8
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
INTRODUCTION
On February 8, 1996, President Clinton signed into law the
Telecommunications Act of 1996 (the "1996 Telecom Act"). This statute
substantially changed the competitive and regulatory environment for
telecommunications providers by significantly amending the Communications Act of
1934, including certain of the rate regulation provisions previously imposed by
the Cable Television Consumer Protection and Competition Act of 1992 (the "1992
Cable Act"). Compliance with those rate regulations has had a negative impact on
the Partnership's revenues and cash flow. However, the Partnership believes that
recent policy decisions by the Federal Communications Commission (the "FCC")
will permit it to increase regulated service rates in the future in response to
specified historical and anticipated future cost increases, although certain
costs may continue to rise at a rate in excess of that which the Partnership
will be permitted to pass on to its customers. The 1996 Telecom Act provides
that certain of the rate regulations will be phased-out altogether in 1999.
Further, the regulatory environment will continue to change pending, among other
things, the outcome of legal challenges and FCC rulemaking and enforcement
activity in respect of the 1992 Cable Act and the completion of a significant
number of FCC rulemakings under the 1996 Telecom Act. There can be no assurance
as to what, if any, future action may be taken by the FCC, Congress or any other
regulatory authority or court, or the effect thereof on the Partnership's
business. Accordingly, the Partnership's historic interim financial results as
described below are not necessarily indicative of future performance.
In addition to the information set forth in this report, reference is
made to the Partnership's Annual Report on Form 10-K for the year ended December
31, 1995 for additional information regarding regulatory matters and the effect
thereof on the Partnership's business.
As discussed in Note 1 to Condensed Consolidated Financial Statements,
the historical results of operations of the Partnership for 1995 did not include
the results of Falcon First. In order to provide a more accurate description of
the changes in the Partnership's 1996 results of operations compared to 1995,
the discussion that follows is based upon 1996 results of operations compared to
the pro-forma combined 1995 results that are set forth in Note 1 to Condensed
Consolidated Financial Statements.
RESULTS OF OPERATIONS
The Partnership's revenues increased from $44.2 million to $46.2
million, or by 4.5%, for the three months ended March 31, 1996 compared to the
corresponding period in 1995. This net increase in revenues of $2.0 million
reflects increased cable service revenues. The $2.0 million increase in cable
service revenues was caused principally by increases of $1.5 million due to
increases in regulated service rates permitted under the 1992 Cable Act that
were implemented in April 1995 and by a $423,600 increase related to other
revenue producing items (primarily advertising sales). As of March 31, 1996, the
Owned Systems had approximately 420,900 homes subscribing to cable service and
181,500 premium service units.
-8-
<PAGE> 9
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
RESULTS OF OPERATIONS (CONTINUED)
Management and consulting fees earned by the Partnership remained
relatively unchanged at $1.7 million for the three months ended March 31, 1996
compared to the corresponding period in 1995.
Service costs decreased from $13.3 million to $12.8 million, or by
3.8%, for the three months ended March 31, 1996 compared with the corresponding
period in 1995. Service costs represent costs directly attributable to providing
cable services to customers. The $533,800 decrease in service costs related
primarily to decreases in programming costs of $442,000 and increases of
$375,000 in capitalized labor related to increased construction activity,
partially offset by increases of $152,000 in franchise and copyright fees
(related to increased revenues) and increases in other service costs of
$131,000. The decrease in programming costs resulted from a decrease of $104,000
in the cost of program guides and to adjustments of estimated programming costs
to reflect actual contracts that have recently been negotiated.
General and administrative expenses increased from $7.9 million to $8.0
million, or by 1.3%, for the three months ended March 31, 1996 compared to the
corresponding period in 1995. The $73,700 increase related primarily to a
$290,700 increase in marketing costs, and a $145,300 increase in personnel costs
due to cost of living increases. These increases were partially offset by a
$329,700 reimbursement of expenses related to certain international investment
activities which were the responsibility of the Partnership until the third
quarter of 1995.
Depreciation and amortization expense remained relatively unchanged at
$20.1 million for the three months ended March 31, 1996 compared to the
corresponding period in 1995. Depreciation expense increased by approximately
$1.5 million due to accelerated depreciation related to asset retirements and
adjustments of the estimated useful lives of certain tangible assets due to
rebuilds and by approximately $700,000 due to the depreciation of property,
plant and equipment additions. These increase were substantially offset by
intangible assets becoming fully amortized and the estimated useful lives of
certain other intangible assets being revised.
Operating income increased from $2.9 million to $5.3 million, or by
82.8%, for the three months ended March 31, 1996 compared with the corresponding
period for 1995. The $2.4 million increase was due principally to revenue
increases of $2.0 million and to decreases in operating expenses of $385,000 as
discussed above.
Interest expense, including the effects of interest rate hedging
agreements, decreased from $15.8 million to $15.6 million, or by 1.3%, for the
three months ended March 31, 1996 compared to the corresponding period in 1995.
Lower average interest rates (9.3% during the three months ended March 31, 1996
compared to 10% during the corresponding period in 1995) accounted for the
majority of the decrease. Payment-in-kind interest expense (in which interest
payment requirements are met by an increase in the notes) associated with the
11% Senior Subordinated Notes amounted to $12.5 million for the three months
ended March 31, 1996 compared to $11.7 million for the corresponding period in
1995. Interest rate hedging agreements resulted in additional interest expense
of $171,000 during the three months ended March 31, 1996 compared to $154,000
during the corresponding period in 1995.
-9-
<PAGE> 10
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
RESULTS OF OPERATIONS (CONCLUDED)
Other income was $1.2 million for the three months ended March 31, 1996
compared to $14.7 million for the corresponding period in 1995. The change was
primarily due to a $13.3 million non-recurring gain from the sale of marketable
securities during 1995.
Due to the factors described above, the Partnership's net income of
$1.8 million for the three months ended March 31, 1995 changed to a $9.1 million
net loss for the three months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Partnership's primary need for capital has been to
finance plant extensions, rebuilds and upgrades, and to add addressable
converters to certain of the Owned Systems. The Partnership spent $37.1 million
during 1995 on non-acquisition capital expenditures. Management's current plan
calls for the expenditure of approximately $95.8 million and $96.6 million in
capital expenditures in 1996 and 1997, respectively, including approximately
$72.7 million and $61.1 million, respectively, to rebuild and upgrade certain of
the Owned Systems. The Partnership's proposed spending plans will require
continued compliance with certain covenants of the Partnership's loan
agreements, of which there can be no assurance. The Partnership spent $5.6
million on non-acquisition capital expenditures during the three months ended
March 31, 1996.
As previously discussed in more detail in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1995, on December 28, 1995
the Partnership acquired all of the direct and indirect ownership interests in
Falcon First that it did not already own. Falcon First was previously managed by
the Partnership. In connection with the acquisition of Falcon First, on December
28, 1995 the Partnership entered into a new $435 million Bank Credit Agreement.
The Partnership is currently in negotiations to sell certain of the
Falcon First cable assets, and, as disclosed in Note 1 to Condensed Consolidated
Financial Statements, an agreement to sell certain of the assets for $15 million
has been executed. The combined cable assets to be sold generated approximately
5.3% of consolidated revenues for the three months ended March 31, 1996. The
Partnership is under no obligation to consummate such transactions, although the
failure to do so would result in the reduction of capital expenditures permitted
under the Bank Credit Agreement. If such sales occur, of which there can be no
assurance, any resulting gain or loss on sale will be recorded as an adjustment
to goodwill, and the proceeds of the sales will be used to temporarily pay down
outstanding debt under the Bank Credit Agreement.
The new Bank Credit Agreement provides for maximum available borrowings
as follows: $435 million at December 31, 1996 and 1997; $389 million at December
31, 1998; $323 million at December 31, 1999; $241 million at December 31, 2000;
$228 million at December 31, 2001; and $157 million at December 31, 2002. As of
March 31, 1996, the amount outstanding under the Bank Credit Agreement
-10-
<PAGE> 11
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
was $389 million and the Partnership had available to it additional borrowings
thereunder of approximately $46 million. The Bank Credit Agreement requires that
interest be tied to the ratio of consolidated total debt to consolidated
annualized cash flow (in each case, as defined therein), and further requires
that the Partnership must maintain hedging arrangements with respect to at least
50% of the outstanding borrowings thereunder. As of March 31, 1996, borrowings
under the Bank Credit Agreement bore interest at an average rate of 7.55%
(including the effect of interest rate hedging transactions). The Partnership
has entered into fixed interest rate hedging agreements with an aggregate
notional amount at March 31, 1996 of $430 million. Agreements in effect at March
31, 1996 totaled $280 million, with the remaining $150 million scheduled to
become effective as certain of the existing contracts mature during 1996 and
1997. The agreements serve as a hedge against interest rate fluctuations
associated with the Partnership's variable rate debt. These agreements expire
through May 27, 2000. The Bank Credit Agreement also contains various
restrictions relating to, among other things, mergers and acquisitions, a change
in control and the incurrence of additional indebtedness and also requires
compliance with certain financial covenants. The Partnership believes that it
was in compliance with all such requirements as of March 31, 1996.
The Partnership (i.e., FHGLP) is a separate, stand-alone holding
company which employs all of the management personnel. All of the Owned
Partnerships are subsidiaries of the Partnership. Accordingly, the Partnership
is financially dependent on the receipt of permitted payments from the Owned
Partnerships, management and consulting fees from both domestic and the
remaining international cable ventures, and the reimbursement of specified
expenses by certain of the Affiliated Partnerships to fund its operations.
Expected increases in the funding requirements of the Partnership combined with
limitations on its sources of cash may create liquidity issues for the
Partnership in the future. Specifically, the new Bank Credit Agreement permits
the Owned Partnerships to remit to FHGLP no more than 3.75% of their net cable
revenues, as defined, in any year. For 1995, that limit was approximately $4.9
million ($3.0 million was actually remitted). In addition, the management fees
and reimbursed expenses earned from the Affiliated Partnerships have been
adversely affected by the FCC's rate regulations (to the extent those fees are
based on revenues of the Affiliated Partnerships), as well as by payment
restrictions currently imposed, or which may be imposed in the future, by the
senior lenders to several of those entities As a result, a portion of the
payment of fees due to FHGLP has been deferred in prior years due to such
restrictions, which increases the amount required to be funded by the Owned
Partnerships. One such partnership, Falcon Cable Systems Company ("FCSC"), which
pays both management fees and reimbursement of certain of the Partnership's
expenses, is presently scheduled to terminate in 1996. Based on an amendment to
the FCSC credit agreement, deferrals of both management fees and reimbursement
of certain of FHGLP's expenses increased in 1995 and will be significantly
greater in 1996. If FHGLP is unable to retain the FCSC systems under management
and thereby ceases to receive management fees from those systems, the loss of
such fees as revenue, while being partially offset by a reduction in FHGLP's
operating costs, would nevertheless negatively impact the Partnership's cash
flow and liquidity. The Partnership earned management fees and reimbursed
expenses from FCSC of $1.2 million for the three months ended March 31, 1996.
Receivables from the Affiliated Partnerships for services and reimbursements
described above amounted to approximately $11.8 million at March 31, 1996 and
include approximately $6.6 million related to fees and reimbursements deferred
as a result of the limitations described above.
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<PAGE> 12
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Due to the uncertainty regarding its ability to meet the projected
liquidity needs outlined above, the Partnership cannot presently determine
whether it will have access to the capital required for it to continue to pursue
its traditional acquisition strategy if and when attractive acquisition
opportunities become available. The Partnership also possesses the right, under
certain circumstances, to acquire some or all of the Affiliated Systems. Any
exercise of such rights is similarly dependent on the availability of adequate
capital, of which there can be no assurance. FHGLP is considering the
possibility of exercising its rights under the FCSC partnership agreement to
purchase the Affiliated Systems held by FCSC at their appraised value (which has
been determined to be $247.4 million at December 31, 1995). There can be no
assurance that such a transaction will be completed.
On March 29, 1993, the Partnership issued $175 million aggregate
principal amount of its 11% Senior Subordinated Notes (the "Notes") in
connection with the Consolidation. As a result of payment-in-kind interest
payments, the aggregate principal of the Notes outstanding as of March 31, 1996
had increased to $240.3 million. Future interest payments are expected to be
paid in kind until the year 2000, when cash payment is required.
As of March 31, 1996, the Partnership also had outstanding an aggregate
of $43.6 million in principal amount of subordinated debt (other than the
Notes).
Enstar Communications Corporation, a wholly-owned subsidiary of one of
the Owned Partnerships ("ECC"), has guaranteed the debt obligations of certain
Enstar partnerships in which it acts as general partner. The Enstar partnerships
own cable television systems through limited partnerships, most of which are
publicly-held. At March 31, 1996, the maximum exposure to ECC pursuant to such
guarantees was approximately $11.6 million, plus accrued interest. This
guarantee is recourse only to the assets of ECC, which consist primarily of
equity interests in the Enstar partnerships.
The Partnership Agreement contains provisions that may require FHGLP to
purchase substantially all of the limited partnership interests held by the
Group I, II and III limited partners (constituting approximately 60% of the
common equity of the Partnership), at the holders' option, during the period
from September 15, 1996 to June 30, 1999. Certain of these interests are
mandatorily redeemable in 1998. Limited partnership interests held by the Group
IV limited partner become redeemable in 2004, subject to certain shared
liquidity rights. The purchase price for such partnership interests (other than
Class C partnership interests), which would be negotiated based on market
conditions or determined by an appraisal, is to be paid in cash or, under
certain circumstances, through the issuance of debt or equity securities. The
redemption value of the Class C partnership interests will generally be
determined based on a formula due to its preferred status. Certain of the
Partnership's debt agreements (including the Bank Credit Agreement and the
Notes) will restrict the Partnership's ability to (i) make distributions to fund
the purchase of these partnership interests pursuant to the provisions described
above, (ii) incur indebtedness or issue debt securities in connection with such
purchase or (iii) sell a substantial amount of its assets. The obligation to
redeem any significant amount of the limited partnership interests in the
Partnership could result in a material liquidity demand on the Partnership and
there can be no assurance that the Partnership will be able to raise such funds
on terms acceptable to the Partnership, or at all.
-12-
<PAGE> 13
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (CONCLUDED)
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (PRO FORMA)
Cash from operating activities (including interest expense and
management fee income) increased from $10.0 million to $10.2 million for the
three months ended March 31, 1996, compared to the corresponding period in 1995,
an increase of $167,800. The increase resulted primarily from a $781,100
increase in payment-in-kind interest expense related to the 11% Subordinated
Notes issued March 29, 1993 partially offset by a net decrease of $613,300 in
other operating items (receivables, cable materials and supplies, payables,
accrued expenses and subscriber deposits and prepayments).
Cash used in investing activities changed from cash provided of $7.4
million for the three months ended March 31, 1996 to a use of cash of $5.9
million for the three months ended March 31, 1996, or a change of $13.3 million.
The change was due primarily to approximately $13.5 million of net proceeds
received by the Partnership during 1995 from the sale of marketable securities
and an increase in capital expenditures of $486,400. These increases were
partially offset by $669,400 of investments in limited partnerships during 1995
that did not recur in 1996. Cash used in financing activities decreased by $8.6
million during the three months ended March 31, 1996, due to decreased repayment
of debt in 1996 of $7.5 million and due to a $1.5 million decrease in deferred
costs.
Operating income before depreciation and amortization (EBITDA) as a
percentage of revenues increased from 52.0% during the three months ended March
31, 1995 to 55.0% for the corresponding period in 1996. The increase was
primarily caused by revenue increases as described above. EBITDA increased from
$23.0 million to $25.4 million, or by 10.4%, for the three months ended March
31, 1996 compared to the corresponding period in 1995.
INFLATION
Certain of the Partnership's expenses, such as those for wages and
benefits, equipment repair and replacement, and billing and marketing generally
increase with inflation. However, the Partnership does not believe that its
financial results have been, or will be, adversely affected by inflation in a
material way, provided that it is able to increase its service rates
periodically, of which there can be no assurance.
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FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEMS 1-5. Not applicable.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.30 - First Amendment to and Extension of office
Lease between Raymond Business Center and Falcon Holding
Group, L.P.
Exhibit 10.31 - Asset purchase agreement by and among
subsidiaries of Falcon Holding Group, L.P. and Teleview,
Inc.
Exhibit 10.32 - Amendment No. 1 to Bank Credit Agreement,
dated as of December 28, 1995, among certain affiliates of
Falcon Holding Group, L.P., their respective subsidiaries
that are from time to time party thereto, The First National
Bank of Boston, as Managing Agent, Toronto-Dominion (Texas)
Inc., as Administrative Agent, Chemical Bank, as
Co-Administrative Agent, NationsBank of Texas, N.A., as
Syndication Agent, and the several lenders from time to time
party thereto.
Exhibit 10.33 - Restricted Subordination Agreement dated as
of March 26, 1993 as restated as of December 28, 1995
between Falcon Holding Group, L.P. Falcon Holding Group,
Inc. and AUSA Life Insurance Company, Inc. and MONY Life
Insurance Company of America
(b) On January 16, 1996 the Registrant filed a Form 8-K dated
December 28, 1995 reporting under Item 2 its acquisition of
all of the capital stock of Falcon First, Inc.
On February 9, 1996 the Registrant filed a Form 8-K/A to
include financial statements and Pro Forma financial
information not previously filed with the January 16, 1996
filing.
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<PAGE> 15
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.
FALCON HOLDING GROUP, L.P.
a DELAWARE LIMITED PARTNERSHIP
(Registrant)
By: Falcon Holding Group, Inc.
General Partner
Date: May 9, 1996 By: /s/ Michael K. Menerey
------------------------------
Michael K. Menerey, Secretary
and Chief Financial Officer
<PAGE> 16
EXHIBIT INDEX
Exhibit
Number Description
10.30 First Amendment to and Extension of office Lease between Raymond
Business Center and Falcon Holding Group, L.P.
10.31 Asset purchase agreement by and among subsidiaries of Falcon
Holding Group, L.P. and Teleview, Inc.
10.32 Amendment No. 1 to Bank Credit Agreement, dated as of December
28, 1995, among certain affiliates of Falcon Holding Group,
L.P., their respective subsidiaries that are from time to time
party thereto, The First National Bank of Boston, as Managing
Agent, Toronto-Dominion (Texas) Inc., as Administrative Agent,
Chemical Bank, as Co-Administrative Agent, NationsBank of Texas,
N.A., as Syndication Agent, and the several lenders from time to
time party thereto.
10.33 Restricted Subordination Agreement dated as of March 26, 1993
as restated as of December 28, 1995 between Falcon Holding
Group, L.P. Falcon Holding Group, Inc. and AUSA Life Insurance
Company, Inc. and MONY Life Insurance Company of America
E-1
<PAGE> 1
EXHIBIT 10.30
FIRST AMENDMENT TO AND EXTENSION OF OFFICE LEASE
This First Amendment to and Extension of Office Lease ("Amendment") is
dated for reference purposes as of October 1, 1995. This Amendment amends that
certain Office Lease ("Lease") dated as of December 1989 between RAYMOND
BUSINESS CENTER, a California limited partnership, as Landlord, and Falcon
Holding Group, L.P., as successor in interest to Falcon Holding Group, Inc., a
California corporation, as Tenant, with reference to the following facts:
RECITALS
A. The initial term of the Lease expired on September 30, 1995.
Although Tenant did not exercise its option to renew the Lease, both Landlord
and Tenant wish to extend the term of the Lease at an agreed upon rental.
B. During the initial term of the Lease, Tenant leased certain
storage space from Landlord, and used additional parking, pursuant to an
unsigned written agreement evidenced by a draft lease amendment and a memorandum
dated April 26, 1994, from Jim Ashjian to Scott Teague. The parties wish to
defer the $13,860.00 additional rent called for in such unsigned amendment and
to provide for the rental of such storage space during the extended lease term.
C. Landlord and Tenant wish to make certain other modifications to
the Lease as set forth below.
AGREEMENT
Now, therefore, in consideration of the mutual promises, covenants, and
conditions herein contained, the Parties hereto agree that the Lease is amended
as follows:
1. Definitions. The capitalized definitions used herein shall have
the same meaning as contained in the Lease unless expressly stated herein to the
contrary.
2. Extended Term. Article II of the Lease shall be deleted in its
entirety and replaced with the following:
"Landlord leases to Tenant, and Tenant leases and accepts from
Landlord, the PREMISES for an additional term of ten (10) years and no months,
commencing on October 1, 1995, and ending on September 30, 2005 (the "Extended
Term"). The RENT COMMENCEMENT DATE will be October 1, 1995. Tenant shall have
the option to extend the term of this Lease after the expiration of the Extended
Term for one (1) additional five year period, to commence upon the expiration of
the Extended Term, upon nine (9) months' prior written notice of its intention
to exercise such option. At the commencement of such additional
1.
<PAGE> 2
term, if any, the Basic Monthly Rent shall equal the greater of the last Basic
Monthly Rent for the month immediately preceding the commencement of the
additional term, or ninety-five percent (95%) of the FAIR MARKET RENTAL RATE as
defined in Section 22.11."
3. Rent. Section 3.02 of the Lease shall be deleted and replaced
with the following:
"3.02 RENTS. Tenant shall pay to Landlord the following RENTS
for the PREMISES.
A. BASIC RENT. The Basic Monthly Rent for the PREMISES
for the first five (5) years of the Extended Term shall be twenty-eight Thousand
Six Hundred fifty-six Dollars ($28,656.00), due and payable on the first day of
each calendar month. The Basic Monthly Rent for the period commencing October 1,
2000 and ending September 30, 2005 shall be equal to (I) ninety-five percent
(95%) of the "face" or "stated" rental rate (including any escalation thereof if
escalation's are contained in such "Comparable Deals," as that term is defined
below), at which tenants, as of the commencement of such period are leasing
non-sub-lease, non-encumbered, non-equity space comparable in size, location and
quality to the Premises for a term of five (5) years, which comparable space is
located in first-class office buildings in Pasadena, California, comparable in
age, location, services and amenities (the "Comparable Deals").
B. VARIABLE RENT. Tenant's PERCENTAGE SHARE is 53%.
An amount equal to 53% of all OPERATING COSTS incurred by Landlord in connection
with its ownership, maintenance, and operation of the BUILDING computed on a
periodic basis, as set forth in Article 3.03 B, shall be due and payable in
equal monthly installments on the first day of each calendar month. With respect
to parking fees incurred by Landlord in connection with engaging a parking
service to operate the outside parking facilities for the PROJECT, Tenant's
PERCENTAGE SHARE is 50%. An amount equal to 50% of such parking expenses shall
be computed on a periodic basis, as set forth in Article 3.03 B, shall be due
and payable in equal monthly installments on the first day of each calendar
month.
C. ADDITIONAL RENT. Any other amount which Tenant
becomes obligated to pay to Landlord pursuant to the terms and conditions of
this LEASE, which amount shall be due and payable within five (5) business days
of receipt by Tenant of a NOTICE from Landlord enclosing an invoice for such
amount."
4. Computation of Rents. Subsection A of Section 3.03 of the Lease
shall be deleted. The first sentence of Subsection B of Section 3.03 of the
Lease shall be deleted and replaced with the following:
"Throughout the Extended Term, Tenant shall pay its PERCENTAGE
SHARE of 53% of all annual OPERATING COSTS in excess of the average OPERATING
COSTS for the calendar years 1991-1995, excluding therefrom, the water proofing
expenses incurred in 1995 in the amount of $11,269.00 and the parking fees
incurred in 1995 in the amount of $25,223.00 in
2.
<PAGE> 3
connection with engaging a parking service to operate the outside parking
facility located in the PROJECT."
5. Lease of Storage Space. Subject to Landlord's right of recapture
as set forth herein, Landlord leases to Tenant, and Tenant leases and accepts
from Landlord, the Storage Space described in Exhibit A and consisting of
approximately 4700 RENTABLE SQUARE FEET in the BUILDING and PROJECT ("Storage
Space").
6. Rent for Storage Space. In addition to the Basic Monthly Rent
and Variable Rent set forth above, Tenant shall pay to Landlord monthly during
the Extended Term $.50 per RENTABLE SQUARE FOOT, or $2,350.00 per month based
upon the assumption that the Storage Space contains 4,700 RENTABLE SQUARE FEET.
Tenant acknowledges that Landlord has agreed to rent such Storage Space computed
on the basis of $.50 per RENTABLE SQUARE FOOT based on the assumption that
Tenant will provide certain TENANT IMPROVEMENTS to the Storage Space as provided
in paragraph 7 below.
7. Conversion of Storage Space to Office Space. Should Tenant,
prior to the expiration of the Extended Term, elect to convert all or a portion
of the Storage Space from storage space to office space, Landlord will pay the
fair market Tenant Improvement costs associated with such conversion consistent
with similar commercial lease space in the same area of Pasadena. The quality of
the TENANT IMPROVEMENTS for the Storage Space shall be substantially consistent
with the quality of the TENANT IMPROVEMENTS for the PREMISES. In the event
Tenant fails to convert at least 2,200 square feet of the Storage Space to
office space during the first two (2) years of the Extended Term, Tenant shall
pay to Landlord at the end of such two (2) year period an amount calculated by
multiplying $13,860.00 by a fraction, the denominator of which shall be 2,200
and the numerator of which shall be (2200-X) where X equals the amount of space
so converted (the "Non-Conversion Penalty"). For example, if Tenant converts
1,500 square feet of space, the Non-Conversion Penalty payable to Landlord would
be $4,410.00 computed as follows:
(2,200-1,500)
$13,860.00 x ------------- = $4,410.00
2,200
In the event Landlord exercises its right to recapture space
as provided below, and the remaining Storage Space is less than 2,200 square
feet, then the formula set forth above shall be modified accordingly such that
the Non-Conversion Penalty shall be calculated by multiplying $13,860.00 by a
fraction, the denominator of which shall be Y and the numerator of which shall
be (Y-X), where X equals the amount of space converted and Y equals the number
of square feet remaining in the Storage Space.
If Tenant converts any portion of the Storage Space to office
space, the rental for such converted space shall be increased to $1.95 per
square foot as of the date construction is substantially completed and Tenant
has occupied such space for use as office space.
3.
<PAGE> 4
8. Right of Recapture. Landlord shall have the right, at any time
upon sixty (60) days' notice, to recapture up to 2,500 square feet of the
Storage Space, or, upon seventy-five (75) days' notice, to recapture up to a
total of 3,000 square feet of the Storage Space. If Landlord exercises such
right of recapture, the Storage Space shall be reconfigured in such a manner as
to insure that Tenant has reasonable access to the Storage Space.
9. Parking. Paragraph 21.01, TENANT'S PARKING, is amended to read
as follows:
"Tenant shall have the right use the BUILDING's parking
facility for reserved or assigned underground parking for up to forty (40)
automobiles (30 single and 10 tandem spaces) at the rate of $1,385.00 per month
(the "Parking Fee"). In addition to the foregoing, Tenant shall have the right
to use the surface lot adjacent to the BUILDING for the parking of up to
twenty-eight (28) automobiles in designated parking spaces only. Tenant's right
to use the parking facility shall be in conjunction with the other tenants of
the BUILDING. Tenant agrees to be bound by the rules and regulations governing
the parking facility, subject to availability and to the rules and regulations
governing visitors parking from time to time adopted by Landlord.
10. Operating Costs. The following sentence shall be added
immediately after Article XXII Paragraph B 11:
"12. In no event shall OPERATING EXPENSES include parking fees
incurred in connection with engaging a parking service to operate the outside
parking facility located in the PROJECT."
11. Lease. Except as expressly modified herein, the terms and
conditions of the Lease shall remain in full force and effect.
TENANT LANDLORD
FALCON HOLDING GROUP, L.P., RAYMOND BUSINESS CENTER,
a California Limited Partnership a California Limited Partnership
By: ____________________________ By: 220 N. Lake, Inc.,
its General Partner its General Partner
By: ____________________________ By:_____________________________
______________, its_________ ______________, its__________
4.
<PAGE> 1
EXHIBIT 10.31
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made effective as of April 10, 1996,
by and among MULTIVISION OF COMMERCE, INC., a Georgia corporation, and
MULTIVISION NORTHEAST, INC., a Georgia corporation, with offices at 10900
Wilshire Boulevard, Fifteenth Floor, Los Angeles, California 90024 (each
individually a "Seller" and collectively, "Sellers"); FC CABLE HOLDINGS, INC., a
Delaware corporation ("Guarantor"); and TELEVIEW, INC., a Georgia corporation,
with offices at 2000 Industrial Boulevard, Cornelia, Georgia 30531 ("Buyer").
WHEREAS, Sellers own and operate cable television systems located in
and around Commerce, Cornelia, and Jefferson, Georgia, as described in Exhibit
"A" hereto (each individually a "System" and collectively, the "Systems"); and
WHEREAS, Buyer desires to buy and Sellers desire to sell all those
assets, other than those expressly excluded from sale or assumption herein, used
or held for use by Sellers in the operation of the Systems, pursuant to the
terms hereof; and
WHEREAS, (i) Guarantor owns one hundred percent (100%) of the issued
and outstanding shares of stock in each of Sellers, and directly or indirectly
owns one hundred percent (100%) of the issued and outstanding shares of stock in
affiliated corporations owning cable television systems located throughout
Georgia and Alabama; (ii) Buyer desires that Guarantor guarantee the
representations and warranties of Sellers hereunder, guarantee the performance
by Sellers of their obligations hereunder, and covenant not to compete with
Buyer on the terms and conditions hereinbelow set forth; and (iii) Guarantor
desires to facilitate the consummation of the transactions contemplated herein
by providing such guarantees and covenant;
NOW, THEREFORE, in consideration of these premises, and the mutual
covenants, conditions, and promises hereinafter set forth, the parties hereto
represent, warrant, and agree as follows:
1.0 SALE AND PURCHASE OF ASSETS.
1.1 Assets to be Sold. Subject to the terms and conditions
hereof, Sellers, in consideration of Buyer's payment of the Purchase Price (as
defined in Section 2.0), shall sell, transfer, convey, assign, and deliver (or
cause to be sold, transferred, conveyed, assigned and delivered) to Buyer at the
Closing, free and clear of all liabilities, liens, conditions, and encumbrances
(except for those described in Section 5.7 below), and Buyer shall purchase from
Sellers at the Closing, all of the tangible and intangible assets of Sellers
used or held for use in the operation of the Systems (other than those assets
expressly excluded from sale or assumption herein), as follows (all assets
described in Sections 1.1.1 through 1.1.7 immediately below are hereinafter
collectively referred to as the "Assets"):
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<PAGE> 2
1.1.1 Personal Property. Except for any items that
are excluded from assignment pursuant to Section 1.2, below, all machinery,
equipment, tools, vehicles, furniture, fixtures, leasehold improvements, office
equipment, plant, subscriber installations, inventory, and other tangible
personal property used or held for use in the operation of the Systems, as
listed in Schedule 1.1.1 hereto, or equivalent replacements, plus such additions
thereto, and less any deletions therefrom approved in writing by Buyer, as arise
in the ordinary course of business through the Closing Date (all of the
foregoing hereinafter collectively referred to as the "Personal Property");
1.1.2 Real Property. All real property, if any,
owned by Sellers and all leasehold interests in real property ("Leases"), except
for any that are excluded from assignment pursuant to Section 1.2, below, and
all other interests in real property, including all easements and rights of way,
and all improvements, buildings, structures, towers, and fixtures located
thereon, which are used or held for use in the operation of the Systems, as
described in Schedule 1.1.2 hereto (all of the foregoing hereinafter
collectively referred to as the "Real Property");
1.1.3 Governmental Licenses. Except for any that are
excluded from assignment pursuant to Section 1.2, below, all municipal, state,
and federal licenses or franchises to provide cable television service,
applications for such licenses or franchises (if any), domestic satellite, CARS,
business radio, and other licenses granted by the Federal Communications
Commission (hereinafter "FCC"), the Federal Aviation Administration (hereinafter
"FAA"), or any other administrative agency, and all authorizations and permits
relating to the Systems granted to either of Sellers or to any affiliate thereof
by any governmental instrumentality, as described in Schedule 1.1.3 hereto (all
of the foregoing hereinafter collectively referred to as the "Licenses");
1.1.4 Contracts. Except for any that are excluded
from assignment pursuant to Section 1.2, below, all contracts, personal property
leases, pole attachment agreements, and other agreements relating to the
Systems, as described in Schedule 1.1.4 hereto, and all subscriber service
agreements and such additional contracts and agreements as Sellers may have
relating to the operation of the Systems made in the ordinary course of business
and approved in writing by Buyer in accordance with Section 1.3.2 hereof (all of
the foregoing hereinafter collectively referred to as the "Contracts");
1.1.5 Miscellaneous Documentation. All warranties
(to the extent they can be assigned to Buyer), maps, plans, diagrams,
blueprints, schematics, and books and records relating to the Systems, and
personnel files for any employees of the Systems as may be hired by Buyer
effective upon the Closing (other than those books and records described in
Section 1.2.5 hereof);
1.1.6 Subscriber and Customer Lists. All subscriber
and customer lists relating to the Systems;
1.1.7 Intellectual Property. All patents, patent
applications, patent licenses, service names, copyrights, copyright
registrations, trademarks, trade names,
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<PAGE> 3
service marks, and all other information and intangible assets relating to the
Systems, other than "Falcon Cable TV" or any derivatives thereof.
1.2 Excluded Assets. The Assets shall not include the
following:
1.2.1 Cash. Cash or cash equivalents, such as
demand deposits, certificates of deposit, treasury bills, and other marketable
securities, provided, however, that pursuant to Sections 2.2 and 4.0, Seller may
be required to credit Buyer with an amount of cash equal to the amount of any
subscriber deposits assumed by Buyer pursuant to Section 1.3.3;
1.2.2 Refunds. All claims, rights, and interest in
and to any refunds for federal, state, or local income or other taxes or fees of
any nature whatsoever for periods prior to and including the Closing Date,
including, without limitation, fees paid to the U.S. Copyright Office;
1.2.3 Bonds, Deposits, and Insurance Policies. All
franchise, construction, surety, fidelity, performance, and other bonds posted
by either of Sellers in connection with its ownership or operation of the
Systems, including the unused portion of any premiums therefor; all deposits
with third parties securing either of Sellers' performance of its obligations to
or on behalf of such third parties; and all insurance policies maintained by
either of Sellers in connection with its ownership or operation of the Systems;
1.2.4 Accounts Receivable. Accounts receivable
arising or accruing through the Closing Date (provided, however, that after the
Closing, Buyer shall collect such accounts receivable on Seller's behalf as
hereinbelow provided).
1.2.5 Corporate Records. Sellers' minute books,
corporate documents, corporate record books, and such other books and records as
pertain to the organization, existence, or capitalization of Sellers or any
other books and records which either of Sellers is required by law to retain;
1.2.6 Correspondence. Correspondence not relating
to the prior operation of the Systems; and
1.2.7 Miscellaneous. Sellers' programming
agreements.
1.3 Assumption of Obligations and Liabilities. As of the
Closing (as defined in Section 3.0), Buyer shall assume and pay, discharge, and
perform:
1.3.1 Insofar as they relate to the time period
after the Closing Date, the obligations and liabilities of either of Sellers
under the Leases, Licenses, and Contracts listed in Schedules 1.1.2, 1.1.3, and
1.1.4, respectively, and under Contracts made in the ordinary course of business
(other than those relating to assets excluded from the definition of Assets
pursuant to Section 1.2, above) which are cancelable without penalty upon not
more than thirty (30) days notice, and under which (i) the remaining payment
obligation with respect to any such individual Contract (exclusive of that
portion of any such obligation which is allocable to Sellers pursuant to Section
4.0, below) is less than Ten Thousand Dollars ($10,000.00), and (ii) the
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<PAGE> 4
aggregate remaining payment obligation with respect to all such Contracts
(exclusive of that portion of any such obligation which is allocable to Sellers
pursuant to Section 4.0, below) is less than Fifty Thousand Dollars
($50,000.00), provided that if there are such Contracts satisfying the criterion
set forth in clause (i) which, in the aggregate, have remaining payment
obligations equaling or exceeding the amount set forth in clause (ii), Buyer
shall have the right, in its sole discretion, to designate which of such
Contracts it will assume, it being understood that Buyer is obligated to assume
such Contracts only until it cannot assume any more without thereby having
assumed such Contracts which, in the aggregate, have remaining payment
obligations equaling or exceeding the amount set forth in clause (ii);
1.3.2 Insofar as they relate to the time period
after the Closing Date, the obligations and liabilities of either of Sellers
under any other written or oral Leases, Licenses, Contracts, personal property
leases, pole attachment agreements, purchase orders, commitments, or other
agreements relating to the Systems not described on Schedule 1.1.2, 1.1.3, or
1.1.4, but which, at Buyer's sole option, are specifically assumed by Buyer by
notice in writing to either of Sellers after Buyer has been notified of the
existence of any such agreement;
1.3.3 Subscriber service agreements, including any
obligation or liability with respect to subscriber deposits or prepayments; and
1.3.4 All obligations, liabilities, and claims
arising out of Buyer's ownership of the Systems or its operation of the Systems
after the Closing Date.
1.4 Excluded Liabilities. Except for those liabilities and
obligations to be assumed by Buyer at Closing as specifically described herein,
Buyer shall not assume or become liable on (i) any other agreement, contract,
lease, liability, or obligation of either Seller, or (ii) any other
indebtedness, obligation, or liability of either Seller whatsoever, including
any litigation matter arising from the operation of the Systems prior to the
Closing Date, and any wages, salaries, overtime pay, vacation pay, holiday pay,
payroll taxes, or employee benefits relating to any of Sellers' employees
arising out of or attributable to services rendered for Sellers, or otherwise in
connection with the operation of the Systems, on or prior to the Closing Date.
2.0 PURCHASE PRICE.
The purchase price (the "Purchase Price") payable to Sellers
shall be Fifteen Million Dollars ($15,000,000.00), payable as follows:
2.1 Deposit. Upon the execution of this Agreement, Three
Hundred Thousand Dollars ($300,000.00) shall be delivered by Buyer to Community
Bank and Trust - Habersham (the "Deposit Escrow Holder") as a deposit (the
"Deposit"), and placed in a federally insured interest bearing account, with
interest on the Deposit to be retained by Buyer except as set forth below. The
Deposit shall be allocated between the respective Sellers as Sellers shall
instruct the Deposit Escrow Holder in writing prior to the Closing, and upon the
Closing shall be delivered to Sellers in accordance with such instructions and
credited against the Purchase Price to be paid by Buyer. Sellers, Buyer, and the
Deposit Escrow Holder shall sign an escrow agreement containing the terms set
forth in Exhibit 2.1 attached hereto (the "Deposit Escrow Instructions"),
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<PAGE> 5
along with any standard and reasonable general provisions required by the
Deposit Escrow Holder. Should the Closing not occur for any reason, the
following shall apply:
2.1.1 Failure to Close Without Fault. If: (a) each
party hereto shall have satisfied in full all of the obligations of such party
under this Agreement which were to have been satisfied by such party prior to
the Closing and neither party shall have breached any representation, warranty,
covenant, or agreement of such party contained in this Agreement, but (b) the
Closing shall nevertheless fail to take place (without any fault on the part of
either party) because one or more conditions to the Closing shall not have been
satisfied or waived, then either party may terminate this Agreement pursuant to
Section 16.2, below, and either: (i) if the only conditions to the Closing that
have not been satisfied or waived are the obtaining of the consent to transfer
to Buyer one or more of the local cable television franchises and/or the
conditions set forth in Section 9.12 or Section 9.13, below, the Deposit, plus
any interest accrued thereon, shall be delivered to Buyer, or (ii) if any other
condition to the Closing has not been satisfied or waived, the Deposit, plus any
interest accrued thereon, shall be delivered to Sellers. If one of the
conditions not satisfied is the existence of any bona fide legal proceedings of
the nature described in Sections 9.9 or 10.9, below, any party hereto that is a
party to such legal proceedings shall have the right to elect such a
termination.
2.1.2 Failure to Close When Only Sellers Perform.
If all of the conditions set forth in Section 9 below are satisfied at or as of
the Closing (or, in the case of any condition which is to be satisfied at the
Closing, Sellers or the applicable third party shall have demonstrated a
willingness and ability to satisfy such condition if the Closing were to take
place), and Buyer shall nevertheless fail to purchase the Systems in accordance
herewith, Sellers shall retain the Deposit, plus any interest accrued thereon,
and shall have the option of electing either specific performance or rescission
of this Agreement as its sole additional remedies.
2.1.3 Failure to Close When Only Buyer Performs. If
all of the conditions set forth in Section 10 below are satisfied at or as of
the Closing (or, in the case of any condition which is to be satisfied at the
Closing, Buyer or the applicable third party shall have demonstrated a
willingness and ability to satisfy such condition if the Closing were to take
place), and Sellers shall nevertheless fail to sell the Systems to Buyer in
accordance herewith, Buyer shall be entitled to the return of the Deposit, plus
any interest accrued thereon, and shall have the option of electing either
specific performance or rescission of this Agreement as its sole additional
remedies.
2.2 Closing Date Payment and Estimated Prorations. At
Closing, Buyer will pay to Sellers the sum of Fourteen Million Seven Hundred
Thousand Dollars ($14,700,000.00). Also at Closing, the following prorations
shall occur: (i) the amount of any subscriber deposits estimated by Sellers as
likely to be held as of the Closing on behalf of subscribers of the Systems
shall be credited to Buyer; and (ii) the amount estimated by Sellers as likely
to be the net amount, as of the Closing, of any subscriber prepayments and other
proratable items described in Section 4.0, below shall be credited to Buyer or
Sellers, as applicable. The net amount of the credits described in clauses (i)
and (ii) shall be reflected in a certificate to be delivered to Buyer at least
five (5) days prior to the Closing Date, and shall be added to or subtracted
from the foregoing payment. Buyer acknowledges that the certificate to
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be provided by Sellers to Buyer pursuant to this Section 2.2 will be based upon
Sellers' best estimates as of the time it is delivered, such estimates are not
warranted as to their completeness or accuracy, and such estimates are subject
to subsequent adjustment as provided in Section 4.0. The amount to be paid at
Closing, determined as set forth above, will be allocated between the respective
Sellers as Sellers shall instruct Buyer in writing prior to the Closing, and
shall be paid directly to Sellers on the Closing Date in accordance with such
instructions by federal funds wire transfer or other means mutually agreed to in
writing by Buyer and Sellers.
3.0 CLOSING AND CLOSING DATE.
The "Closing" pursuant to this Agreement shall take place
between the twenty-fifth (25th) day of the month during which all of the
necessary consents have been obtained and all other conditions precedent to the
parties' obligations hereunder have been satisfied and the first (1st) day of
the immediately following month (with a preference that it occur on the last
business day of a month), unless otherwise mutually agreed to in writing by
Buyer and Sellers. As used herein, the term "Closing Date" shall refer to the
date of the Closing. Unless the Closing can take place by mail (i.e., by Sellers
delivering all of their closing deliveries in trust to the offices of counsel
for Buyer, King & Spalding, 191 Peachtree Street, N.E., Atlanta, Georgia
30303-1763, Attn: Horace H. Sibley, Esq., with such deliveries to be held by
said counsel pending (a) the receipt by Sellers of the balance of the Purchase
Price to be paid on the Closing Date, and (b) the delivery to Sellers' counsel
of all of the other closing deliveries to be made by Buyer hereunder), the
Closing shall take place at the offices of Sellers in Los Angeles, California.
In the event the Closing does not take place on or before October 1, 1996, this
Agreement shall become subject to termination as provided in Section 16.2, with
the results prescribed therein.
4.0 PRORATIONS.
All expenses arising from the operations of the Systems (to the
extent applicable by reason of assignment and/or assumption hereunder), and all
revenues arising from the operations of the Systems (other than revenues
relating to items which are excluded from the Assets as provided in Section
1.2), shall be prorated between Buyer and Sellers as of 11:59 p.m. on the
Closing Date so that Sellers receive the benefit of such revenues and bear such
expenses which relate to the operations of the Systems for the period through
the Closing Date and Buyer receives the benefit of such revenues and bears such
expenses relating to the operations of the Systems after the Closing Date. The
net amount of such prorations shall be adjusted by crediting Buyer with the
amount of any subscriber deposits assumed by Buyer pursuant to Section 1.3.3.
The initial statement of prorations ("the Initial Settlement Statement"), which
will reflect any adjustments to the amounts set forth in the certificate to be
provided by Sellers to Buyer pursuant to Section 2.2, above, will be prepared by
Sellers and delivered to Buyer as soon as practicable, but not later than one
hundred twenty (120) days after the Closing Date. Within thirty (30) days after
delivery of the Initial Settlement Statement, Buyer shall, in writing, provide
Sellers reasonable detail of the nature and extent of any disagreement with the
Initial Settlement Statement, and Buyer and Sellers shall have a period of
thirty (30) days in which to resolve such disagreement. If the parties are
unable to resolve such disagreement within such thirty (30) day period, the
matter shall be submitted to an accounting firm reasonably acceptable to Buyer
and Sellers, whose determination shall be binding on Buyer and Sellers. Each
party shall bear the fees
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and expenses of its own representatives, including its independent accountants,
if any, and the fees and expenses of any firm selected to resolve any
disagreement between the parties shall be borne equally by Buyer and Sellers.
Within three (3) business days following a final determination (whether as a
result of Buyer failing to give timely written notice of its disagreement with
the Initial Settlement Statement, a resolution by Buyer and Sellers of any such
disagreement, or a determination by an accounting firm selected to resolve any
disagreement between the parties), Buyer shall pay any amount owed to Sellers,
or Sellers shall pay any amount owed to Buyer, as the case may be. If any item
of revenue or expense subject to proration hereunder cannot be ascertained or
the proration cannot be calculated within the time limits set forth above, then
it shall be separately prorated as soon as possible thereafter and, subject to
the same method for resolving disagreements discussed above, appropriate payment
in satisfaction thereof shall be made within three (3) business days after its
determination.
5.0 REPRESENTATIONS AND WARRANTIES OF SELLERS.
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Sellers represent and warrant
to Buyer as follows:
5.1 Organization and Standing. Sellers are corporations duly
organized, validly existing, and in good standing under the laws of Georgia, and
are duly qualified to do business in the State of Georgia.
5.2 Corporate and Other Authorizations. Sellers have full
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and all transactions
contemplated hereby have been duly and validly authorized by all necessary
actions of Sellers and of each Seller's board of directors and shareholders, and
the Agreement constitutes a legal, valid, and binding obligation of Sellers
enforceable in accordance with its terms. Neither the execution, delivery, and
performance of this Agreement nor the consummation of the transactions
contemplated hereby by Sellers will, with or without the giving of notice or the
passage of time, or both, in any material respect conflict with, result in a
default or loss of rights under, give rise to any rights of termination,
cancellation, or acceleration under, or result in the creation of any lien,
charge, or encumbrance on the Systems or the Assets pursuant to, (1) any
provision of any articles of incorporation, bylaws, corporate resolutions,
franchises, or any other document regulating the actions of either Seller; (2)
any note, bond, indenture, mortgage, deed of trust, contract, agreement, lease,
license, or other instrument or obligation relating to the Systems or the Assets
to which either Seller is a party or by which it may be bound or affected; or
(3) any law, order, judgment, ordinance, or decree to which either Seller is a
party or by which it may be bound or affected.
5.3 Consents. Except as described in Schedule 5.3, no
material permit, consent, approval, or authorization of, or declaration to or
filing with, any governmental or regulatory authority, and no material consent
or approval from any other party, is required prior to the Closing in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
5.4 Conduct of Business in Ordinary Course. Since September
30, 1995, Sellers have conducted their business relative to the Systems only in
the ordinary course and has
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not (i) sold or otherwise disposed of any of the Assets which are, in the
aggregate, material to the operation or maintenance of the Systems, except for
inventory and/or services sold in the ordinary course of business or assets sold
or disposed of and replaced by other assets of comparable utility; (ii) to the
best of Sellers' knowledge suffered any damage, destruction, or loss not covered
by insurance which has a material adverse impact on the Systems; or (iii) to the
best of Sellers' knowledge suffered any other change, event, or condition which
materially and adversely affects the condition of the Systems, other than
changes, events, or conditions affecting the cable television industry in
general.
5.5 Claims or Legal Actions. Except as disclosed in Schedule
5.5, and excluding matters relating to the cable television industry in general,
(i) there are not to Sellers' knowledge any material claims, legal actions,
governmental investigations, or other proceedings (all collectively referred to
as "Claims") in progress or pending against or relating to either of Sellers
with respect to the Systems; (ii) there are not to Sellers' knowledge any such
Claims threatened, nor to Sellers' knowledge any basis for any such Claims;
(iii) there is not in existence to Sellers' knowledge any judgment or order
requiring either of Sellers to take any action of any kind with respect to the
Systems or the Assets, or to which the Systems or the Assets are subject or by
which they are bound or affected.
5.6 Compliance with Laws. To the best of Sellers' knowledge,
each Seller has complied in all material respects with the Licenses and all
laws, rules, regulations, and ordinances (hereinafter collectively "Laws")
applicable to the Systems.
5.7 Title to and Condition of Assets. At and as of the
Closing, each Seller will have good and marketable title to its respective
Assets to be transferred hereunder (or will have been granted the right to
transfer or cause to be transferred to Buyer such Assets), free and clear of all
liens, security interests, encumbrances, restrictions, and claims of any nature
whatsoever, except those minor imperfections of title and encumbrances, if any,
which do not materially detract from the value of the properties subject thereto
and which do not materially interfere with the present and continued use of the
Assets or with the conduct of the normal operations of the Systems. The Assets
and the Systems are functioning and operational, provided, however, Sellers make
no warranty whatsoever as to the effectiveness or quality thereof.
5.8 Copyright Filings. Sellers have filed with the U.S.
Copyright Office all notices, Statements of Account, Supplements, Declarations
of Gross Receipts, and Gross Receipts Adjustment Schedules (collectively,
"Copyright Filings") required pursuant to the rules and regulations of the
Copyright Office and copyright acts and amendments, and have paid all royalty
fees and other fees reflected in such Copyright Filings, relating to the
Systems.
5.9 Validity of Leases, Licenses, and Contracts. No actions
or inactions on the part of Sellers have caused any of the Leases, Licenses, and
Contracts to be invalid, non-binding, or other than in full force and effect.
There is not, under any Lease, License, or Contract, any material default by
either Seller which, after notice or lapse of time, or both, would constitute
such a default as a result of which any other party would have the right to
terminate such Lease, License or Contract, and to the best of Sellers'
knowledge, there is not, under any Lease, License, or Contract, any material
default by any other party or other event which, after notice or lapse of
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time, or both, would constitute such a default as a result of which either
Seller would have the right to terminate such Lease, License or Contract. True
and complete copies of all Leases, Licenses, and Contracts listed in Schedules
1.1.2, 1.1.3, and 1.1.4 have been delivered to Buyer. All reports of Seller to
the FCC and to municipal authorities are true and correct in all material
respects and have been duly filed. Other than subscriber service agreements,
contracts made in the ordinary course of business and not excluded from
assumption pursuant to Section 1.3.1 hereof, and the Leases, Licenses, and
Contracts described in Schedules 1.1.2, 1.1.3, and 1.1.4 hereto, Sellers are not
party to any contract, agreement, license, franchise or permit material to the
operation of the Systems. None of the Leases, Licenses, or Contracts would be
breached by virtue of the transactions contemplated hereby or by virtue of the
assignment thereof by Sellers to Buyer, provided any consents referred to in
Schedule 5.3 are obtained.
5.10 Franchise Fees. The current franchise fees being charged
under each of the Systems' franchises are disclosed in Schedule 5.10 hereto.
5.11 Pole Attachment Agreements. For all pole attachment
agreements relating to the Systems, the current rates being charged as pole
attachment fees and the number of poles covered by each such agreement are
disclosed in Schedule 5.11 hereto.
5.12 Labor and Employment Matters. Schedule 5.12 includes a
schedule showing the name of each person regularly employed in the operation of
the Systems, along with each such person's current annual salary rate and any
amounts paid or payable to each such person as bonus payments, indirect and/or
deferred compensation, or similar additional compensation payments for the
current and prior fiscal years. Without material exception, Sellers have
complied and will comply with all applicable laws and regulations relating to
the employment of labor. To the best of Sellers' knowledge, there are no unfair
labor practice charges or claims pending against Sellers, nor any pending or
threatened charges against Sellers with respect to any wage and hour, employment
discrimination, or other statutory violation. Neither of the Sellers is a party
to or bound by any collective bargaining agreement with respect to the
operations of the Systems, nor has either of them experienced any strikes,
grievances, claims of unfair labor practices or other collective bargaining
disputes involving the Systems or any of the employees thereof.
5.13 Benefit Plans. Neither the Systems nor the Assets are
subject to any lien arising under the Internal Revenue Code of 1986, as amended,
or the Employee Retirement Income Security Act of 1974, as amended, arising out
of any pension plans or employee benefit plans maintained or contributed to by
Sellers or any of Sellers' affiliates.
5.14 Brokerage Commission. Other than the agreement pursuant
to which Sellers have agreed to pay a brokerage commission to Communications
Equity Associates, Inc., Sellers have not entered into any agreement or other
arrangement pursuant to which a brokerage or other commission or finder's fee
will be payable arising out of the transactions contemplated by this Agreement.
5.15 No Other Commitment to Sell. No part of the Systems or
any of the Assets is directly or indirectly subject in any manner to any written
or oral commitment or any
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arrangement for the sale, transfer, assignment, or disposition thereof, in whole
or in part, except for actions taken in the ordinary course of business or
pursuant to this Agreement.
6.0 REPRESENTATIONS AND WARRANTIES OF BUYER.
As an inducement to Sellers to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer represents and warrants
to Sellers as follows:
6.1 Organization and Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Georgia, and is duly qualified to do business in the State of Georgia.
6.2 Corporate and Other Authorizations. Buyer has full power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement and all transactions contemplated hereby
have been duly and validly authorized by all necessary actions of Buyer's Board
of Directors, and the Agreement constitutes a legal, valid, and binding
obligation of Buyer enforceable in accordance with its terms. Neither the
execution, delivery, and performance of this Agreement nor the consummation of
the transactions contemplated hereby by Buyer will, with or without the giving
of notice or the passage of time, or both, in any material respect conflict
with, result in a default or loss of rights under, or result in the creation of
any lien, charge, or encumbrance pursuant to, (1) any provision of the articles
of incorporation, bylaws, corporate resolutions, franchises, or any other
document regulating the actions of Buyer; (2) any note, bond, indenture,
mortgage, deed of trust, contract, agreement, lease, license, or other
instrument or obligation to which Buyer is a party or by which it may be bound
or affected; or (3) any law, order, judgment, ordinance, or decree to which
Buyer is a party or by which it may be bound or affected.
6.3 Brokerage Commission. Buyer has not entered into any
agreement or other arrangement pursuant to which a brokerage or other commission
or finder's fee will be payable arising out of the transactions contemplated by
this Agreement.
7.0 CONDUCT OF BUSINESS OF SELLERS PENDING CLOSING.
Except as otherwise expressly provided herein, between the date
hereof and the Closing:
7.1 Operations in Ordinary Course. Sellers will conduct
their business and affairs substantially in the ordinary course and consistent
with prior practices;
7.2 Maintenance of Systems. Sellers will maintain, keep, and
preserve the Systems and Assets in the same general operating condition as on
the date hereof, ordinary wear and tear excepted;
7.3 Maintenance of Business. Sellers will use reasonable,
good faith efforts to preserve intact their businesses and organizations
relating to the Systems;
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7.4 Goodwill. Sellers will use reasonable, good faith
efforts to preserve for the benefit of Buyer the goodwill of its suppliers and
customers and others having business relations with them;
7.5 Contracts and Agreements. Except for transactions
contemplated hereby, Sellers will not enter into any contract, agreement,
commitment, or other understanding or arrangement relating to the Assets or the
Systems, other than in the ordinary course of business, and will notify Buyer in
writing at least twenty (20) days prior to the Closing Date of all material
contracts, agreements, commitments, or other understandings or arrangements
relating to the Assets or the Systems entered into in the ordinary course of
business after the effective date hereof, unless exigent circumstances require
that any such contract, agreement, commitment, or other understanding or
arrangement be entered into thereafter, in which event Buyer will promptly be
notified thereof;
7.6 Acts and Transactions. Sellers will not, except for
transactions contemplated by this Agreement or matters not within Sellers'
control, perform or take any action or incur or permit to exist any of the acts,
transactions, events, or occurrences of the type described in Section 5.4;
7.7 Breaches or Modifications. Sellers will not, except for
transactions contemplated by this Agreement, breach, cancel, modify, or amend
any Lease, Contract, or License in any material respect;
7.8 Sale or Transfer. Sellers will not sell, dispose of, or
transfer any of the Assets, except as permitted herein, or permit the creation
of any mortgage, pledge, lien or other encumbrance, security interest, or
imperfection of title thereon or with respect thereto, except for those
described in Section 5.7 and encumbrances which will be extinguished at or prior
to the Closing, without Buyer's prior written consent, which consent shall not
be unreasonably withheld or delayed;
7.9 Subscriber Rates, Deposits, Etc. Except for those
approved marketing practices described on Exhibit 7.9 and any national or
regional promotions offered or authorized by any of the companies currently
providing programming to the Systems, neither of Sellers will modify or amend
any rate, deposit, or other material condition under which it does business with
its subscribers or potential subscribers, nor undertake any special promotion
pursuant to which any subscriber or potential subscriber will be entitled to
receive any service after the Closing Date at a lesser rate than those presently
being charged for such service, or be entitled to receive any premium, prize, or
other inducement after the Closing Date; and
7.10 Representations and Warranties. Sellers will not take
any actions which would cause any of the representations and warranties of
Sellers contained in this Agreement to be untrue in any material respect as of
the Closing.
8.0 ADDITIONAL COVENANTS AND AGREEMENTS.
8.1 Access to Business and Records. During reasonable
business hours, Sellers will permit Buyer to have access to the premises in
which Sellers conduct their business
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and to all of their books, records, and personnel relating to the Systems;
provided, however, Buyer will not contact any of Sellers' employees at the
Systems, other than those at the Divisional Vice President level or higher,
without Sellers' prior consent, which consent shall not be unreasonably withheld
or delayed. Sellers will also furnish to Buyer such financial data, operating
data, contracts, and other documents which relate to the Systems as Buyer may
reasonably request; provided, however, that Buyer shall pay for the cost of
preparation of any such materials as are not normally prepared by Sellers in the
ordinary course of Sellers' business. Buyer and its representatives will be
afforded the opportunity, upon reasonable notice and at reasonable times, to
examine the business, assets, and operations of the Systems, including an
on-site inspection of the Systems and Assets. Buyer shall hold all information
obtained in such examinations confidential, except as may be required for
legitimate business purposes.
8.2 Information After Closing. For a period of five (5)
years after the Closing Date, Buyer shall give to Sellers, their
representatives, and their accountants access to any records delivered to Buyer
by either of Sellers pursuant to this Agreement, and Sellers shall give Buyer
access to any records relating to the Systems for the three (3) complete fiscal
years ending prior to the Closing Date, in each case to the extent necessary to
enable Buyer or Sellers, as the case may be, to prepare audited and unaudited
financial statements, tax returns, or other reports, and to obtain any
information any of them may require in connection with the audit of any tax
return or other report filed by any of them.
8.3 Cooperation. The parties shall each file, as quickly as
possible, any applications required to be filed by such party with any
governmental authority, including the FCC, to obtain such consents as are
necessary to assign the Licenses identified and described in Schedule 1.1.3, and
shall otherwise cooperate fully with each other and their respective counsel and
accountants in connection with any steps required to be taken as part of their
respective obligations under this Agreement, and all parties will use
reasonable, good faith efforts to consummate the transactions contemplated
hereby and to fulfill their obligations hereunder.
8.3.1 Regulatory Approvals the Responsibility of
Sellers. Sellers shall be responsible for the prompt, timely filing and diligent
pursuit of (i) any applications necessary to obtain any required permits,
consents, or approvals of the FCC (other than for the 214 Approval as defined
below), the FAA, or any state, local, county, or municipal agency or other
governmental authority, to the transfer of the Systems and the Assets, including
the Licenses, to Buyer hereunder; (ii) the renewal or extension of any expired
franchise; and (iii) any Notification and Report Forms and related material that
Sellers may be required to file with the Federal Trade Commission ("FTC") and
the Antitrust Division of the United States Department of Justice ("DOJ") under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act").
Sellers will further use their best efforts to obtain an early termination of
any applicable waiting period under the HSR Act, and will make any further
filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith.
8.3.2 Regulatory Approvals the Responsibility of
Buyer. Buyer shall be responsible for the prompt, timely filing and diligent
pursuant of (i) any applications with the FCC necessary to obtain any required
permits, consents, or approvals of the FCC to Buyer's Application for Authority
pursuant to Section 214 of the Communications Act of 1934,
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as amended or as superseded (the "214 Approval"), and (ii) any Notification and
Report Forms and related material that Buyer may be required to file with the
FTC and the Antitrust Division of the DOJ under the HSR Act. Buyer will further
use its best efforts to obtain an early termination of any applicable waiting
period under the HSR Act, and will make any further filings pursuant thereto
that may be necessary, proper, or advisable in connection therewith.
8.4 No Rate Increases Without Consent. Sellers will not
implement any rate increases or channel additions or reconfigurations of the
existing tier service levels prior to the Closing, unless agreed to by Buyer in
writing.
8.5 Employees to be Hired by Buyer. Buyer shall provide
Sellers, at least thirty (30) days prior to the Closing Date (but not earlier
than five (5) days following Buyer's receipt of an executed copy of this
Agreement with Schedule 5.12 attached and initialed by Sellers), a written list
of the names of all of the Systems' current employees, if any, to be hired as
employees of Buyer after the Closing Date. Buyer has no obligation to employ any
of Sellers' employees.
8.6 Allocation of Purchase Price. The Purchase Price shall be
allocated as set forth on Schedule 8.6, or as such may be amended by mutual
agreement of the parties in the manner hereinafter provided for amendment of
this Agreement. Buyer and Sellers shall, for purposes of all federal, state, and
other income tax returns, (i) adopt the allocation as set forth on Schedule 8.6;
(ii) execute any forms required by Section 1060 of the Internal Revenue Code of
1986, as amended; and (iii) not take any position inconsistent with the
allocation in Schedule 8.6, as amended, upon examination of any tax return or
refund claim, litigation, or otherwise.
8.7 Collection of Accounts Receivable. For a period of three
(3) months after the Closing, Buyer shall collect on Sellers' behalf, and remit
to Sellers within fifteen (15) days following the last day of the month during
which the collection occurred, all accounts receivable relating to the period
prior to and including the Closing Date which are not paid directly to Sellers.
In doing so, Buyer shall use such efforts as would be ordinary and reasonable if
Buyer were collecting such accounts receivable on its own behalf (provided,
however, Buyer shall not be obligated to institute any legal proceedings or use
any collection agencies as part of such efforts), and Buyer shall, upon
reasonable notice, provide Sellers with such access to its records and personnel
as is reasonably necessary in order for Sellers to verify the collection of such
accounts receivable and the efforts expended by Buyer in doing so.
8.8 Buyer's Obligations with Respect to Programming. As of
the Closing, Buyer shall add the Systems to each of the relevant schedules or
exhibits to Buyer's then current affiliate agreements with (i) Turner Network
Television, Inc. (for the satellite television programming service known as
"Turner Network Television"); (ii) Cable News Network, Inc. (for the satellite
television programming services known as "Cable News Network" and "Headline
News"); (iii) ESPN, Inc. (for the satellite television programming services
known as "ESPN" and "ESPN2"); and (iv) USA Network (for the satellite television
programming service known as "USA Network"); all at the same level of service as
such programming services are carried by the Systems as of the Closing. In
addition, Buyer shall not delete or reduce the hours of the carriage of any
programming on the Systems for at least one hundred twenty (120) days after the
Closing without the prior written consent of Sellers.
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8.9 Third Party Consents, Waivers and Approvals. Following
the execution of this Agreement, and subject to Buyer's cooperation as set forth
in the immediately following sentence, Sellers shall promptly and diligently
pursue the waiver, consent, or approval of all persons or entities listed on
Schedule 5.3 whose waiver, consent, or approval is required to transfer any of
the Assets to Buyer on the Closing Date in all circumstances where, without such
waiver, consent, or approval, the transactions contemplated by this Agreement
would constitute an occurrence of default under the provisions of, result in the
acceleration of any obligation under, or give rise to a right of any other party
thereto to terminate its obligations under, any contractual arrangement with
Sellers. Buyer shall promptly and diligently cooperate with any reasonable
request by Sellers to cooperate in the pursuit of any such waivers, consents, or
approvals.
8.10 As-Is/Where-Is. Notwithstanding anything to the contrary
contained in this Agreement (other than the last sentence of Section 5.7) or in
any other agreement, instrument, or document delivered to Buyer in connection
with the transaction contemplated hereunder, Sellers shall not be deemed to have
made any representations or warranties, express or implied, hereunder or
thereunder regarding or with respect to the physical condition or engineering
capability of the cable plant, equipment, and other personal property
constituting the Systems and the Assets. Subject to the foregoing and to
Sellers' obligations under Sections 7.1 and 7.2 hereof, the Systems and the
Assets are being purchased hereunder "as-is, where-is", with Buyer assuming all
risks whatsoever with regard to the functionality thereof and any repairs or
replacements that may be necessary or desired.
9.0 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
All obligations of Buyer at the Closing hereunder are subject to
the fulfillment of each of the following conditions at or prior to the Closing,
any or all of which may be waived in writing in whole or in part by Buyer:
9.1 Representations and Warranties. The representations and
warranties of Sellers and Guarantor contained herein shall be true and correct
in all material respects.
9.2 Covenants. Sellers shall in all material respects have
performed their obligations, agreements, and covenants contained in this
Agreement to be performed or complied with by them on or before the Closing
Date.
9.3 Consents and Approvals. Except for any consents or
approvals of from H.W. Stewart, Jr. as may otherwise be required, Sellers and
Buyer shall have obtained all consents and approvals of third persons or
parties, including the FCC, the FAA, the FTC, the DOJ, all franchise
authorities, and all other governmental authorities, bodies, or agencies having
jurisdiction over the transactions contemplated by this Agreement, or any part
thereof, necessary for the consummation of the transactions contemplated by this
Agreement. All presently expired franchises shall have been extended or renewed.
If the HSR Act is applicable to this transaction, all required waiting periods
thereunder shall have expired.
9.4 Instruments of Conveyance. Sellers shall have delivered
to Buyer a Bill of Sale and Assignment in the form of Exhibit 9.4 hereto, and
all other applicable assignments and other good and sufficient instruments of
conveyance, transfer, and assignment, all in form and
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substance reasonably satisfactory to Buyer, as shall be effective to vest in
Buyer good and marketable title in and to the Systems and the Assets transferred
pursuant to this Agreement, free and clear of all mortgages, liens,
restrictions, encumbrances, claims, and obligations, of any nature whatsoever,
except as permitted in this Agreement.
9.5 Opinion of Counsel. Buyer shall have been furnished with
an opinion of Goldman & Kagon Law Corporation, counsel for Sellers, dated the
Closing Date and addressed to Buyer, in the form attached hereto as Exhibit 9.5.
9.6 Adverse Change. Between the date of this Agreement and
the Closing, there shall have been no material adverse change in the Systems or
the Assets, other than a casualty loss which has been restored or replaced to
substantially the condition in which it existed prior to such change. For
purposes of this Agreement, the institution of or change in any laws, rules, or
regulations shall in no event be deemed to constitute an adverse change in the
Systems or the Assets.
9.7 Resolutions. Sellers and Guarantor, respectively, shall
have delivered to Buyer copies of resolutions of their respective Boards of
Directors certified as true and correct on the Closing Date by their respective
Secretaries, in the case of Sellers authorizing and approving the execution of
this Agreement and the consummation of the transactions contemplated hereby, and
in the case of Guarantor authorizing and approving the provision of its
guarantees and delivery of its covenant not to compete as set forth herein.
9.8 Certificate of Compliance. Sellers shall have delivered
to Buyer a Certificate of Compliance in the form of Exhibit 9.8 hereto, signed
by duly authorized officers of Sellers and dated the Closing Date.
9.9 Legal Proceedings. There shall not be pending or
threatened any lawsuit, claim, or legal action involving Buyer, either of
Sellers, the Assets, or the Systems relating to the transactions contemplated by
this Agreement which would, if determined adversely to Buyer, materially
increase the effective cost to it of acquiring the Systems, or if determined
adversely to either of Sellers, have a material adverse effect upon the fair
market value of the Assets or the Systems.
9.10 Certificates of Good Standing. Sellers shall have
delivered to Buyer certificates from the State of Georgia indicating that each
Seller is in good standing in the State of Georgia, issued as of a date not more
than thirty (30) days prior to the Closing Date.
9.11 Covenant not to Compete. Sellers and Guarantor shall
each have delivered to Buyer, on behalf of themselves and their affiliates, a
Non-Competition Agreement in the form of Exhibit 9.11 covering the territory
included therein.
9.12 Number of Equivalent Subscribers. The Systems will have
not less than Nine Thousand Two Hundred Fifty (9,250) Equivalent Subscribers (as
hereinbelow defined) as of the end of the most recently concluded month ending
at least ten (10) days prior to the Closing Date, as certified by Sellers in a
certificate delivered to Buyer not more than five (5) days prior to the Closing
Date, which certificate shall be certified as true, correct, and complete by the
-15-
<PAGE> 16
Treasurer or other financial officer of Sellers. The term "Equivalent
Subscribers" shall mean the sum of all "Qualified Basic Subscribers" and all
"Equivalent Basic Subscribers" in the Systems. A "Qualified Basic Subscriber"
shall mean an individual or household receiving at least basic cable service who
has paid any applicable deposit and installation fee, who has paid the normal
monthly service charge applicable to such individual or household for at least
one (1) month of basic cable service, and whose account is not more than two (2)
months in arrears (other than arrearages which, for each delinquent individual
or household, aggregate Five Dollars ($5.00) or less (hereinafter, "Exempt
Arrearages")) as of the Closing Date. For purposes of this Agreement, subscriber
arrearages shall be measured from the first day of the period of cable service
to which the earliest statement not paid by the subscriber applies. The number
of "Equivalent Basic Subscribers" shall mean, for each commercial or bulk
account, the quotient obtained by dividing (i) the total billings for the most
recently reported monthly period to such commercial or bulk account by (ii) the
standard rate charged to regular subscribers of the Systems for the levels of
service received by such commercial or bulk account.
9.13 Inspection and Compliance. Buyer's inspection of the
Systems shall not have uncovered any matters which are inconsistent, in a manner
that is materially adverse to Buyer, with any written representations about the
Systems theretofore presented to Buyer. Buyer's failure to notify Sellers, on or
before April 15, 1996, of Buyer's election to terminate this Agreement based
upon a failure to satisfy the condition set forth in this Section 9.13 shall be
deemed to constitute a waiver by Buyer of the condition set forth in this
Section 9.13.
9.14 Other Documents. Sellers shall have delivered such other
additional documents as may be reasonably requested by Buyer to consummate the
transaction.
10.0 CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.
All obligations of Sellers at the Closing hereunder are subject
to the fulfillment of each of the following conditions at or prior to the
Closing, any one or more of which may be waived in writing in whole or in part
by Sellers:
10.1 Purchase Price. Receipt by Sellers of their respective
portions of the Purchase Price as described in Section 2.0.
10.2 Representations and Warranties. All representations and
warranties of Buyer contained herein shall be true and correct in all material
respects.
10.3 Covenants. Buyer shall, in all material respects, have
performed all of its obligations, agreements, and covenants in this Agreement to
be performed or complied with by it on or before the Closing Date.
10.4 Resolutions. Buyer shall have delivered to Sellers
copies of resolutions of its Board of Directors authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby, certified as true and correct on the Closing Date by
Buyer's Secretary.
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<PAGE> 17
10.5 Certificate of Compliance. Buyer shall have delivered
to Sellers a Certificate of Compliance in the form of Exhibit 10.5 hereto,
signed by its Chief Operating Officer and dated the Closing Date.
10.6 Assumption Agreement. Buyer shall have executed and
delivered to Sellers an Assumption Agreement in the form of Exhibit 10.6, dated
the Closing Date.
10.7 Opinion of Counsel. Sellers shall have received an
opinion of King & Spalding, counsel for Buyer, dated the Closing Date and
addressed to Sellers, in the form of Exhibit 10.7 hereto.
10.8 Consents and Approvals. Sellers and Buyer shall have
obtained all consents and approvals of third persons or parties, including the
FCC, the FAA, the FTC, the DOJ, all franchise authorities, and all other
governmental authorities, bodies, or agencies having jurisdiction over the
transactions contemplated by this Agreement, or any part thereof, necessary for
the consummation of the transaction contemplated by this Agreement. If the HSR
Act is applicable to this transaction, all required waiting periods thereunder
shall have expired.
10.9 Legal Proceedings. There shall not be pending or
threatened any lawsuit, claim, or legal action relating to the transactions
contemplated by this Agreement seeking to enjoin or render unlawful, or seeking
damages arising out of, its consummation.
10.10 Other Documents. Buyer shall have delivered such other
additional documents as may be reasonably requested by Sellers to consummate the
transactions contemplated by this Agreement.
11.0 FURTHER ASSURANCES.
At and after the Closing, Sellers and Buyer will, without
further consideration, execute and deliver such further instruments and
documents and do such other acts and things as the other party or parties may
reasonably request in order to effect or confirm the transactions contemplated
by this Agreement.
12.0 INDEMNIFICATIONS AND CLAIMS THRESHOLD.
12.1 Indemnification of Buyer by Sellers. Sellers and their
successors and assigns shall indemnify and hold Buyer harmless against and in
respect of, and shall reimburse Buyer for: (i) any and all losses, liabilities,
or damages resulting from any untrue representation, breach of warranty, or
nonfulfillment of any covenant or agreement by Sellers contained herein or in
any certificate, document, or instrument delivered to Buyer hereunder by any
officer of Sellers pursuant to any express provision of this Agreement; (ii) any
and all obligations of Sellers not specifically assumed by Buyer pursuant to the
terms of this Agreement and the Assumption Agreement and relating to events
which occurred prior to the Closing; (iii) any liabilities or obligations to pay
any brokerage fees, finder's fees, or commissions to Sellers' broker,
Communications Equity Associates, Inc.; and (iv) any and all actions, suits,
proceedings, claims, demands, assessments, judgments, costs, and expenses,
including, without limitation, reasonable
-17-
<PAGE> 18
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
12.2 Indemnification of Sellers by Buyer. Buyer and its
successors and assigns shall indemnify and hold Seller harmless against and in
respect of, and shall reimburse Seller for: (i) any and all losses, liabilities,
or damages resulting from any untrue representation, breach of warranty, or
nonfulfillment of any covenant or agreement by Buyer contained herein or in any
certificate, document, or instrument delivered to Sellers hereunder by any
officer of Buyer pursuant to any express provision of this Agreement; (ii) any
and all losses, liabilities, or damages resulting from Buyer's operation or
ownership of the Systems after the Closing or relating to obligations undertaken
by Buyer pursuant to the Assumption Agreement or otherwise; (iii) any
liabilities or obligations to pay any brokerage fees, finder's fees, or
commissions to any broker or agent retained by or on behalf of Buyer; and (iv)
any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs, and expenses, including, without limitation, reasonable legal
fees and expenses, incident to any of the foregoing or incurred in investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
12.3 Indemnification Procedure. If any claim covered by
Section 12.1 or Section 12.2 is asserted by a third party, the party entitled to
indemnification thereunder (the "Indemnitee") shall promptly give the party
required to provide indemnification thereunder (the "Indemnitor") notice thereof
and give the Indemnitor an opportunity to defend or settle the same with counsel
of the Indemnitor's choice and at the Indemnitor's expense. The failure to give
the Indemnitor prompt notice of any such claim shall not affect the Indemnitor's
indemnification obligations, except that the Indemnitee shall be responsible for
any damages proximately incurred by the Indemnitor as a result of such failure.
The Indemnitee shall extend its full cooperation in connection with such
defense, subject to reimbursement for actual out-of-pocket expenses incurred
thereby as the result of a request by the Indemnitor. The settlement of any such
claim by the Indemnitee prior to giving the Indemnitor such opportunity or while
the Indemnitor is providing an appropriate defense, without the Indemnitor's
prior written consent (which consent shall not be unreasonably withheld or
delayed), shall release the Indemnitor from its obligations hereunder with
respect to such claim or action so settled. No settlement which fails to contain
a provision expressly negating any claim of wrongdoing on the part of the
Indemnitee shall be entered into on behalf of the Indemnitee without its prior
written consent. Such consent shall not be unreasonably withheld or delayed, and
may only be withheld to the extent the Indemnitee reasonably believes the lack
of such a provision may result in a material adverse impact on its business
operations. If the Indemnitor fails to defend any such claim within a reasonable
time, the Indemnitee shall be entitled to assume the defense thereof and the
Indemnitor shall be bound by the results obtained by the Indemnitee with respect
to such claim, and the Indemnitor shall be liable to the Indemnitee for all
expenses incurred in such defense and/or in any action to enforce its
indemnification rights hereunder, including, without limitation, reasonable
attorneys' fees and any settlement payments.
12.4 Claims Threshold. Notwithstanding anything to the
contrary contained in this Agreement, neither party shall be entitled to pursue
claims against the other arising hereunder until the aggregate amount of all of
such claims equals or exceeds One Hundred Fifty Thousand Dollars ($150,000.00)
This One Hundred Fifty Thousand Dollar ($150,000.00)
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<PAGE> 19
threshold shall not apply to claims arising under Section 12.1(iii) or Section
12.2(iii), above, or with respect to either party's right to receive any amounts
as a result of the prorations pursuant to Section 4.0 of this Agreement, nor
shall it apply to any claims by Sellers that Buyer has delivered to Sellers or
the Deposit Escrow Holder, respectively, less than the amounts specified in
Section 2.0 of this Agreement to be delivered as the Closing Date Payment or the
Deposit.
13.0 NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All statements made by Sellers in this Agreement or in any
certificate delivered by or on behalf of Sellers pursuant to this Agreement
shall be deemed representations and warranties of Sellers, and all statements
made by Buyer in this Agreement or contained in any certificate delivered by or
on behalf of Buyer pursuant to this Agreement shall be deemed representations
and warranties of Buyer. All representations and warranties made by Buyer or by
Sellers hereunder, and all indemnities, covenants, and agreements relating
thereto, shall survive the Closing for a period of one (1) year or, in the case
of any representation or warranty related to taxes, for the applicable statute
of limitations related to such taxes, notwithstanding any investigation by the
parties hereto. Any claim of breach not asserted within such one (1) year period
by notice delivered in the manner provided in Section 14.0 shall be deemed
waived. There are no intended third party beneficiaries of this Agreement, and
to the extent any third party asserts any claim or cause of action arising from
the alleged breach of any representation or warranty, covenant, or agreement in
this Agreement, the statute of limitations for such alleged claim or cause of
action shall not in any way be extended or tolled by reason of this Section
13.0.
14.0 NOTICES.
Any notices or other communications to Sellers or Buyer shall be
personally delivered, sent by certified or registered mail, return receipt
requested, by Federal Express or similar service that records delivery, or by
facsimile transmission combined with any of the foregoing methods of notice, to
the addresses set forth below, or to such other address as Sellers or Buyer may
designate, from time to time, by written notice to the other.
If To Sellers: With A Copy To:
Falcon Cable TV Goldman & Kagon Law Corporation
10900 Wilshire Blvd. 1801 Century Park East
Fifteenth Floor Suite 2222
Los Angeles, CA 90024 Los Angeles, California 90067
Attn: General Counsel
If To Buyer: With A Copy To:
TeleView, Inc. Adams, Ellard & Frankum, P.C.
2000 Industrial Boulevard P.O. Drawer 1255
Post Office Box 400 20 N. Main Street
Cornelia, Georgia 30531 Cornelia, Georgia 30531
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<PAGE> 20
and
King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
Attn: Horace H. Sibley, Esq.
15.0 CONFIDENTIALITY.
In the event this Agreement is terminated and the purchase and
sale contemplated hereby abandoned, the parties hereto will keep confidential
any proprietary information obtained from the other party in connection with the
transactions contemplated by this Agreement for a period of not less than three
(3) years after the termination hereof, and will promptly return to the other
party all documents, work papers, and other written material obtained by it in
connection with the transactions contemplated hereby.
16.0 TERMINATION RIGHTS.
This Agreement may be terminated by either Buyer or Sellers, if
the terminating party is not then in material default, by written notice to the
other party, upon the occurrence of either of the following, with the results
prescribed hereunder:
16.1 Material Default. If the other party defaults in the
observance or in the due and timely performance of any of its material covenants
or agreements herein contained, which default has not been cured on or prior to
the Closing Date (or any subsequent date by which the defaulting party may cure
such default), the nondefaulting party shall have the right to terminate this
Agreement.
16.2 Failure of Conditions Precedent. If any of the conditions
precedent to Closing are otherwise not fulfilled or waived on or before October
1, 1996, without either party being at fault, either party may terminate this
Agreement on or after such date with the results described in Section 2.1.1,
above, but without any further liability of either party to the other, except
for the obligations created by the provisions of Section 15.0 hereof, which
shall survive such termination; provided, however, that if the only condition
remaining unsatisfied as of such date is the obtaining of the approval of the
FCC to Buyer's application for 214 Approval, this Agreement may not be
terminated pursuant to this Section 16.2 prior to the earlier to occur of (i)
five (5) business days following the 214 Approval or (ii) November 15, 1996.
If either party shall have received written notice from the
other of the existence of a condition which would give rise to the party
receiving such written notice having the right to unilaterally terminate this
Agreement pursuant to this Section 16.0, the party receiving such written notice
may nevertheless elect at its sole option to proceed with the Closing, and such
election shall be deemed a waiver of such party's rights to indemnification with
respect to the condition described in the written notice.
-20-
<PAGE> 21
17.0 MISCELLANEOUS.
17.1 Sales and Transfer Taxes and other Transfer Fees. All
sales or use taxes, transfer taxes, stamp taxes, excise taxes, and license
taxes, and all other fees charged, in connection with the sale, transfer, or
delivery of any of the Assets to Buyer, shall be paid and borne by Buyer.
17.2 Expenses. Except as otherwise expressly provided herein,
the parties hereto shall pay their respective expenses incurred under or in
connection with this Agreement.
17.3 Attorneys' Fees. Should either Buyer or Sellers institute
any action or proceeding to enforce any provision of this Agreement, or for
damages by reason of any alleged breach of any provision of this Agreement, or
for a declaration of such party's rights or obligations hereunder, or for any
other judicial or quasi-judicial remedy, the prevailing party in such action or
proceeding shall recover from the losing party all attorneys' fees, costs, and
expenses incurred by the prevailing party for the services rendered for or on
behalf of such prevailing party.
17.4 Waiver. Either Buyer or Sellers may waive any condition,
breach, or default of this Agreement; provided, however, no waiver of any
condition, breach, or default hereunder shall be considered valid unless
contained in a writing referring to this Agreement and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any other
condition or any subsequent breach or default of the same or similar nature.
17.5 Assignment and Binding Effect. This Agreement shall be
binding upon and inure to the benefit of each party hereto, and its successors,
assigns, and transferees. Buyer shall not assign its rights or obligations
hereunder to any person or entity other than Standard Group, Inc., a Georgia
corporation, or a subsidiary thereof, without the express written consent of
Sellers (which consent shall not be unreasonably withheld or conditioned), and
no such assignment, whether or not consented to by Sellers, shall release Buyer
from any of its obligations hereunder.
17.6 Governing Law. The construction and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of Georgia.
17.7 Section Headings. The section headings contained herein
are for the purpose of convenience only and are not intended to define or limit
the contents of said sections.
17.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original but which when
taken together shall be deemed one instrument.
17.9 Schedules and Exhibits. The Schedules and Exhibits
attached hereto shall be deemed to be incorporated by reference in this
Agreement as if fully set forth herein.
17.10 Entire Agreement. This Agreement and the exhibits,
agreements, and schedules referred to herein constitute the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
agreements, negotiations, and oral understandings, if any. Except as otherwise
provided herein, this Agreement may not be modified, amended, or
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<PAGE> 22
terminated except by a written agreement specifically referring to this
Agreement and signed by all of the parties hereto.
18.0 GUARANTOR'S REPRESENTATIONS AND WARRANTIES AND GUARANTEE.
Guarantor hereby represents and warrants that it owns one
hundred percent (100%) of the issued and outstanding shares of stock in each of
Sellers, and directly or indirectly owns one hundred percent (100%) of the
issued and outstanding shares of stock in affiliated corporations owning cable
television systems located throughout Georgia and Alabama. Guarantor hereby
guarantees the representations and warranties of Sellers hereinabove set forth
and the performance by Sellers of their obligations herein. Guarantor further
represents and warrants that it is duly organized, validly existing, and in good
standing under the laws of Delaware, is duly qualified to do business in the
State of Georgia, and has full power and authority to enter into this Agreement
for the limited purposes expressly provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BUYER:
TELEVIEW, INC.,
a Georgia corporation
By: /s/ Harris L. Bagley
----------------------------
Harris L. Bagley, President
SELLERS:
MULTIVISION OF COMMERCE, INC.,
a Georgia corporation
By: /s/ Jon Lunsford
----------------------------
Jon Lunsford, Vice President
MULTIVISION NORTHEAST, INC.,
a Georgia corporation
By: /s/ Jon Lunsford
----------------------------
Jon Lunsford, Vice President
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<PAGE> 23
GUARANTOR:
FC CABLE HOLDINGS, INC.,
a Delaware corporation
By: /s/ Jon Lunsford
----------------------------
Jon Lunsford, Vice President
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<PAGE> 24
SCHEDULES
1.1.1 Personal Property 5.10 Franchise Fees
1.1.2 Real Property 5.11 Pole Attachment Fees
1.1.3 Licenses and Franchises 5.12 Labor and Employment Matters
1.1.4 Contracts 7.9 Approved Marketing Practices
5.3 Consents 8.6 Allocation of Purchase Price
5.5 Claims
EXHIBITS
A. Description of Cable System Service Areas
2.1 Deposit Escrow Instructions
9.4 Bill of Sale and Assignment
9.5 Opinion of Sellers' Counsel
9.8 Sellers' Certificate of Compliance
9.11 Covenant not to Compete
10.5 Buyer's Certificate of Compliance
10.6 Assumption Agreement
10.7 Opinion of Buyer's Counsel
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<PAGE> 25
PERSONAL PROPERTY
CORNELIA
Headend Electronics Quantity
------------------- --------
REC. S.A. 9640 18
S.A. 9650 6
S.A. 9655 1
MICRODYNE 1100 1
MOD. S.A. 6330 2
S.A. 6340 4
S.A. 9220 1
S.A. 9270 2
S.A. 9260 11
CATEL TM 2400 7
PROC. S.A. 6150 10
DRAKE HCP 2550 1
OLSEN LCP 500A 1
MISC. VIDEO CIPHER II PLUS 2901 1
VIDEO CIPHER II 17
THE WEATHER STAR 1
EAGLE EE 2001 1
AIR CONDITIONER 1
TV 1
2 WAY RADIO 1
Page One of Seven
SCHEDULE 1.1.1
<PAGE> 26
PERSONAL PROPERTY
JEFFERSON
Headend Electronics Quantity
------------------- --------
REC. S.A. 9640 4
S.A. 9650 11
S.A. 6600 9
MICRODYNE 1100 2
MOD. S.A. 6330 2
S.A. 6340 3
S.A. 6350 1
S.A. 9220 1
S.A. 9270 5
S.A. 9260 7
CATEL 2400 2
TRIPLE CORWN HEM 6
DRAKE 2250 1
DE-MOD. CATEL D-850 1
PROC. S.A. 6150 2
DRAKE HCP 2550 1
BLONDER TOUNGE 1
JERROLD CC II 2
MISC. VIDEO CIPHER 2901 1
VIDEO CIPHER II 12
220 VAC AIR COND. 1
110 VAC AIR COND. 1
13" TV 1
Page Two of Seven
SCHEDULE 1.1.1
<PAGE> 27
PERSONAL PROPERTY
COMMERCE
Headend Electronics Quantity
------------------- --------
REC. S.A. 9640 6
S.A. 9650 9
MICRODYNE 1100 6
GARDINER 2
DX ANTENNA 2
S.A. 6600 1
MOD. S.A. 6330 4
S.A. 6340 5
S.A. 6350 1
S.A. 9260 3
S.A. 9270 1
GARDINER 2400 1
OLSEN DTM 1000 1
PROC. S.A. 6150 9
JERROLD S450P 2
DRAKE HCP 2550 1
MISC. VIDEO CIPHER 2901 1
VIDEO CIPHER II 13
EAGLE EE 2001 1
THE WEATHER STAR 1
FIBER S.A. 6460/750 TRANSMITTER 2
S.A. H.E. DRIVER AMP 1
AIR CONDITIONER 1
Page Three of Seven
SCHEDULE 1.1.1
<PAGE> 28
PERSONAL PROPERTY
CONVERTERS & REMOTES (as of March 21, 1996)
<TABLE>
<CAPTION>
Area No. of Converters Remotes
- ---- ----------------- -------
<S> <C> <C>
Habersham County 458 251
Clarksville 84 44
Demorest 37 21
Cornelia 171 123
Mt. Airy 25 14
Baldwin 48 21
Alto 23 8
Banks Co./Cornelia Headend 18 13
Banks County 16 7
Homer 20 10
Commerce 161 80
Nicholson 25 10
Jackson Co./Commerce Headend 103 41
Jackson County 9 3
Jefferson 133 58
Arcade 8 3
----- ---
Total: 1,339 707
</TABLE>
Types of Converters
1. S.A. 8510 - 6780 - 6784
2. NSC IM78IR - M78R
3. Oaks M35B - L35 (Equal mixture of several types of converters)
4. Tusa CM1400
5. Pioneer BC2002J
6. SPC - 4000
Used S/A 8511 converters have been purchased at $30.00 each for use in the past
for the Cornelia operations.
Hand units are separate.
Page Four of Seven
SCHEDULE 1.1.1
<PAGE> 29
PERSONAL PROPERTY
CORNELIA VEHICLES
1. 1991 Chevrolet Blazer 1GNCT18ZSM0113002
107,768 miles Tag #MXY225
2. 1991 Chevrolet Van G-10 1GCCG15ZCM7139455
75,275 miles Tag #QB9638
3. 1991 Ford F-350 Bucket 1FDKF37H3MNA48083
103,769 miles Tag #QB11676
4. 1991 Chevrolet Pickup S-10 1GCCS14R4M2243360
101,481 miles Tag# XP6542
5. 1987 Chevrolet Pickup S-10 1GCBS14EOK2181266
111,497 miles Tag # SC9346
6. 1991 Chevrolet G-10 Van 1GCCG15ZIM7140089
66,000+ miles Tag# QC42168
7. 1984 Ford F-350 2FDJF37Y4ECA307G1
162,000+ miles Tag #SC933C
Page Five of Seven
SCHEDULE 1.1.1
<PAGE> 30
PERSONAL PROPERTY
TOWERS
Cornelia Commerce
- -------- --------
Tower Wooden Pole - 60' Tower Rohn, Guyed - 100'
HE Building Masonary 15' x 21' HE Building Metal 25' x 25'
Jefferson
Tower Rohn, Guyed - 100'
HE Building Mobile Home 15' x 45'
DISHES
Cornelia Headend
1. 10 ft. mesh looking at G-V
2. S.A. 4.5 meter multifeed looking at GI & C3
3. S.A. 2.8 meter looking at C4
4. Comtech 3.8 meter looking at SN III
Commerce Headend
1. Comtech 3.8 meter looking at G-V
2. 5.0 meter looking at C-3
3. S.A. 2.8 meter looking at C-4
4. 3.0 meter looking at G-1
5. 10 ft. mesh looking at SN III
Jefferson Headend
1. Comtech 3.8 meter looking at G-V
2. S.A. 2.8 meter looking at C-3
3. 10 ft. mesh looking at SN III
4. S.A. 4.5 multifeed looking at G-1 and C-4
Page Six of Seven
SCHEDULE 1.1.1
<PAGE> 31
PERSONAL PROPERTY
ANTENNA DETAIL
Cornelia
1. S.A. low band quad 2-5 2
2. S.A. high bank quad 8-11 1
3. UHF Parabolic 17-36-46 1
4. High band quad 7-4 1
5. UHF broad band 69-32-34 2
Commerce
<TABLE>
<CAPTION>
Antenna Type Height & Leg Mount Feedline Size/Type
- ------------ ------------ ----- ------------------
<S> <C> <C> <C>
UHF 44' B Leg Mount 1/4"
UHF 65' C Leg Mount 1/2"
UHF 67' A Leg Mount Unused
YAGI 75' A Leg Mount 1/4"
YAGI 76' B Leg Mount 1/4"
YAGI 80' A Leg Mount 1/4"
YAGI 81' B Leg Mount 1/4"
YAGI 100' Top Top Mount 1/2"
Jefferson
Antenna Type Height & Leg Mount Feedline Size/Type
- ------------ ------------ ----- ------------------
10' Low Band 68' A Leg Mount 1/2"
5' High Band 76' B Leg Mount 9/16"
10' Low Band 83' A Leg Mount 1/2"
10' Parabolic 90' B Stand-Off 1/2"
8' Low Band 95' A Leg Mount 1/2"
20' High/Low Band 100' Top Top Mount 9/16"
</TABLE>
Page Seven of Seven
SCHEDULE 1.1.1
<PAGE> 32
REAL PROPERTY
OWNED PARCELS:
USE: Headend site
LOCATION: 110 State Street, Commerce
OWNER: Multivision of Commerce, Inc.
DESCRIPTION: Building, 0.41 acres
Parcel No. C05 044, Acct. No. R99108940, LT6, BLD
LEASED PARCELS:
A. USE: Cornelia headend site
LOCATION: Lot No. 207, 10th Land District of Habersham County
DATE: August 1, 1973
LESSOR: H.W. Stewart, Jr.
LESSEE: Multivision Northeast, Inc.
EXPIRATION DATE: 11/30/96
RENTAL CHARGE: $200.00/month
B. USE: Jefferson headend site
LOCATION: Cobb Street, Jefferson
DATE: Month-to month
LESSOR: Jerry Fletcher and Damon Gause
LESSEE: Multivision of Commerce, Inc.
EXPIRATION DATE: Month-to month
RENTAL CHARGE: $500.00/month
C. USE: Cornelia office/collection site
LOCATION: 920 Clarkesville Street, Cornelia
DATE: Month-to-month
LESSOR: Don Higgins Realty
LESSEE: Falcon First Cable of the Southeast, Inc.
EXPIRATION DATE: Month-to-month
RENTAL CHARGE: $650.00/month
Page One of Two
SCHEDULE 1.1.2
<PAGE> 33
REAL PROPERTY
LEASED PARCELS (CONT.):
D. USE: Jefferson office/collection site
LOCATION: Jefferson Drugs, 127 Lee Street, Jefferson
DATE: Month-to-month
LESSOR: John Peoples
LESSEE: Multivision of Commerce, Inc.
EXPIRATION DATE: Month-to-month
RENTAL CHARGE: $40.00/month
EASEMENTS AND RIGHTS OF WAY:
1. USE: Aerial wire line crossing
LOCATION: Commerce, from 1,257' N to 257' S of MP NE22
DATE: 4/10/89
LICENSOR: Southern Railway Company
LICENSEE: Multivision of Commerce, Inc.
EXPIRATION DATE: 60 days' written notice
RENTAL CHARGE: $4,350.00/year
Page Two of Two
SCHEDULE 1.1.2
<PAGE> 34
LICENSES AND FRANCHISES
FCC LICENSES:
TYPE: Business Radio License
LICENSEE: Multivision Northeast, Inc.
CALL SIGN: WNBZ957
EXPIRATION DATE: March 16, 2000
FRANCHISES:
A. COMMUNITY: Town of Alto, GA
FRANCHISE HOLDER: Falcon First Cable of the Southeast, Inc.
ORDINANCE NUMBER: None
DATE GRANTED: 7/13/93
EXPIRATION DATE: 7/13/08
B. COMMUNITY: City of Arcade, GA
FRANCHISE HOLDER: Multivision of Commerce, Inc.
ORDINANCE NUMBER: None
DATE GRANTED: 2/16/81
EXPIRATION DATE: 2/16/11 (?)
C. COMMUNITY: City of Baldwin, GA
FRANCHISE HOLDER: Multivision Northeast, Inc.
ORDINANCE NUMBER: 09-12-88-01
DATE GRANTED: 10/3/88
EXPIRATION DATE: 10/3/03
D. COMMUNITY: Banks County, GA
FRANCHISE HOLDER: Falcon First Communications, L.P.
ORDINANCE NUMBER: None
DATE GRANTED: 1/5/82
EXPIRATION DATE: 1/5/97
Page One of Three
SCHEDULE 1.1.3
<PAGE> 35
LICENSES AND FRANCHISES
FRANCHISES (CONT.):
E. COMMUNITY: City of Clarkesville, GA
FRANCHISE HOLDER: Falcon First Communications, L.P.
ORDINANCE NUMBER: None
DATE GRANTED: 9/6/88
EXPIRATION DATE: 9/6/03
F. COMMUNITY: City of Commerce, GA
FRANCHISE HOLDER: Falcon First Cable of the Southeast, Inc.
ORDINANCE NUMBER: 89-503; Resolution 89-1102
DATE GRANTED: 5/20/80
EXPIRATION DATE: 5/20/95
G. COMMUNITY: City of Cornelia, GA
FRANCHISE HOLDER: Multivision Northeast, Inc.
ORDINANCE NUMBER: None
DATE GRANTED: 5/16/66
EXPIRATION DATE: 9/2/96
H. COMMUNITY: City of Demorest, GA
FRANCHISE HOLDER: Multivision Northeast, Inc.
ORDINANCE NUMBER: 09-12-88-01
DATE GRANTED: 11/1/88
EXPIRATION DATE: 11/1/03
I. COMMUNITY: Habersham County, GA
FRANCHISE HOLDER: Multivision Northeast, Inc.
ORDINANCE NUMBER: None
DATE GRANTED: 1/12/77
EXPIRATION DATE: 1/18/07
Page Two of Three
SCHEDULE 1.1.3
<PAGE> 36
LICENSES AND FRANCHISES
FRANCHISES (CONT.):
J. COMMUNITY: Town of Homer, GA
FRANCHISE HOLDER: Multivision of Commerce, Inc.
ORDINANCE NUMBER: None
DATE GRANTED: 1/11/83
EXPIRATION DATE: 1/11/98
K. COMMUNITY: Jackson County, GA
FRANCHISE HOLDER: Falcon First, Inc.
ORDINANCE NUMBER: None
DATE GRANTED: 2/16/95
EXPIRATION DATE: 2/16/10
L. COMMUNITY: City of Jefferson, GA
FRANCHISE HOLDER: Falcon Cable TV
ORDINANCE NUMBER: None
DATE GRANTED: 2/16/81
EXPIRATION DATE: 2/16/96
M. COMMUNITY: Town of Mt. Airy, GA
FRANCHISE HOLDER: Falcon Community Ventures I, L.P.
ORDINANCE NUMBER: None
DATE GRANTED: 3/7/94
EXPIRATION DATE: 3/7/09
N. COMMUNITY: Town of Nicholson, GA
FRANCHISE HOLDER: Multivision of Commerce, Inc.
ORDINANCE NUMBER: None
DATE GRANTED: 12/6/82
EXPIRATION DATE: 12/6/97
Page Three of Three
SCHEDULE 1.1.3
<PAGE> 37
CONTRACTS
A. POLE ATTACHMENT AGREEMENTS: As described on SCHEDULE 5.11
B. OTHER CONTRACTS:
1. PARTIES: Falcon First [Cable of the] Southeast, Inc.
and Cates Communication
DATE: August 5, 1992
DESCRIPTION: Cable installation and burial
TERMS: $4.00/foot for road boring; $35.00 for up to 350
feet of burial, $0.10/foot for additional burial
EXPIRATION DATE: At will
Page One of One
SCHEDULE 1.1.4
<PAGE> 38
CONSENTS
GOVERNMENTAL CONSENTS:
A. GOVERNMENTAL AUTHORITY: City of Alto
NATURE OF CONSENT: Franchise Transfer (notice only)
B. GOVERNMENTAL AUTHORITY: City of Arcade
NATURE OF CONSENT: Franchise Transfer
C. GOVERNMENTAL AUTHORITY: City of Baldwin
NATURE OF CONSENT: Franchise Transfer (acceptance only)
D. GOVERNMENTAL AUTHORITY: Banks County
NATURE OF CONSENT: Franchise Transfer
E. GOVERNMENTAL AUTHORITY: City of Clarkesville
NATURE OF CONSENT: Franchise Transfer
F. GOVERNMENTAL AUTHORITY: City of Commerce
NATURE OF CONSENT: Franchise Transfer
G. GOVERNMENTAL AUTHORITY: City of Cornelia
NATURE OF CONSENT: Franchise Transfer
H. GOVERNMENTAL AUTHORITY: City of Demorest
NATURE OF CONSENT: Franchise Transfer
I. GOVERNMENTAL AUTHORITY: City of Homer
NATURE OF CONSENT: Franchise Transfer (acceptance only)
Page One of Three
SCHEDULE 5.3
<PAGE> 39
CONSENTS
GOVERNMENTAL CONSENTS (cont.):
J. GOVERNMENTAL AUTHORITY: Jackson County
NATURE OF CONSENT: Franchise Transfer (notice only)
K. GOVERNMENTAL AUTHORITY: City of Jefferson
NATURE OF CONSENT: Franchise Transfer
L. GOVERNMENTAL AUTHORITY: Habersham County
NATURE OF CONSENT: Franchise Transfer (notice only)
M. GOVERNMENTAL AUTHORITY: Town of Mt. Airy
NATURE OF CONSENT: Franchise Transfer (notice only)
N. GOVERNMENTAL AUTHORITY: Town of Nicholson
NATURE OF CONSENT: Franchise Transfer (acceptance only)
NON-GOVERNMENTAL CONSENTS:
1. CONSENTING PARTY: H. M. Stewart, Jr.
NATURE OF CONSENT: Cornelia headend site lease assignment
2. CONSENTING PARTY: Georgia Power
NATURE OF CONSENT: Pole attachment agreements assignment
3. CONSENTING PARTY: Habersham Electric Membership Corp.
NATURE OF CONSENT: Pole attachment agreement assignment
Page Two of Three
SCHEDULE 5.3
<PAGE> 40
CONSENTS
NON-GOVERNMENTAL CONSENTS (cont.):
4. CONSENTING PARTY: Mid-Georgia Telephone Corp.
NATURE OF CONSENT: Pole attachment agreements assignment
5. CONSENTING PARTY: City of Commerce
NATURE OF CONSENT: Pole attachment agreement assignment
6. CONSENTING PARTY: Jackson Electric Membership Corp.
NATURE OF CONSENT: Pole attachment agreements assignment
7. CONSENTING PARTY: Standard Telephone Company
NATURE OF CONSENT: Pole attachment agreement assignment
Page Three of Three
SCHEDULE 5.3
<PAGE> 41
CLAIMS
NONE
Page One of One
SCHEDULE 5.5
<PAGE> 42
FRANCHISE FEES
A. COMMUNITY: Town of Alto
ANNUAL FEE: 5% of Gross Subscriber Receipts
B. COMMUNITY: City of Arcade
ANNUAL FEE: 5% of Gross Revenue
C. COMMUNITY: City of Baldwin
ANNUAL FEE: 5% of Gross Revenue
D. COMMUNITY: Banks County
ANNUAL FEE: 5% of Gross Revenue
E. COMMUNITY: City of Clarkesville
ANNUAL FEE: 3% of Gross Revenue
F. COMMUNITY: City of Commerce
ANNUAL FEE: 5% of Gross Revenue
G. COMMUNITY: City of Cornelia
ANNUAL FEE: 5% of Gross Revenue
H. COMMUNITY: City of Demorest
ANNUAL FEE: 5% of Gross Revenue
I. COMMUNITY: Habersham County
ANNUAL FEE: 5% of Gross Revenue
Page One of Two
SCHEDULE 5.10
<PAGE> 43
FRANCHISE FEES
J. COMMUNITY: Town of Homer
ANNUAL FEE: 3% of Gross Basic Service Payments
K. COMMUNITY: Jackson County
ANNUAL FEE: 5% of Gross Subscriber Receipts
L. COMMUNITY: City of Jefferson
ANNUAL FEE: 5% of Gross Revenue
M. COMMUNITY: Town of Mt. Airy
ANNUAL FEE: 5% of Gross Subscriber Receipts
N. COMMUNITY: Town of Nicholson
ANNUAL FEE: 3% of Gross Subscriber Revenue
Page Two of Two
SCHEDULE 5.10
<PAGE> 44
POLE ATTACHMENT FEES
A. LICENSOR: Georgia Power
LICENSEE: Multivision Northeast, Inc.
DATED: 1/14/91
COMMUNITIES SERVED: Cornelia, Habersham County, Mt. Airy
ANNUAL FEE: $20,935
NUMBER OF POLES: 3965
B. LICENSOR: Georgia Power
LICENSEE: Multivision of Commerce, Inc.
DATED: 1/15/91
COMMUNITIES SERVED: Arcade, Banks County, Homer Jackson County,
Jefferson
ANNUAL FEE: $4,287
NUMBER OF POLES: 812
C. LICENSOR: Habersham Electric Membership Corp.
LICENSEE: Multivision Northeast, Inc.
DATED: 3/19/79
COMMUNITIES SERVED: Habersham County
ANNUAL FEE: $22,295
NUMBER OF POLES: 4039
D. LICENSOR: Mid-Georgia Telephone Corp.
LICENSEE: Commerce Cable Communications
DATED: 8/20/80
COMMUNITIES SERVED: Jackson and Banks Counties
ANNUAL FEE: $8,165
NUMBER OF POLES: 1080
Page One of Two
SCHEDULE 5.11
<PAGE> 45
POLE ATTACHMENT FEES
E. LICENSOR: City of Commerce
LICENSEE: Multivision of Commerce, Inc.
DATED: Unknown
COMMUNITIES SERVED: Commerce
ANNUAL FEE: $2,887
NUMBER OF POLES: 802
F. LICENSOR: Jackson Electric Membership Corp.
LICENSEE: Jackson County Cablevision
DATED: 6/17/81
COMMUNITIES SERVED: Unknown
ANNUAL FEE: $13,169
NUMBER OF POLES: 1860
G. LICENSOR: Standard Telephone Company
LICENSEE: Falcon First Communications, L.P.
DATED: 2/15/92
COMMUNITIES SERVED: Habersham County, GA
ANNUAL FEE: $7,563.00
NUMBER OF POLES: 1,313
Page Two of Two
SCHEDULE 5.11
<PAGE> 46
LABOR AND EMPLOYMENT MATTERS
<TABLE>
<CAPTION>
EMPLOYEE 1995 1996 BASE
NAME POSITION COMPENSATION SALARY
- -------- -------- ------------ ---------
<S> <C> <C> <C>
Phylliss E. Hopper CSR $ 7,163.61 $12,854.44
Scott H. Lewis CSR $17,794.48 $16,619.20
Connie C. Ramsey CSR $23,617.53 $22,339.20
Dennis E. Fish, Jr. Installer $13,520.00
Ronald P. Gary Installer $20,834.37 $15,371.20
Matthew L. Hayes Installer $20,926.59 $15,371.20
Kenneth A. Kinsey Lead Technician $34,129.68 $29,827.20
William C. McEntire Technician $25,692.07 $20,238.40
Jerry R. Hallford Technician $29,595.63 $25,147.20
</TABLE>
Page One of One
SCHEDULE 5.12
<PAGE> 47
APPROVED MARKETING PRACTICES
Page One of One
SCHEDULE 7.9
<PAGE> 48
ALLOCATION OF PURCHASE PRICE
<TABLE>
<CAPTION>
Total Value
-----------
<S> <C>
Office Furniture & Equipment $ 8,000
Office Building & Headend - Commerce 27,810
Tower & Antenna 89,610
Headend Electronics 421,270
Headend Building 18,800
Trunk & Distribution - Underground 412,776 (38.22 U/G miles @ $10,800 per mile)
Trunk & Distribution - Overhead 3,566,364 (383.48 O/H miles @ $9,300 per mile)
Subscriber Connect Cost 330,785 (9,451 subscribers @ $35 per sub)
Non-addressable Converters 40,170 (1,339 converters @ $30 per unit)
Remotes 1,768 (707 remotes @ $2.50 per unit)
Shop Tools & Test Equipment 5,500
Autos & Trucks 94,300
-----------
Total Property, Plant & Equipment 5,017,153
Franchise Cost 9,482,847
Covenant not to Compete 500,000
-----------
Purchase Price $15,000,000
===========
</TABLE>
Page One of One
SCHEDULE 8.6
<PAGE> 49
SERVICE AREAS
SERVICE AREA KNOWN AS THE COMMERCE, GEORGIA SYSTEM
Commerce Nicholson
Homer Part of Banks and Jackson County
SERVICE AREA KNOWN AS THE CORNELIA, GEORGIA SYSTEM
Habersham County Mount Airy
Clarkesville Baldwin
Demorest Alto
Cornelia Part of Banks County
SERVICE AREA KNOWN AS THE JEFFERSON, GEORGIA SYSTEM
Arcade
Jefferson
Part of Jackson County
Page One of One
EXHIBIT A
<PAGE> 50
DEPOSIT ESCROW INSTRUCTIONS
ESCROW AGREEMENT
This Escrow Agreement is made as of the 15th day of April, 1996, by and
among MULTIVISION OF COMMERCE, INC., a Georgia corporation, and MULTIVISION
NORTHEAST, INC., a Georgia corporation (each individually a "Seller" and
collectively, "Sellers"); TELEVIEW, INC., a Georgia corporation ("Buyer"); and
COMMUNITY BANK AND TRUST - HABERSHAM, as Escrow Agent ("Escrow Agent").
1. Buyer shall deposit with Escrow Agent, in escrow, the sum of
Three Hundred Thousand Dollars ($300,000.00).
2. Escrow Agent shall accept said sum and establish and maintain a
separate account therefor (the "Escrow Account").
3. Escrow Agent shall invest and reinvest the funds in the Escrow
Account at the direction and risk of Buyer during the term of the escrow. Upon
written instructions signed by an officer of Buyer, Escrow Agent shall invest
and reinvest the Escrow Account in one or more of the following investments (the
"Obligations") from time to time:
(A) Direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United States of
America;
(B) Repurchase Agreements with Escrow Agent involving
securities of the kind described in (A) above; or
(C) Money market funds authorized to invest in short term
securities issued or guaranteed as to principal and interest by the U.S.
Government and Repurchase Agreements with respect to such securities.
No Obligation shall have a maturity which exceeds fifteen (15) days
beyond the date upon which the investment in the Obligation is made. Interest
and other earnings on the Obligations shall be added to the Escrow Account. Any
loss incurred from an investment and/or any investment fee will be borne by the
Escrow Account. Investment and reinvestment of the Escrow Account shall be made
only in Obligations. Escrow Agent is authorized to use Buyer's Federal Tax I.D.
Number in connection with any obligations.
4. Upon receipt of a letter, in a form substantially similar to
that attached hereto as Attachment A, officially signed on behalf of Sellers and
Buyer, Escrow Agent shall liquidate all or a portion of the Obligations and to
pay the full balance and proceeds of the Escrow Account, or such portion as may
be designated in the letter, as Sellers and Buyer shall jointly direct. Sellers
shall have the right to unilaterally direct Escrow Agent as to the allocation
between the respective Sellers of the amounts to be paid pursuant to any such
joint letter.
Page One of Five
EXHIBIT 2.1
<PAGE> 51
5. (a) Sellers and Buyer shall hold Escrow Agent harmless and
indemnify Escrow Agent against any loss, liability, expenses (including
attorney's fees and expenses), claim, or demand arising out or in connection
with the performance of its obligations in accordance with the provisions of
this Agreement, except for gross negligence or willful misconduct of Escrow
Agent. The foregoing indemnities in this paragraph shall survive the resignation
of Escrow Agent or the termination of this Agreement.
(b) Escrow Agent's duties are only such as are specifically
provided herein, and Escrow Agent shall incur no liability whatsoever to Sellers
or Buyer except for gross negligence or willful misconduct. Escrow Agent shall
have no responsibility hereunder other than to follow faithfully the
instructions herein contained. Escrow Agent may consult with counsel and shall
be fully protected in any action taken in good faith in accordance with such
advice. Escrow Agent shall be fully protected in acting in accordance with any
written instructions given to it hereunder and believed by it to have been
executed by the proper parties. Escrow Agent shall not be liable for interest on
the Escrow Account except as specifically agreed upon by Escrow Agent and the
respective parties hereto.
(c) Buyer and Sellers shall each pay Escrow Agent a fee of
Three Hundred Seventy-Five Dollars ($375.00) as compensation for the ordinary
administrative services to be rendered hereunder. Sellers and Buyer shall each
pay one-half (1/2) of all expenses of Escrow Agent, including its attorney's
fees and expenses, which it may incur in connection with the performance of its
duties under this Agreement, or under the indemnity provided in Section 5.(a)
hereof, and Escrow Agent's claim therefor shall constitute a first lien against
the Escrow Account. Sellers' agreements in this Section 5.(c) and in Section
5.(e) hereof shall not limit or otherwise affect any indemnification or
contribution rights of either Seller vis-a-vis Buyer.
(d) Should any dispute arise with respect to the payment and/or
ownership or right of possession of the Escrow Account, Escrow Agent is
authorized and directed to retain in its possession, without liability to
anyone, all or any part of said Escrow Account until such dispute shall have
been settled either by mutual agreement by the parties concerned or by the final
order, decree, or judgment of a court or other tribunal of competent
jurisdiction in the United States of America and time for appeal has expired and
no appeal has been perfected, but Escrow Agent shall be under no duty whatsoever
to institute or defend any such proceedings.
(e) Escrow Agent may resign at any time by giving written notice
thereof to the other parties hereto, but such resignation shall not become
effective until a successor escrow agent shall have been appointed and shall
have accepted such appointment in writing. If an instrument of acceptance by a
successor escrow agent shall not have been delivered to Escrow Agent within
thirty (30) days after the giving of such notice of resignation, the resigning
Escrow Agent may at the expense of Buyer and Sellers petition any court of
competent jurisdiction for the appointment of a successor escrow agent.
Page Two of Five
EXHIBIT 2.1
<PAGE> 52
6. This Agreement shall be construed in accordance with the laws of
the State of Georgia. It may be executed in several counterparts, each one of
which shall constitute an original and all collectively shall constitute but one
instrument.
7. Any notice, consent or request to be given in connection with
any of the terms or provisions of this Agreement shall be in writing and shall
be sent by First Class mail, postage prepaid, telecopier and confirmed in
writing or delivered:
(A) (i) if to Escrow Agent by U.S. Mail Delivery, to its office
at _____________ _________________________________________, Attention:
__________________________;
(ii) if to Escrow Agent by courier, to its office at
_______________________ _________________________________________, Attention:
__________________________;
(iii) if to Escrow Agent by Telecopier, to be followed by an
original in writing by U.S. Mail Delivery or courier, Telecopier No. (___)
___-____.
(B) (i) if to Sellers by U.S. Mail Delivery, to their office at
10900 Wilshire Boulevard, 15th Floor, Los Angeles, California 90024;
(ii) if to Sellers by courier, to their office at 10900
Wilshire Boulevard, 15th Floor, Los Angeles, California 90024;
(iii) if to Sellers by Telecopier, to be followed by an
original in writing by U.S. Mail Delivery or courier, Telecopier No. (310)
824-4824 or 208-3655.
(C) (i) if to Buyer by U.S. Mail Delivery, to its office at 2000
Industrial Boulevard, Post Office Box 400, Cornelia, Georgia 30531;
(ii) if to Buyer by courier, to its office at 2000 Industrial
Boulevard, Post Office Box 400, Cornelia, Georgia 30531;
(iii) if to Buyer by Telecopier, to be followed by an original
in writing by U.S. Mail Delivery or courier, Telecopier No. (706) 778-5684.
8. This Agreement shall terminate on November 15, 1996, unless
previously terminated by fully disbursing the Escrow Account. Any investments in
the Escrow Account on the aforesaid termination date shall be liquidated and the
proceeds thereof plus any cash balance in the Escrow Account shall be remitted
as Sellers and Buyer shall jointly direct; provided, however, Sellers shall have
the right to unilaterally direct Escrow Agent as to the allocation between the
respective Sellers of the amounts to be paid pursuant to any such joint
direction by Sellers and Buyer.
Page Three of Five
EXHIBIT 2.1
<PAGE> 53
IN WITNESS WHEREOF, the parties have been duly executed this Escrow
Agreement as of the date first above written.
TELEVIEW, INC.,
a Georgia corporation
By: /s/ Harry L. Bagley
--------------------------------
Harris L. Bagley, President
MULTIVISION OF COMMERCE, INC.,
a Georgia corporation
By: /s/ Jon Lunsford
--------------------------------
Jon Lunsford, Vice President
MULTIVISION NORTHEAST, INC.,
a Georgia corporation
By: /s/ Jon Lunsford
--------------------------------
Jon Lunsford, Vice President
COMMUNITY BANK AND
TRUST - HABERSHAM
By /s/ Illegible Signature
--------------------------------
SENIOR VICE PRESIDENT
& TRUST OFFICER
Page Four of Five
EXHIBIT 2.1
<PAGE> 54
ATTACHMENT A
Community Bank and Trust - Habersham
____________________________________
____________________________________
Attention: ________________________
Re: Escrow Account No. _______________ among Multivision Of Commerce,
Inc., Multivision Northeast, Inc.; Teleview, Inc.; and Community
Bank and Trust - Habersham, as Escrow Agent (the "Escrow Account")
Ladies and Gentlemen:
Please liquidate so much of the investments held in the Escrow Account
as are necessary to distribute the amount of _________________________, and
distribute such amount by (wire transfer) (cashier's check) to
_____________________ (if wire transfer - Name of bank, bank's ABA# and
customer's account number for credit) or as ______________________ shall
otherwise direct.
Very truly yours,
_____________________________
By __________________________
and
_____________________________
By __________________________
Page Five of Five
EXHIBIT 2.1
<PAGE> 55
BILL OF SALE AND ASSIGNMENT
Pursuant to the Asset Purchase Agreement made effective as of
_______________ (the "Agreement"), by and between MULTIVISION OF COMMERCE, INC.,
a Georgia corporation, and MULTIVISION NORTHEAST, INC., a Georgia corporation
(each individually a "Seller" and collectively, "Sellers") and TELEVIEW, INC., a
Georgia corporation ("Buyer"), for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged:
(1) Sellers do hereby sell, assign, transfer, and convey unto Buyer,
and its successors and assigns, each and all of the Assets (as such term is
defined in the Agreement), intending hereby to convey all of Sellers' right,
title, and interest therein.
(2) Sellers hereby covenant and agrees with Buyer, and its successors
and assigns, to do, execute, acknowledge, and deliver, or to cause to be done,
executed, acknowledged, and delivered, to Buyer and/or its successors and
assigns, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney, and assurances that may be reasonably requested by Buyer to
facilitate the selling, assigning, transferring, conveying, delivering,
assuring, and confirming, to Buyer and its successors or assigns, or for aiding
and assisting in collecting or reducing to possession, any or all of the Assets.
(3) Sellers hereby warrant to Buyer and its successors and assigns that
Sellers have legal title to the Assets transferred by them hereunder and that
such Assets are free and clear of all liens, security interests, encumbrances,
restrictions, and claims of any nature whatsoever, except those minor
imperfections of title and encumbrances, if any, which do not materially detract
from the value of the properties subject thereto and which do not materially
interfere with the present and continued use of the Assets or with the conduct
of the Systems' normal operations, and Sellers covenants defend such title based
on claims originating prior to the date hereof.
(4) This Bill of Sale and Assignment shall be binding upon the
successors and assigns of Sellers and shall inure to the benefit of the
successors and assigns of Buyer.
IN WITNESS WHEREOF, Sellers have executed and delivered this Bill of
Sale and Assignment as of this ______ day of _____________, 1996.
MULTIVISION OF COMMERCE, INC., MULTIVISION NORTHEAST, INC
a Georgia corporation a Georgia corporation
By: _____________________________ By: ____________________________
Jon Lunsford, Vice President Jon Lunsford, Vice President
Page One of One
EXHIBIT 9.4
<PAGE> 56
_____________, 1996
Harris L. Bagley, President
TeleView, Inc.
2000 Industrial Boulevard
Post Office Box 400
Cornelia, Georgia 30531
Dear Mr. Bagley:
This opinion is being delivered to you pursuant to Section 9.5 of the
Asset Purchase Agreement made effective as of _______________ (the "Agreement"),
by and between MULTIVISION OF COMMERCE, INC., a Georgia corporation, and
MULTIVISION NORTHEAST, INC., a Georgia corporation (each individually a "Seller"
and collectively, "Sellers") and TELEVIEW, INC., a Georgia corporation
("Buyer"). All capitalized terms not otherwise defined herein have the same
meanings as defined in the Agreement.
We are attorneys admitted to practice in the State of California. We
have acted as general counsel for Sellers in connection with the negotiation and
execution of the Agreement. We are not admitted to the practice of law in the
State of Georgia, and in rendering those aspects of this opinion covered in the
opinion of _______________________ delivered concurrently herewith, we have
relied solely on such opinion. In addition, we call Buyer's attention to the
fact that no opinion is expressed herein other than with respect to the laws of
the State of California and the State of Georgia (to the extent set forth above)
and the federal laws of the United States of America (other than the
Communications Act of 1934 and the rules and regulations of the Federal
Communications Commission and the Copyright Royalty Tribunal thereunder, and the
rules and regulations of the Federal Aviation Administration).
We further call Buyer's attention to the fact that this letter includes
an opinion as to the legal enforceability of a covenant not to compete.
Applicable law provides that, in general, such covenants constitute agreements
in restraint of trade and are enforceable only to the extent reasonably limited
in nature, geographic area, and duration. Whether a particular covenant not to
compete is reasonably limited in nature, geographic area, and duration is
determined from all of the facts and circumstances of the particular
transaction. No opinion is expressed herein as to whether Sellers' covenants not
to compete granted in connection herewith is reasonably limited in nature,
geographic area, or duration.
Page One of Three
EXHIBIT 9.5
<PAGE> 57
Harris L. Bagley, President
TeleView, Inc.
___________ __, 1996
Page Two
In rendering this opinion, we have examined Sellers' files and records,
and any other records, files, documents, and other evidence we deemed pertinent
and necessary to our rendering of this opinion. We have assumed the genuineness
of all signatures on, and the authenticity of, all documents submitted to us as
originals; and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. We have also assumed the due and valid
execution, delivery, and performance of the Agreement by Buyer, and the
legality, validity, binding effect, and enforceability of the Agreement as it
relates to Buyer. With respect to factual matters, we have relied solely on the
representations of officers and employees of Sellers. We have not conducted an
independent field investigation of the Systems nor have we examined its
day-to-day operations.
Based on the foregoing, we are of the opinion that:
(1) Sellers are corporations having all requisite power and
authority to own, lease, and use their properties and assets, and are entitled
to carry on their business of operating the Systems as and in the places where
such properties and assets are now owned, leased, or operated and such business
is now conducted. Sellers have full power and authority to enter into the
Agreement and to consummate the transactions contemplated thereby.
(2) Sellers have taken all actions required in order to
authorize the execution, delivery, and performance of the Agreement, and none of
such acts will violate any requirement created by law, by any provision of any
articles of incorporation, bylaws, corporate resolutions, or any other documents
governing the actions of either Seller, or by the provisions of any contract or
other commitment to which either of Sellers is a party.
(3) Guarantor has full power and authority to enter into the
Agreement for the limited purposes expressly provided therein, and has taken all
actions required in order to authorize the execution, delivery, and performance
of the Agreement as to such limited purposes. None of such acts will violate any
requirement created by law, by any provision of any articles of incorporation,
bylaws, corporate resolutions, or any other documents governing the actions of
Guarantor, or by the provisions of any contract or other commitment to which
Guarantor is a party.
(4) The instruments of conveyance, transfer, and assignment of
real and personal property delivered to Buyer at the closing of the transaction
contemplated by the Agreement are legally valid as to form under Georgia law so
as to fully transfer to Buyer all of Sellers' right,
Page Two of Three
EXHIBIT 9.5
<PAGE> 58
Harris L. Bagley, President
TeleView, Inc.
___________ __, 1996
Page Three
title, and interest in and to the assets and properties specified therein, and
the specific assignments of real property interests which are to be recorded in
the public records are in proper form for recordation.
(4) Except as set forth in the Agreement and the Schedules and
Exhibits thereto, we have no knowledge of any litigation, proceeding, or
governmental investigation, existing or threatened, which affects the title or
interest of Sellers in or to any of the properties or assets assigned or
transferred under the Agreement, or which would prevent or adversely affect the
ownership, use, or operation of same by Buyer.
This opinion is given solely for Buyer's benefit, and no other person
or entity is entitled to rely hereon.
Very truly yours,
GOLDMAN & KAGON
LAW CORPORATION
Page Three of Three
EXHIBIT 9.5
<PAGE> 59
CERTIFICATE OF COMPLIANCE
MULTIVISION OF COMMERCE, INC., a Georgia corporation, and MULTIVISION
NORTHEAST, INC., a Georgia corporation (each individually a "Seller" and
collectively, "Sellers") hereby certify, pursuant to Section 9.8 of the Asset
Purchase Agreement made effective as of ____________________, by and between
Sellers and TELEVIEW, INC., a Georgia corporation (the "Agreement"), that:
1. Sellers have performed and complied with all of its material
obligations, agreements, and covenants contained in the Agreement to be
performed or complied with on or before the date hereof; and
2. The representations and warranties of Sellers contained in the
Agreement are true and correct in all material respects, and there have been no
material adverse changes in the condition of the Systems (as that term is
defined in the Agreement), other than changes, events, or conditions affecting
the cable television industry in general.
IN WITNESS WHEREOF, Sellers have executed and delivered this
Certificate of Compliance as of this ____ day of _______________, 1996.
MULTIVISION OF COMMERCE, INC., MULTIVISION NORTHEAST, INC
a Georgia corporation a Georgia corporation
By: _____________________________ By: ____________________________
Jon Lunsford, Vice President Jon Lunsford, Vice President
Page One of One
EXHIBIT 9.8
<PAGE> 60
NON-COMPETITION AGREEMENT
This Non-Competition Agreement is delivered pursuant to the Asset
Purchase Agreement made effective as of ________ (the "Agreement"), by and
between MULTIVISION OF COMMERCE, INC., a Georgia corporation, and MULTIVISION
NORTHEAST, INC., a Georgia corporation (each individually a "Seller" and
collectively, "Sellers") and TELEVIEW, INC., a Georgia corporation ("Buyer").
All capitalized terms not otherwise defined herein have the same meanings as
defined in the Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the Agreement, Sellers are concurrently herewith
selling, assigning, transferring, conveying, and delivering to Buyer, with
certain exceptions, the tangible and intangible assets defined in the Agreement
as the Assets; and
WHEREAS, in partial consideration for such sale, assignment, transfer,
conveyance, and delivery of the Assets, the Agreement requires Sellers and FC
Cable Holdings, Inc., a Delaware corporation ("Parent"), to agree not to compete
with Buyer as hereinbelow set forth;
NOW, THEREFORE, pursuant to the terms of the Agreement and for good and
valuable consideration, Sellers and Parent hereby agree as follows:
1. For a period of five (5) years after the Closing Date, neither
Sellers and nor Parent nor any affiliate of any of them shall not own, manage,
or operate any business which engages in the business of operating a cable
television system or telephone system in the areas listed on Exhibit "A" hereto.
2. Notwithstanding anything contained herein, the ownership of
securities of any company owning, managing, or operating a cable television
system within such area is permitted if such securities are publicly traded on a
national securities market, and if such ownership does not constitute more than
five percent (5%) of all outstanding securities of the same class or provide
effective control of such company.
3. If any portion of this agreement is held to be illegal,
unenforceable, void, or voidable, the remainder shall remain in full force and
effect, and this agreement shall be deemed altered and amended to the minimum
extent necessary to bring it within the legal requirements for enforceability.
Page One of Three
EXHIBIT 9.11
<PAGE> 61
IN WITNESS WHEREOF, Sellers have executed and delivered this
Non-Competition Agreement as of this ____ day of __________, 1996.
MULTIVISION OF COMMERCE, INC., MULTIVISION NORTHEAST, INC
a Georgia corporation a Georgia corporation
By: _____________________________ By: ____________________________
Jon Lunsford, Vice President Jon Lunsford, Vice President
FC CABLE HOLDINGS, INC.,
a Delaware corporation
By: _____________________________
Jon Lunsford, Vice President
Page Two of Three
EXHIBIT 9.11
<PAGE> 62
EXHIBIT "A"
NONCOMPETE TERRITORY:
THE COMMERCE, GEORGIA SYSTEM SERVICE AREA
Commerce Nicholson
Homer Banks and Jackson County
THE CORNELIA, GEORGIA SYSTEM SERVICE AREA
Habersham County Mount Airy
Clarkesville Baldwin
Demorest Alto
Cornelia Banks County
THE JEFFERSON, GEORGIA SYSTEM SERVICE AREA
Arcade
Jefferson
Jackson County
ADDITIONAL AREAS:
Towns County, Georgia Habersham County, Georgia
Union County, Georgia Banks County, Georgia
Clay County, North Carolina Jackson County, Georgia
Lumpkin County, Georgia Rabun County, Georgia
White County, Georgia Hall County, Georgia
Dawson County, Georgia
Page Three of Three
EXHIBIT 9.11
<PAGE> 63
CERTIFICATE OF COMPLIANCE
TELEVIEW, INC., a Georgia corporation ("Buyer"), hereby certifies,
pursuant to Section 10.5 of the Asset Purchase Agreement made effective as of
____________________, by and between Buyer MULTIVISION OF COMMERCE, INC., a
Georgia corporation, and MULTIVISION NORTHEAST, INC., a Georgia corporation,
that:
1. Buyer has in all material respects performed all of its material
obligations and agreements and complied with all of its covenants contained in
the Agreement to be performed or complied with on or before the date hereof; and
2. The representations and warranties of Buyer contained in the
Agreement are in all material respects true and correct.
IN WITNESS WHEREOF, Buyer has executed and delivered this Certificate
of Compliance as of this ____ day of ______________, 1996.
TELEVIEW, INC.,
a Georgia corporation
By: ___________________________
Harris L. Bagley, President
Page One of One
EXHIBIT 10.5
<PAGE> 64
ASSUMPTION AGREEMENT
This Assumption Agreement is delivered pursuant to the Asset Purchase
Agreement made effective as of ________ (the "Agreement"), by and between
MULTIVISION OF COMMERCE, INC., a Georgia corporation, and MULTIVISION NORTHEAST,
INC., a Georgia corporation (each individually a "Seller" and collectively,
"Sellers") and TELEVIEW, INC., a Georgia corporation ("Buyer"). All capitalized
terms not otherwise defined herein have the same meanings as defined in the
Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the Agreement, Sellers are concurrently herewith
selling, assigning, transferring, conveying, and delivering to Buyer, with
certain exceptions, the tangible and intangible assets defined in the Agreement
as the Assets; and
WHEREAS, in partial consideration for such sale, assignment, transfer,
conveyance, and delivery of the Assets, the Agreement requires Buyer to assume
and pay, discharge, and perform certain obligations of Sellers;
NOW, THEREFORE, pursuant to the terms of the Agreement and for good and
valuable consideration, Buyer hereby assumes and undertakes and agrees to pay,
discharge, and perform in accordance with the terms and conditions thereof each
of the following:
(1) insofar as they relate to the time period after the
Closing Date, the obligations and liabilities of either of Sellers under the
Leases, Licenses, and Contracts listed in Schedules 1.1.2, 1.1.3, and 1.1.4 to
the Agreement, respectively, and under Contracts made in the ordinary course of
business (other than those relating to assets excluded from the definition of
Assets pursuant to Section 1.2, above) which are cancelable without penalty upon
not more than thirty (30) days notice, and under which (i) the remaining payment
obligation with respect to any such individual Contract (exclusive of that
portion of any such obligation which is allocable to Sellers pursuant to Section
4.0, below) is less than Ten Thousand Dollars ($10,000.00), and (ii) the
aggregate remaining payment obligation with respect to all such Contracts
(exclusive of that portion of any such obligation which is allocable to Sellers
pursuant to Section 4.0, below) is less than Fifty Thousand Dollars
($50,000.00), provided that if there are such Contracts satisfying the criterion
set forth in clause (i) which, in the aggregate, have remaining payment
obligations equaling or exceeding the amount set forth in clause (ii), Buyer
shall have the right, in its sole discretion, to designate which of such
Contracts it will assume, it being understood that Buyer is obligated to assume
such Contracts only until it cannot assume any more without thereby having
assumed such Contracts which, in the aggregate, have remaining payment
obligations equaling or exceeding the amount set forth in clause (ii);
Page One of Two
EXHIBIT 10.6
<PAGE> 65
(2) insofar as they relate to the time period after the
Closing Date, the obligations and liabilities of either of Sellers under any
other written or oral Leases, Licenses, Contracts, personal property leases,
pole attachment agreements, purchase orders, commitments, or other agreements
relating to the Systems not described on any of Schedules 1.1.2, 1.1.3, or 1.1.4
to the Agreement, but which, at Buyer's sole option, are specifically assumed by
Buyer by notice in writing to either of Sellers after Buyer has been notified of
the existence of any such agreement;
(3) any obligation or liability with respect to subscriber
service agreements, subscriber deposits, and prepayments; and
(4) all obligations, liabilities, and claims arising out of
Buyer's ownership of the Systems or its operation of the Systems on and after
the Closing Date.
Except for those liabilities and obligations to be assumed by Buyer as
specifically described herein, Buyer shall not assume or become liable on (i)
any other agreement, contract, lease, liability, or obligation of either Seller,
or (ii) any other indebtedness, obligation, or liability of either Seller
whatsoever, including any litigation matter arising from the operation of the
Systems prior to the Closing Date, and any wages, salaries, overtime pay,
vacation pay, holiday pay, payroll taxes, or employee benefits relating to any
of Sellers' employees arising out of or attributable to services rendered for
Sellers, or otherwise in connection with the operation of the Systems, on or
prior to the Closing Date.
This Assumption Agreement shall inure to the benefit of and be binding
upon the successors and assigns of Sellers and Buyer.
IN WITNESS WHEREOF, Buyer has executed and delivered this Assumption
Agreement as of this ____ day of ______________, 1996.
TELEVIEW, INC.,
a Georgia corporation
By: ___________________________
Harris L. Bagley, President
Page Two of Two
EXHIBIT 10.6
<PAGE> 66
___________ __, 1996
Mr. Frank J. Intiso
Chief Operating Officer
Falcon Cable TV
10900 Wilshire Boulevard
Fifteenth Floor
Los Angeles, California 90024
Dear Mr. Intiso:
This opinion is being delivered to you pursuant to Section 10.7 of the
Asset Purchase Agreement made effective as of ______________ (the "Agreement"),
by and between MULTIVISION OF COMMERCE, INC., a Georgia corporation, and
MULTIVISION NORTHEAST, INC., a Georgia corporation (each individually a "Seller"
and collectively, "Sellers") and TELEVIEW, INC., a Georgia corporation
("Buyer"). All capitalized terms not otherwise defined herein have the same
meanings as defined in the Agreement.
We have acted as counsel to Buyer in connection with the negotiation
and execution of the Agreement. In rendering this opinion, we have examined
_______________________________________________________________________________
________________________________________________________________, and any other
records, files, documents, and other evidence we deemed pertinent and necessary
to our rendering of this opinion. We have assumed the genuineness of all
signatures on, and the authenticity of, all documents submitted to us as
originals; and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. We have also assumed the due and valid
execution, delivery, and performance of the Agreement by Sellers, and the
legality, validity, binding effect, and enforceability of the Agreement as it
relates to Sellers. With respect to factual matters, we have relied solely upon
the representations of officers and employees of Buyer. We have not conducted
any independent investigation other than as set forth in this letter.
Based upon the foregoing, we are of the opinion that:
1. Buyer is a corporation duly organized, validly existing,
and in good standing under the laws of the state of Georgia, is qualified to do
business in the state of Georgia, and has full power and authority to enter into
the Agreement and to carry out the transactions contemplated thereby.
Page One of Two
EXHIBIT 10.7
<PAGE> 67
Mr. Frank J. Intiso
Chief Operating Officer
Falcon Cable TV
______________ __, 1996
Page Two
2. The Agreement has been duly executed and delivered by
Buyer, and Buyer has taken all actions required in order to authorize and
consummate the Agreement and all transactions contemplated thereby. The
execution, delivery, and performance of the Agreement will not violate any
requirement created by law, by Buyer's articles of incorporation, by-laws, or
any other documents governing its actions, or by any contract or commitment to
which Buyer is a party.
This opinion is solely for Sellers' benefit, and no other person or
entity is entitled to rely hereon.
Very truly yours,
______________________________
Page Two of Two
EXHIBIT 10.7
<PAGE> 68
FALCON FIRST SUBSCRIBER REPORT - SYSTEM: ATHENS
<TABLE>
<CAPTION>
BASIC END OF
SUBSCRIBERS PERIOD 1995
----------- -----------
<S> <C> <C>
10 Athens 3,856 5.14%
20 Limestone County 3,889 5.18%
30 Elkmont 207 0.28%
40 Killen 775 1.03%
50 Center Star 471 0.63%
60 West Killen 247 0.33%
70 Rogersville 693 0.92%
80 Elgin 391 0.52%
90 Lexington 265 0.35%
100 North Rogersville 59 0.08%
110 Anderson 84 0.11%
120 Lawrence County 58 0.08%
130 Town Creek 311 0.41%
140 Courtland 136 0.18%
150 North Courtland 117 0.16%
160 Leighton 363 0.48%
170 Colbert County 741 0.99%
180 Spring Valley 446 0.59%
190 Barton 213 0.28%
200 Cherokee 561 0.75%
210 Burnsville 271 0.36%
220 Belmont 732 0.98%
230 Tishomingo 171 0.23%
240 Golden 109 0.15%
410 Scottsboro 5,499 7.33%
420 Hollywood 326 0.43%
430 Section 340 0.45%
440 Dutton 117 0.16%
450 Cedar Bluff 761 1.01%
460 Gurley 295 0.39%
470 Paint Rock 101 0.13%
480 Rainsville 1,079 1.44%
490 Shiloh 48 0.06%
500 Fyffe 212 0.28%
510 Powell 153 0.20%
520 De Kalb County 19 0.03%
530 Jackson Co. (Scottsboro) 4 0.01%
540 Jackson Co. (Section) 3 0.00%
550 Jackson Co. (Paint Rock) 1 0.00%
590 Colbert Co. (Cherokee) 38 0.05%
600 Tishomingo Co. (Burnsville) 2 0.00%
610 Tishomingo Co.(Belmont) 53 0.07%
620 Lauderdale Co. (Rogersville) 176 0.23%
24,393 32.50%
------
75,047
</TABLE>
<PAGE> 69
FALCON FIRST SUBSCRIBER REPORT - SYSTEM: DALTON
<TABLE>
<CAPTION>
BASIC END OF
SUBSCRIBERS PERIOD 1995
----------- -----------
<S> <C> <C>
10 Whitfield Co. (Dalton) 11,882 15.83%
20 Dalton 7,237 9.64%
30 Tunnel Hill 755 1.01%
40 Varnell 182 0.24%
50 Cohutta 338 0.45%
60 Catoosa Co. (Dalton) 144 0.19%
70 Catoosa Co. (Ringgold) 4,633 6.17%
80 Ringgold 948 1.26%
200 Habersham County 3,237 4.31%
210 Clakesville 534 0.71%
220 Demorest 358 0.48%
230 Cornelia 1,332 1.77%
240 Mt. Airy 136 0.18%
250 Baldwin 506 0.67%
260 Alto 199 0.27%
270 Banks Co. (Cornelia) 115 0.15%
280 Helen 0 0.00%
290 White County 0 0.00%
300 Banks Co. (Commerce) 74 0.10%
310 Homer 99 0.13%
320 Commerce 977 1.30%
330 Nicholson 183 0.24%
340 Jackson Co. (Commerce) 645 0.86%
350 Jackson Co. (Jefferson) 52 0.07%
360 Jefferson 721 0.96%
370 Arcade 39 0.05%
35,326 47.07%
------
75,047
</TABLE>
<PAGE> 70
FALCON FIRST SUBSCRIBERS REPORT - PLATTSBURGH
<TABLE>
<CAPTION>
BASIC END OF
SUBSCRIBERS PERIOD 1995
----------- -----------
<S> <C> <C>
10 City of Plattsburgh 4,957 6.61%
20 Town of Plattsburgh 3,270 4.36%
30 Schuyler Falls 1,152 1.54%
40 Peru 1,141 1.52%
50 Keeseville (Clinton Co.) 328 0.44%
60 Chesterfield 148 0.20%
70 Ausable 177 0.24%
80 Keeseville (Essex Co.) 296 0.39%
90 Town of Dannemora 27 0.04%
100 Village of Dannemora 236 0.31%
110 Saranac 409 0.54%
120 Village of Dannemora (Saranac) 112 0.15%
130 Beekmantown 1,038 1.38%
140 Plattsburgh AFB 74 0.10%
150 Black Brook 246 0.33%
160 Jay 430 0.57%
170 Wilmington 230 0.31%
180 Village of Westport 164 0.22%
190 Town of Westport 82 0.11%
200 Elizabethtown 335 0.45%
210 Lewis 157 0.21%
220 Long Lake 319 0.43%
15,328 20.42%
------
75,047
</TABLE>
<PAGE> 1
EXHIBIT 10.32
FALCON RESTRICTED COMPANIES
1995 CREDIT AGREEMENT
AMENDMENT NO. 1
This Agreement, dated as of April 26, 1996, is among the affiliates of
Falcon Holding Group, Inc., a California corporation, set forth on the signature
pages hereto, their respective subsidiaries set forth on the signature pages
hereto and The First National Bank of Boston, as managing agent for itself and
the other Lenders under the Credit Agreement (as defined below) and as
collateral agent for itself and the other Secured Lenders under the Security
Agreement (as defined below), and Toronto-Dominion (Texas) Inc., as
administrative agent for itself and the other Lenders under the Credit
Agreement. The parties agree as follows:
1. Credit Agreement; Definitions. This Agreement amends the Credit
Agreement dated as of December 28, 1995 among the parties hereto (as in effect
prior to giving effect to this Agreement, the "Credit Agreement"). The terms
defined in the Credit Agreement as amended hereby (the "Amended Credit
Agreement") are used with the meaning so defined.
2. Amendment of Credit Agreement. Effective upon the date all the
conditions set forth in Section 4 hereof are satisfied (the "Amendment Date"),
which conditions must be satisfied no later than April 30, 1996, the Credit
Agreement is amended as follows:
3. Amendment of Section 1.20. The definition of "Borrower" in
Section 1.20 of the Credit Agreement is amended by replacing the word
"and" in the last line thereof with a semicolon and adding the
following text at the end thereof:
"and Falcon Telecom, L.P., a California limited
partnership."
4. Amendment of Section 1.36. The definition of "Computation
Covenants" in Section 1.36 of the Credit Agreement is amended by
replacing the word "and" before the reference to Section 7.13 with a
comma and adding the following text immediately after such reference:
"and 7.18".
5. Amendment of Section 1. Section 1 of the Credit Agreement is
amended by adding immediately after Section 1.69 new Section 1.69A to
read in its entirety as follows:
"1.69A. "Falcon Telecom" means Falcon Telecom, L.P., a
California limited partnership."
6. Amendment of Section 7.5.5. Section 7.5.5 of the Credit
Agreement is amended by replacing the existing figures in the table for
calendar year 1996 with the figures "$98,752,000" under the heading
"Amount" and "$94,414,000" under the heading "Budget".
7. Amendment of Section 7. Section 7 of the Credit Agreement is
amended by adding immediately after Section 7.17 a new Section 7.18 to
read in its entirety as follows:
- PAGE -
<PAGE> 2
"7.18. Special Restrictions on Falcon Telecom. The sum of
(a) all Investments by the Restricted Companies in Falcon Telecom
plus (b) all proceeds of the Loan actually received by Falcon
Telecom for use in its business shall not exceed $15,000,000 in
the aggregate."
8. Amendment of Section 9.1.2. Section 9.1.2 of the Credit
Agreement is amended by replacing the word "and" before the reference
to Section 7.17 with a comma and adding the following text immediately
after such reference:
"and 7.18".
9. Amendment of Exhibit 8.1. Exhibit 8.1 to the Credit Agreement
is amended by adding the text provided in Exhibit 8.1 hereto in the
places indicated on such Exhibit.
10. Amendment of Exhibit 11.1. Exhibit 11.1 to the Credit
Agreement is amended to read in its entirety as set forth in Exhibit
11.1 hereto.
11. Representations and Warranties. Each of the Restricted Companies
jointly and severally represents and warrants as follows:
12. Legal Existence, Organization. Each Restricted Company is
duly organized and validly existing and in good standing under the laws
of the jurisdiction of its organization, with all power and authority,
corporate, partnership or otherwise, necessary (a) to enter into and
perform this Agreement and the Amended Credit Agreement and (b) to own
its properties and carry on the business now conducted or proposed to
be conducted by it. Each of the Restricted Companies has taken all
corporate, partnership or other action required to make the provision
of this Agreement and the Amended Credit Agreement the valid and
enforceable obligations they purport to be.
13. Enforceability. Each of the Restricted Companies has duly
executed and delivered this Agreement. Each of this Agreement and the
Amended Credit Agreement is the legal, valid and binding obligation of
each of the Restricted Companies and is enforceable against it in
accordance with its terms.
14. No Legal Obstacle to Agreements. Neither the execution,
delivery or performance of this Agreement, nor the performance of the
Amended Credit Agreement, nor the consummation of any other transaction
referred to nor contemplated by this Agreement, nor the fulfillment of
the terms hereof or thereof, has constituted or resulted in or will
constitute or result in:
15. any breach or termination of the provisions of any agreement,
instrument, deed or lease to which any Restricted Company is a party or
by which it is bound, or of the Charter or By-laws of any Restricted
Company;
16. the violation of any law, judgment, decree or governmental
order, rule or regulation applicable to any Restricted Company;
17. the creation under any agreement, instrument, deed or lease
of any Lien (other than Liens on the Credit Security which secure the
Credit Obligations) upon any of the assets of any Restricted Company;
or
<PAGE> 3
18. any redemption, retirement or other repurchase obligation of
any Restricted Company under any Charter, By-law, agreement,
instrument, deed or lease.
No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other
Person is required to be obtained or made by any Restricted Company in
connection with the execution, delivery and performance of this
Agreement or the performance of the Amended Credit Agreement, or the
consummation of the transactions contemplated hereby or thereby.
19. Defaults. Immediately before and after giving effect to the
amendments set forth in Section 2, no Default or Event of Default will
exist.
20. Incorporation of Representations and Warranties. The
representations and warranties set forth in Section 8 of the Amended
Credit Agreement are true and correct on the date hereof as if
originally made on and as of the date hereof.
21. Conditions. The effectiveness of this Agreement shall be subject to
the satisfaction of the following conditions, which conditions must be satisfied
prior to May 1, 1996 or this Agreement shall terminate:
22. Notes. Falcon Telecom shall have duly authorized, executed
and delivered to the Managing Agent Notes for each Lender.
23. Legal Opinion. On the Amendment Date, the Lenders shall have
received from Weinstein, Boldt, Racine & Halfhide, special counsel for
the Holdings Companies, their opinion with respect to the transactions
contemplated by this Agreement, which opinion shall be in form and
substance satisfactory to the Lenders. The Restricted Companies
authorize and direct their counsel to furnish the foregoing opinion.
24. Perfection of Security. Falcon Telecom shall have duly
authorized, executed, acknowledged, delivered, filed, registered and
recorded such UCC financing statements, security agreements, notices,
transfer powers and other instruments as the Managing Agent may have
requested in order to perfect the security interests and encumbrances
purported or required pursuant to the Credit Documents to be created in
the Credit Security.
25. Officer's Certificate. The representations and warranties of
the Restricted Companies set forth or incorporated by reference herein
shall be true and correct as of the Amendment Date as if originally
made on and as of the Amendment Date; no Default shall have occurred on
or prior to the Amendment Date or hereby; and the Managing Agent shall
have received a certificate to these effects signed by a Financial
Officer.
26. Proper Proceedings. This Agreement, each other Credit
Document and the transactions contemplated hereby and thereby shall
have been authorized by all necessary proceedings of each Obligor and
any of their respective Affiliates party thereto. All necessary
consents, approvals ands authorizations of any governmental or
administrative agency or any other Person with respect to any of the
transactions contemplated hereby or by any other Credit Document shall
have been obtained and shall be in full force and effect. The Managing
Agent shall have received copies of all documents, including
certificates, records of corporate and partnership proceedings and
opinions of counsel, which the Managing Agent may have reasonably
requested in connection therewith, such documents where appropriate to
be certified by proper corporate or governmental authorities.
<PAGE> 4
27. Joinder of Falcon Telecom. Effective upon the Amendment Date,
Falcon Telecom joins in and becomes party to (a) the Credit Agreement as a
Borrower, a Guarantor, an Obligor and a Restricted Company, (b) the Security
Agreement as an Obligor, and (c) the Holding Pledge and Subordination Agreement
as an Obligor. Without limiting the foregoing, Falcon Telecom hereby (i)
represents and warrants all of the representations and warranties made by the
Borrowers, Guarantors, Obligors and Restricted Companies in the Credit Documents
described above in this Section 5 and in Section 3 hereof and (ii) mortgages,
pledges and collaterally grants and assigns to the Collateral Agent (as defined
in the Security Agreement) for the benefit of the Secured Lenders (as defined in
the Security Agreement) and the holders from time to time of any Secured
Obligation (as defined in the Security Agreement), and creates a security
interest in favor of the Collateral Agent for the benefit of the Secured Lenders
and such holders in, all of Falcon Telecom's right, title and interest in and to
(but none of its obligations or liabilities with respect to) the items and types
of present and future property described in Sections 2.1.1 through 2.1.14 of the
Security Agreement (subject, however, to Section 2.1.15 thereof), whether now
owned or hereafter acquired.
28. Further Assurances. Each of Falcon Telecom and the other Restricted
Companies will, promptly upon the request of the Managing Agent from time to
time, execute, acknowledge, deliver, file and record all such instruments and
notices, and take all such other action, as the Managing Agent deems necessary
or advisable to carry out the intent and purposes of this Agreement.
29. General. The Amended Credit Agreement and all of the Credit
Documents are each confirmed as being in full force and effect. This Agreement,
the Amended Credit Agreement and the other Credit Documents referred to herein
or therein constitute the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all prior and current
understandings and agreements, whether written or oral. Each of this Agreement
and the Amended Credit Agreement is a Credit Document and may be executed in any
number of counterparts, which together shall constitute one instrument, and
shall bind and inure to the benefit of the parties and their respective
successors and assigns, including as such successors and assigns all holders of
any Note. This Agreement shall be governed by and construed in accordance with
the laws (other than the conflict of law rules) of The Commonwealth of
Massachusetts.
<PAGE> 5
Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
FALCON CABLE MEDIA, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON CABLEVISION, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON COMMUNITY CABLE, L.P.
FALCON COMMUNITY VENTURES I
LIMITED PARTNERSHIP
FALCON TELECABLE, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON COMMUNITY INVESTORS, L.P.
FALCON INVESTORS GROUP, LTD., A
CALIFORNIA LIMITED PARTNERSHIP
FALCON MEDIA INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP
FALCON TELECABLE INVESTORS GROUP,
A CALIFORNIA LIMITED PARTNERSHIP
FALCON TELECOM, L.P.
By FALCON HOLDING GROUP, INC., as
general partner, or general partner
of the general partner, of each of
the foregoing Restricted Companies
By ________________________________
Title:
FALCON FIRST, INC.
By ____________________________________
Title:
<PAGE> 6
ATHENS CABLEVISION, INC.
AUSABLE CABLE TV, INC.
CEDAR BLUFF CABLEVISION, INC.
DALTON CABLEVISION, INC.
EASTERN MISSISSIPPI CABLEVISION, INC.
FALCON FIRST CABLE OF NEW YORK, INC.
FALCON FIRST CABLE OF THE SOUTHEAST,
INC.
FALCON FIRST HOLDINGS, INC.
FF CABLE HOLDINGS, INC.
LAUDERDALE CABLEVISION, INC.
MULTIVISION NORTHEAST, INC.
MULTIVISION OF COMMERCE, INC.
PLATTSBURG CABLEVISION, INC.
SCOTTSBORO CABLEVISION, INC.
SCOTTSBORO TV CABLE, INC.
By
As an authorized officer of each of
the foregoing corporations
THE FIRST NATIONAL BANK OF BOSTON, as
Managing Agent under the Credit
Agreement and as Collateral Agent
under the Security Agreement
By ____________________________________
Title:
TORONTO-DOMINION (TEXAS) INC., as
Administrative Agent under the Credit
Agreement
By ____________________________________
Title:
<PAGE> 7
The foregoing Amendment No. 1 is approved
by the undersigned Lenders:
CHEMICAL BANK
By _____________________________________
Title:
CHL HIGH YIELD LOAN PORTFOLIO
(A Unit of Chemical Bank)
By _____________________________________
Title:
NATIONSBANK OF TEXAS, N.A.
By _____________________________________
Title:
BANK OF AMERICA N.T. & S.A.
By _____________________________________
Title:
THE BANK OF CALIFORNIA, N.A.
By _____________________________________
Title:
<PAGE> 8
BANK OF MONTREAL, CHICAGO BRANCH
By _____________________________________
Title:
BANQUE PARIBAS
By _____________________________________
Title:
CIBC, INC.
By _____________________________________
Title:
CORESTATES BANK, N.A.
By _____________________________________
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By _____________________________________
Title:
SOCIETE GENERALE
By _____________________________________
Title:
<PAGE> 9
UNION BANK
By _____________________________________
Title:
BARCLAYS BANK PLC
By _____________________________________
Title:
CHASE MANHATTAN BANK
By _____________________________________
Title:
THE SUMITOMO BANK, LIMITED
By _____________________________________
Title:
By _____________________________________
Title:
THE FUJI BANK, LIMITED LOS ANGELES AGENCY
By _____________________________________
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
LOS ANGELES AGENCY
By _____________________________________
Title:
<PAGE> 10
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By _____________________________________
Title:
SENIOR DEBT PORTFOLIO
By BOSTON MANAGEMENT AND
RESEARCH, as investment advisor
By ______________________________
Title:
MEESPIERSON, N.V.
By _____________________________________
Title:
SUNTRUST BANK, CENTRAL FLORIDA,
N.A.
By _____________________________________
Title:
<PAGE> 11
UNION BANK OF CALIFORNIA, N.A.
By _____________________________________
Title:
<PAGE> 12
EXHIBIT 8.1
Add to Credit Agreement Exhibit 8.1 in Alphabetical Order:
<TABLE>
<CAPTION>
Jurisdiction of Chief Executive Office and Partners and
Name Organization Chief Place of Business Other Names Business Jurisdiction Percentage Ownership
- ---- ------------ ----------------------- ----------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
Falcon Telecom, L.P. California 10900 Wilshire Boulevard Falcon Cable TV California FHGLP - 99%
Fifteenth Floor
Los Angeles, CA 90024 Falcon Telecable
Investors Group,
a California
limited
Partnership - 1%
</TABLE>
- PAGE -
<PAGE> 13
EXHIBIT 11.1
LENDER PERCENTAGE INTERESTS
<TABLE>
<CAPTION>
Revolving Lender Maximum Principal Amount Percentage
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Interest
The First National Bank of Boston $ 10,000,000 3.225806452%
Chemical Bank 20,000,000 6.451612904
Toronto-Dominion (Texas) Inc. 20,000,000 6.451612904
*CIBC, Inc. 11,000,000 3.548387097
*Credit Lyonnais Cayman Island Branch 23,000,000 7.419354839
NationsBank of Texas, N.A 20,000,000 6.451612904
*Bank of America, N.T. & S.A 23,000,000 7.419354839
*Bank of Montreal, Chicago Branch 20,000,000 6.451612904
CoreStates Bank, N.A 15,000,000 4.838709678
*Union Bank of California, N.A 34,000,000 10.967741935
*Banque Paribas 17,000,000 5.483870967
*Societe Generale 24,000,000 7.741935484
Chase Manhattan Bank 10,000,000 3.225806451
The Sumitomo Bank, Limited 15,000,000 4.838709677
Fuji Bank, Limited 15,000,000 4.838709677
Long-Term Credit Bank of Japan 15,000,000 4.838709677
Meespierson, N.V 8,000,000 2.580645161
SunTrust Bank, Central Florida, N.A 10,000,000 3.225806452
---------------------------------------------
TOTAL REVOLVING LOAN $310,000,000 100%
<CAPTION>
Term Lender Maximum Principal Amount Percentage
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Interest
The First National Bank of Boston $ 3,000,000 2.400000000%
CHL High Yield Portfolio 6,000,000 4.800000000
Toronto-Dominion (Texas) Inc. 6,000,000 4.800000000
*CIBC, Inc. 12,000,000 9.600000000
NationsBank of Texas, N.A 6,000,000 4.800000000
*Union Bank of California, N.A 4,000,000 3.200000000
*Banque Paribas 6,000,000 4.800000000
Barclays Bank PLC 10,000,000 8.000000000
Chase Manhattan Bank 5,000,000 4.000000000
The Sumitomo Bank, Limited 5,000,000 4.000000000
Van Kampen American Capital 38,000,000 30.400000000
Senior Debt Portfolio 22,000,000 17.600000000
Meespierson, N.V 2,000,000 1.600000000
---------------------------------------------
TOTAL TERM LOAN $125,000,000 100%
</TABLE>
* Co-Agent
- PAGE -
<PAGE> 14
April 26, 1996
The Lenders who are parties to the
Credit Agreement described below
c/o The First National Bank of Boston,
as Managing Agent
100 Federal Street
Boston, MA 02110
Ladies and Gentlemen:
This opinion is being furnished to you pursuant to Section 4.2 of
Amendment No. 1 dated April 26, 1996 (the "Amendment") which amends certain
provisions of the Credit Agreement dated as of December 28, 1995 (the "Credit
Agreement"), among Falcon Cablevision, a California limited partnership, Falcon
Cable Media, a California limited partnership, Falcon Community Cable, L.P., a
Delaware limited partnership, Falcon Community Ventures I Limited Partnership, a
California limited partnership, Falcon Telecable, a California limited
partnership, Falcon First, Inc., a Delaware corporation and its Subsidiaries,
Falcon Media Investors Group, a California limited partnership, Falcon Investor
Group, Ltd., a California limited partnership, Falcon Community Investors, L.P.,
a California limited partnership, Falcon Telecable Investors Group, a California
limited partnership (collectively, along with Falcon Telecom, L.P., a California
limited partnership, the "Restricted Companies"), and each of you (collectively,
the "Banks"). Terms defined in the Credit Agreement as amended by the Amendment
(the "Amended Credit Agreement") and not otherwise defined herein are used
herein with the meanings so defined.
We are counsel for each of the Restricted Companies, Falcon Holding
Group, L.P., a Delaware limited partnership ("FHGLP"), and Falcon Holding Group,
Inc., a California corporation ("Falcon Group"). The Restricted Companies,
FHGLP, The Investor Group Companies and Falcon Group are hereinafter sometimes
referred to collectively as the "Companies". We have acted as counsel for the
Companies in connection with the preparation, execution and delivery of the
Amendment.
<PAGE> 15
April 26, 1996
Page 2
We have examined the Amendment and such other documents, certificates
and papers and have made such examination of law and such investigation of fact
as we have deemed necessary to enable us to render the opinions expressed below.
We have also relied upon covenants contained in and made pursuant to the
Amendment and the Amended Credit Agreement as to the application of the proceeds
of the loans made pursuant to the Amendment and the Amended Credit Agreement,
and on matters of fact (other than facts constituting conclusions of law)
contained in the Amendment and Amended Credit Agreement.
In rendering this opinion, we point out that our opinion is limited to
matters of law of the state of California, the United States of America and the
Delaware Revised Uniform Limited Partnership Act, and we express no opinion as
to the laws of any other states or jurisdictions.
We call your attention to the fact that the Amendment, the Amended
Credit Agreement, the Security Agreement, the Subordination Agreement, the
Contribution Agreement and the Notes each provides that it is to be governed by
and construed in accordance with the laws (other than the conflict of laws
rules) of The Commonwealth of Massachusetts, and we are of the opinion that a
California court or a federal court sitting in California would, under conflict
of laws principles observed by the courts of California, give effect to such
provisions. We have assumed that none of such agreements or instruments is
inconsistent with or repugnant to Massachusetts law. If, however, a court of
competent jurisdiction were to determine that the Amendment, the Credit
Agreement, the Security Agreement, the Subordination Agreement, the Contribution
Agreement or the Notes should be governed and construed in accordance with the
laws (other than the conflict of laws rules) of California, our opinions
expressed in Paragraphs 4, 5, 6, 7, 8, 9 and 10 below would remain unchanged.
For the purposes of this opinion we have assumed that you have all
requisite power and authority and have taken all necessary corporate action to
enter into the Amendment and to effect the transactions contemplated thereby.
You have not asked us to opine upon the application to you or the Agent's
authority to do so of any federal or state law or regulation, except as provided
in Paragraph 15 below.
Based on the foregoing, we are of the opinion that:
<PAGE> 16
April 26, 1996
Page 3
1. Each of the Restricted Companies is a duly organized and validly
existing limited partnership (or, in the case of Falcon First, Inc. and its
Subsidiaries, corporations) in good standing under the laws of the jurisdiction
in which it is organized with partnership (or corporate) powers adequate for the
execution, delivery and performance of the Amendment and the Amended Credit
Agreement. Said powers may be exercised on behalf of the Restricted Companies
(other than Falcon First, Inc. and its Subsidiaries) by Falcon Group, the
managing general partner or the managing general partner of its managing general
partner, as the case may be, and by the officers of the Restricted Companies so
authorized by Falcon Group pursuant to their partnership agreements. Said powers
may be exercised on behalf of Falcon First, Inc. and its Subsidiaries by the
officers of each respective corporation so authorized by the Board of Directors
of each such corporation.
2. FHGLP is a duly organized and validly existing limited partnership
in good standing under the laws of the State of Delaware with partnership powers
adequate for the execution, delivery and performance, in its capacity as a
general partner of the Restricted Companies (other than Falcon First, Inc. and
its Subsidiaries), of the Amendment and the Amended Credit Agreement.
3. Falcon Group is a duly organized and validly existing corporation in
good standing under the laws of the State of California with corporate powers
adequate for the execution, delivery and performance, in its capacity as general
partner of FHGLP in FHGLP's capacity as a general partner of the Restricted
Companies (other than Falcon First, Inc. and its Subsidiaries), and in its
capacity as a general partner of the Investor Group Companies in the Investor
Group Companies' capacity as a general partner of the Borrowers (other than
Falcon First, Inc.), of the Amendment and the Amended Credit Agreement.
4. The Amendment has been duly authorized, executed and delivered on
behalf of each of the Restricted Companies, and is the legal, valid and binding
obligation of each of the Restricted Companies and (subject to the
qualifications stated in the paragraphs following Paragraph 15 hereof) is
enforceable against the Restricted Companies in accordance with its terms.
5. The Amended Credit Agreement is the legal, valid and binding
obligation of the Restricted Companies and (subject to the
<PAGE> 17
April 26, 1996
Page 4
qualifications stated in the paragraphs following Paragraph 15 hereof) is
enforceable against the Restricted Companies in accordance with its terms.
6. The Subordination Agreement is the legal, valid and binding
obligation of Falcon Telecom, L.P. (and subject to the qualifications stated in
the paragraphs following Paragraph 15 hereof) is enforceable against it in
accordance with its terms.
7. Each of the Notes issued by Falcon Telecom, L.P. has been duly
authorized, executed and delivered by Falcon Telecom, L.P., and constitutes the
legal, valid and binding obligations of Falcon Telecom, L.P. and (subject to the
qualifications stated in the paragraphs following Paragraph 15 hereof) is
enforceable against Falcon Telecom, L.P. in accordance with its terms.
8. The Contribution Agreement is the legal, valid and binding
obligation of Falcon Telecom, L.P. and (subject to the qualifications stated in
the paragraphs following Paragraph 15 hereof) is enforceable against Falcon
Telecom, L.P. in accordance with its terms.
9. The Security Agreement is the legal, valid and binding obligation of
Falcon Telecom, L.P. and (subject to the qualifications stated in the paragraphs
following Paragraph 15 hereof) is enforceable against Falcon Telecom, L.P. in
accordance with its terms.
10. The incurrence of the Credit Obligations has been duly authorized
by Falcon Telecom, L.P. and the Credit Obligations outstanding on the date
hereof and evidenced by the Notes issued by Falcon Telecom, L.P. constitute the
legal, valid and binding obligations of Falcon Telecom, L.P. and (subject to the
qualifications stated in the paragraphs following Paragraph 15 hereof) are
enforceable against Falcon Telecom, L.P. in accordance with their terms.
11. Falcon Telecom, L.P. has executed certain financing statements
furnished to you regarding the Credit Security for filing in California. The
description of the Credit Security set forth in such financing statements is
adequate to perfect a security interest under the Uniform Commercial Code as in
effect in California in all such Credit Security which can be perfected by
filing thereunder. Assuming such financing statements have been
<PAGE> 18
April 26, 1996
Page 5
duly filed with the proper filing officer or officers in California and all fees
and taxes with respect thereto have been paid, your security interest in the
Credit Security owned by Falcon Telecom, L.P. within California which can be
perfected by filing is so perfected, except that no opinion is expressed as to
the perfection of your security interest in Credit Security constituting
fixtures, and we call you attention to the fact that your security interest in
certain Credit Security may not be perfected by filing. We also call your
attention to (a) the necessity of filing continuation statements from time to
time under the Uniform Commercial Code; (b) the fact that under certain
circumstances described in Section 9-306 of the Uniform Commercial Code, the
rights of a secured party to enforce a perfected security interest in the
proceeds of collateral may be limited; (c) the fact that under certain
circumstances described in Sections 9-307 and 9-308 of the Uniform Commercial
Code buyers or purchasers of collateral may take the same free of the security
interest created by the Amended Credit Agreement; and (d) the fact that Section
552 of the Bankruptcy Code limits the extent to which property acquired by a
debtor after the commencement of a case may be subject to a lien resulting from
any security agreement entered into by the Debtor before the commencement of the
case.
12. Falcon Telecom, L.P. is not in violation of any term or provision
of (a) its Charter or By-laws, or (b) to the best of our knowledge, any law,
statute or governmental regulation, or (c) to the best of our knowledge, any
Franchise, license, judgment, decree, order, agreement, indenture or other
instrument applicable to it of which we have knowledge. The execution and
delivery of the Amendment and the Notes by Falcon Telecom, L.P. and Falcon
Telecom, L.P. becoming a party to the Amended Credit Agreement, the Security
Agreement, the Subordination Agreement and the Contribution Agreement, and
compliance by Falcon Telecom, L.P. with the terms of the Amended Credit
Agreement, the Security Agreement, the Subordination Agreement, the Contribution
Agreement and the Notes applicable to it, does not and will not conflict with or
result in any breach or violation of, or constitute a default under, any term or
provision of (a) the Charter or By-laws of Falcon Telecom, L.P., or (b) to the
best of our knowledge, any governmental license, judgment, decree, order,
agreement, indenture or other instrument applicable to Falcon Telecom, L.P. of
which we have knowledge, or (c) any federal or California law, statute or
regulation or (d) the Delaware Revised Uniform Limited Partnership Agreement.
<PAGE> 19
April 26, 1996
Page 6
13. There is no action, proceeding or investigation pending or
threatened of which we have knowledge which places in question the validity or
enforceability of the Amendment, the Amended Credit Agreement, the Security
Agreement, the Subordination Agreement, the Contribution Agreement or the Notes.
14. No consent or approval of any trustee or holder of any Indebtedness
or other obligations of any of the Companies, and, under the existing provisions
of law, no approval or authorization or other action by any governmental
authority, is required to be obtained by any of the Companies that has not been
obtained in connection with the execution, delivery and performance of the
Amendment or the Amended Credit Agreement.
15. The making of the loans by you pursuant to the Amended Credit
Agreement does not contravene Regulation U of the Board of Governors of the
Federal Reserve System as in effect on the date hereof.
Our opinion that the Amendment, the Amended Credit Agreement, the Notes
issued by Falcon Telecom, L.P., the Security Agreement, the Contribution
Agreement, the Credit Obligations and the Subordination Agreement are
enforceable in accordance with their respective terms is subject to: (i)
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law). In addition, we advise you that a California
court may not strictly enforce certain covenants contained in the Amended Credit
Agreement or allow acceleration of the due dates of the Credit Obligations if it
concludes that such enforcement or acceleration would be unreasonable under the
then existing circumstance and might not give effect to any provisions providing
for increased interest rates for nonpayment of principal or interest. In our
opinion, however, acceleration in accordance with the Amended Credit Agreement
would be available if an Event of Default occurred as a result of a material
breach of a material covenant, contained in the Amended Credit Agreement or
related Credit Obligations and, if a California court were to conclude that a
provision for increased interest was unenforceable, the basic interest rate
would still be recoverable.
<PAGE> 20
April 26, 1996
Page 7
This opinion is limited to the matters expressly stated herein and no
opinion is implied or may be inferred beyond the matters expressly stated
herein.
This opinion is delivered by the undersigned to the addressees, and
only the addressees and their special counsel, Ropes & Gray, shall be entitled
to rely thereon.
Very truly yours,
WEINSTEIN, BOLDT, RACINE,
HALFHIDE & CAMEL
Professional Corporation
<PAGE> 1
EXHIBIT 10.33
================================================================================
FALCON HOLDING GROUP, L.P.
FALCON HOLDING GROUP, INC.
RESTATED
SUBORDINATION AGREEMENT
DATED AS OF MARCH 26, 1993
AS RESTATED AS OF DECEMBER 28, 1995
AUSA LIFE INSURANCE COMPANY, INC.
MONY LIFE INSURANCE COMPANY OF AMERICA
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Definitions, etc........................................................................... 1
1.1 Reference to Agreements; Definitions.............................................. 1
1.1.1 "Consolidated Holding L.P. Annualized
Operating Cash Flow"........................................... 2
1.1.2 "Consolidated Holding, L.P. Net Income"......................... 2
1.1.3 "Consolidated Holding, L.P. Operating
Cash Flow"..................................................... 3
1.1.4 "Consolidated Holding, L.P. Total Debt"......................... 3
1.1.5 "Financial Officer"............................................. 3
1.1.6 "Holder of Subordinated Indebtedness"........................... 4
1.1.7 "Obligor"....................................................... 4
1.1.8 "Parent Companies".............................................. 4
1.1.9 "Reorganization"................................................ 4
1.1.10 "Senior Indebtedness"........................................... 4
1.1.11 "Subordinated Indebtedness"..................................... 4
1.1.12 "Subsidiaries".................................................. 5
2. Subordination Covenants.................................................................... 5
2.1 Subordination..................................................................... 5
2.2 Restricted Payments............................................................... 5
2.3 Reorganization.................................................................... 5
2.4 Specific Powers in Reorganization................................................. 6
2.5 Payments Held in Trust............................................................ 6
2.6 No Security....................................................................... 6
2.7 Restrictions on Remedies.......................................................... 7
2.8 Restrictions on Acceleration...................................................... 7
2.9 Payment in Full................................................................... 7
2.10 Effect of Provisions.............................................................. 7
2.11 Further Assurances................................................................ 7
2.12 Legend............................................................................ 8
2.13 Financial Statements.............................................................. 8
2.14 Subordination by the Purchasers................................................... 8
3. Representations and Warranties............................................................. 8
3.1 Organization and Business......................................................... 8
3.2 Financial Statements.............................................................. 8
3.3 Enforceability; No Legal Obstacle to
Agreements........................................................................ 9
4. General Covenants.......................................................................... 9
4.1 Preservation of Corporate Existence, Etc. ........................................ 10
4.2 Taxes and Other Charges; Accounts Payable. ....................................... 10
4.2.1 Taxes and Other Charges......................................... 10
4.2.2 Accounts Payable................................................ 10
4.3 Financial Statements and Reports.................................................. 10
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C> <C>
4.3.1 Annual Reports.................................................. 10
4.3.2 Quarterly Reports............................................... 11
4.3.3 Other Information............................................... 12
4.3.4 Notice of Material Litigation; Notice
of Defaults, etc................................................ 12
4.4 Merger and Consolidation.......................................................... 12
4.5 Restrictions on Financing Debt.................................................... 13
4.6 No Cash Payments on Senior Subordinated Debt...................................... 13
4.7 Transactions with Affiliates...................................................... 13
4.8 Senior Subordinated Debt Amendments and
Waivers........................................................................... 14
4.9 Certain Consents.................................................................. 14
5. Information Regarding the Obligors......................................................... 14
6. Continuing Agreement, etc.................................................................. 14
7. Waivers; Powers, etc....................................................................... 15
7.1 Specific Performance.............................................................. 15
7.2 Consent to Note Agreements and Guaranty
Agreements........................................................................ 15
7.3 Power to Modify, etc.............................................................. 15
7.4 No Subrogation.................................................................... 16
8. Transfers; Successors and Assigns.......................................................... 16
8.1 Transfers......................................................................... 16
8.2 Successors and Assigns............................................................ 16
9. Notices.................................................................................... 16
10. Defeasance................................................................................. 17
11. Limited Recourse Against Partners.......................................................... 17
12. Venue; Service of Process.................................................................. 17
13. WAIVER OF JURY TRIAL....................................................................... 17
14. General.................................................................................... 18
</TABLE>
-ii-
<PAGE> 4
FALCON HOLDING GROUP, L.P.
FALCON HOLDING GROUP, INC.
RESTATED
SUBORDINATION AGREEMENT
This Restated Subordination Agreement (the "Agreement"), dated as of
March 26, 1993 as restated as of December 28, 1995, is among Falcon Holding
Group, L.P., a Delaware limited partnership ("Holding, L.P."), Falcon Holding
Group, Inc., a California corporation ("Holding, Inc."), certain Subsidiaries
(as defined herein) of Holding, L.P. and Holding, Inc. set forth on the
signature pages hereof and AUSA Life Insurance Company, Inc. and MONY Life
Insurance Company of America (the "Purchasers").
WHEREAS, certain of the parties hereto entered into a Subordination
Agreement dated as of March 26, 1993 (the "Initial Agreement"); and
WHEREAS, the parties desire to enter into this Restated Subordination
Agreement to reflect that certain Subsidiaries of Holding, L.P. have entered
into a new Bank Credit Agreement and that additional amendments have been
entered into with respect to the Telecable Note Agreement (as defined below) and
the Cablevision Note Agreement (as defined below).
NOW, THEREFORE, the parties agree that the Initial Agreement is hereby
amended and restated in its entirety as follows:
1 . DEFINITIONS, ETC.
.1 REFERENCE TO AGREEMENTS; DEFINITIONS. Reference is made to:
(a) the Note Purchase and Exchange Agreement dated as of September
15, 1988 among Falcon Cablevision ("Cablevision"), a California limited
partnership, The Mutual Life Insurance Company of New York ("Mutual of New
York"), MONY Life Insurance Company of America ("MONY") and MONY Legacy Life
Insurance Company, which agreement has been heretofore amended,including a Ninth
Amendment to Note Purchase and Exchange Agreement dated as of December 28, 1995
(as so amended, the "Cablevision Note Agreement");
(b) the Note Purchase and Exchange Agreement dated as of October 21,
1991 among Falcon Telecable ("Telecable"), a California limited partnership,
Mutual of New York and MONY, as amended by a Third Amendment to Note Purchase
and Exchange
<PAGE> 5
Agreement dated as of December 28, 1995 (as so amended, the "Telecable Note
Agreement"); and
(c) two separate restated Guaranty Agreements (the "Guaranty
Agreements"), each dated as of March 29, 1993 as restated as of December 28,
1995 and each made by the Guarantors set forth therein. The Guaranty Agreements,
respectively, guarantee the obligations arising under the Cablevision Note
Agreement and the Telecable Note Agreement.
The Telecable Note Agreement and the Cablevision Note Agreement are
collectively referred to herein as the "Note Agreements". The Purchasers hold
all of the Notes issued and outstanding under the Note Agreements. The
obligations under the Note Agreements and the Guaranty Agreements are referred
to herein as the "Obligations".
Except as the context otherwise explicitly requires, (i) the
capitalized term "Section" refers to sections of this Agreement, (ii) references
to a particular Section shall include all subsections thereof and (iii) the word
"including" shall be construed as "including without limitation". Capitalized
terms defined in the Note Agreements are used herein with the meanings so
defined. Certain other capitalized terms used in this Agreement shall have the
meanings specified below:
.2 "CONSOLIDATED HOLDING L.P. ANNUALIZED OPERATING CASH FLOW" means
the product of Consolidated Holding, L.P. Operating Cash Flow multiplied by four
(4).
.3 "CONSOLIDATED HOLDING, L.P. NET INCOME" means, for any period,
the net income (or loss) of Holding, L.P. and its Subsidiaries determined in
accordance with GAAP on a Consolidated basis (giving pro forma effect to the
results of operations for such period of any Person or other business acquired
by Holding, L.P. and its Subsidiaries; provided, however, that Consolidated
Holding, L.P. Net Income shall not include:
(a) the income (or loss) of any Person (other than a Wholly
Owned Subsidiary (as defined in the Bank Credit Agreement) of Holding, L.P. and
Holding, Inc.) in which any of Holding, L.P. and its Subsidiaries has an
ownership interest; provided, however, that Consolidated Holding, L.P. Net
Income shall be reduced by the aggregate amount of all investments, regardless
of the form thereof, made by any of Holding, L.P. or its Subsidiaries in such
Person for the purpose of funding any deficit or loss of such Person;
(b) all amounts included in computing such net income (or loss)
in respect of the write-up of any asset or the
2
<PAGE> 6
retirement of any indebtedness at less than face value after December 31, 1994;
(c) extraordinary and nonrecurring gains or losses;
(d) the income of any Subsidiary of Holding, L.P. (other than
a Restricted Company) to the extent the payment of such income in the form of a
Distribution or repayment of Indebtedness to Holding, L.P. is not permitted,
whether on account of any Charter or By-law restriction, any agreement,
instrument, deed or lease or any law, statute, judgment, decree or governmental
order, rule or regulation applicable to such Subsidiary or otherwise; and
(e) any after tax gains or losses attributable to the
retained surplus assets of any Plan.
.4 "CONSOLIDATED HOLDING, L.P. OPERATING CASH FLOW" means for the
period of three consecutive months then most recently ended, the total of (a)
Consolidated Holding, L.P. Net Income plus (b) all amounts deducted in computing
such Consolidated Holding, L.P. Net Income in respect of:
(i) depreciation, amortization and other charges that are not
expected to be paid in cash;
(iii) interest on Consolidated Holding, L.P. Total Debt
(including payments in the nature of interest under Capitalized Leases
and Interest Rate Protection Agreements);
(v) federal (but not state or local) taxes based upon or
measured by income; and
(iv) other non-cash charges;
minus (c) revenues of Holding, L.P. that are not expected to be
received in cash within the next twelve months to the extent included
in calculating Consolidated Holding, L.P. Net Income.
.5 "CONSOLIDATED HOLDING, L.P. TOTAL DEBT" means, at any date, all
Financing Debt of Holding, L.P. and its Subsidiaries on a Consolidated basis
minus the lesser of (a) cash and Cash Equivalents of Holding, L.P. and its
Subsidiaries (as defined in the Bank Credit Agreement) on a Consolidated basis
in accordance with GAAP or (b) $1,250,000 minus convertible debentures
originally
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<PAGE> 7
issued by Holding, Inc. (to the extent assumed by Holding, L.P.) to Hellman &
Friedman in an amount not exceeding $5,000,000.
.6 "FINANCIAL OFFICER" means the chief financial officer, treasurer
or corporate controller of Holding, Inc. in its capacity as the managing general
partner of each Investor Group Company, in such Investor Group Company's
capacity as the managing general partner of a borrower under the Bank Credit
Agreement (or other specified Person) or a vice president whose primary
responsibility is for the financial affairs of Holding, Inc. (or other specified
Person) in such capacity, all of whose incumbency and signatures have been
certified to the Administrative Agent by an appropriate attesting officer of
Holding, Inc. (or other specified Person).
.7 "HOLDER OF SUBORDINATED INDEBTEDNESS" means: (a) Holding, L.P.,
(b) Holding, Inc. and (c) each Person becoming a party to this Agreement
pursuant to Section 8.1.
.8 "OBLIGOR" means Cablevision, Telecable and each other Person
obligated to the Purchasers under a Guaranty Agreement.
.9 "PARENT COMPANIES" means each of Holding, L.P. and Holding, Inc.
.10 "REORGANIZATION" means any voluntary or involuntary dissolution,
winding-up, total or partial liquidation or reorganization or restructuring,
whether by judicial proceedings or otherwise, or bankruptcy, insolvency,
receivership or other statutory or common law proceedings or arrangements,
including any proceeding under Title 11 of the Bankruptcy Code or any similar
law of any other jurisdiction, involving the Obligors or any guarantor of the
Subordinated Indebtedness or any of their present or future Subsidiaries (as
defined in the Bank Credit Agreement) or the readjustment of the respective
liabilities of the Obligors or any such other Person or any assignment for the
benefit of creditors or any marshaling of the assets or liabilities of the
Obligors or any such other Person.
.11 "SENIOR INDEBTEDNESS" means: (a) the principal of, and premium,
if any, on any indebtedness of the Obligors to any Purchaser under the Note
Agreements or the Guaranty Agreements, including the indebtedness evidenced by
the Notes; (b) all renewals, extensions, restructuring, refinancings and
refundings of Senior Indebtedness as defined in clause (a) above; (c) all fees,
costs, expenses, indemnities and other obligations payable under Note Agreements
or the Guaranty Agreements, or otherwise with respect to Senior Indebtedness as
defined in clauses (a) and (b)
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<PAGE> 8
above, accrued to the date of payment, whether before or after the institution
by or against the Obligors of proceedings under Title 11 of the Bankruptcy Code;
and (d) all interest arising on or with respect to Senior indebtedness as
defined in clauses (a), (b) and (c) above accrued to the date of payment,
whether before or after the institution by or against the Obligors of a
Reorganization.
.12 "SUBORDINATED INDEBTEDNESS" means: (a) the principal of and
premium, if any, and interest, fees, expenses, indemnities and other obligations
arising on or with respect to all indebtedness of any Obligor to any Parent
Company, including indebtedness owed by the Borrowers under the Bank Credit
Agreement to Holding, L.P. described in Section 7.6.14 of the Bank Credit
Agreement, (b) all obligations of any Obligor to pay management fees to any
Parent Company or to reimburse any Parent Company for expenses or services, (c)
all obligations of any Obligor to issue securities upon conversion of or in
exchange for any Subordinated Indebtedness as defined in clauses (a) or (b)
above, (d) other investments by any Parent Company in the Obligors with required
redemption, repurchase, interest or dividend obligations of the Obligors and (e)
any and all claims, damages and liabilities of any nature whatsoever arising
hereunder or with respect to any Subordinated Indebtedness as defined in clauses
(a), (b), (c) and (d) above which the Holder of Subordinated Indebtedness may
now or hereafter have against any Obligors.
.13 "SUBSIDIARIES" means each of Falcon Cable Media, a California
limited partnership, Falcon Cablevision, a California limited partnership,
Falcon Community Cable, L.P., Falcon Community Ventures I Limited Partnership,
Falcon Telecable, a California limited partnership, Falcon Community Investors,
L.P., Falcon Investors Group, Ltd., a California limited partnership, Falcon
Media Investors Group, a California limited partnership, Falcon Telecable
Investors Group, a California limited partnership, Athens Cablevision, Inc.,
Ausable Cable TV, Inc., Cedar Bluff Cablevision, Inc., Dalton Cablevision, Inc.,
Eastern Mississippi Cablevision, Inc., Falcon First Cable of New York, Inc.,
Falcon First Cable of the Southeast, Inc., Falcon First Holdings, Inc., FF Cable
Holdings, Inc., Lauderdale Cablevision, Inc., Multivision Northeast, Inc.,
Multivision of Commerce, Inc., Plattsburg Cablevision, Inc., Scottsboro
Cablevision, Inc. and Scottsboro TV Cable, Inc.
2 . SUBORDINATION COVENANTS. The Obligors and each Holder of Subordinated
Indebtedness covenants that, until all of the Senior Indebtedness is paid in
full, each will comply with such of the following provisions as are applicable
to it:
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<PAGE> 9
.1 SUBORDINATION. To the extent and in the manner provided in this
Agreement, the payment of any Subordinated Indebtedness shall be expressly
subordinated and junior in right of payment to the prior payment in full of all
Senior Indebtedness, and the Subordinated Indebtedness is hereby subordinated as
a claim against the Obligors, any guarantor of the Subordinated Indebtedness or
any of their respective assets to the prior payment in full of the Senior
Indebtedness, in each case whether such claim be (a) in the ordinary course of
business or (b) in the event of any Reorganization.
.2 RESTRICTED PAYMENTS. The Obligors will not make, and no Holder of
Subordinated Indebtedness will receive, any payment of any Subordinated
Indebtedness, whether in cash, securities or other property or by way of
conversion, exchange or set-off or otherwise, and no such payment shall become
due; provided, however, so long as immediately before and after giving effect
thereto no Event of Default exists, that the Obligors may make Distributions
permitted by Section 7.10 of the Bank Credit Agreement (as incorporated into the
Note Agreements) to any Holder of Subordinated Indebtedness.
.3 REORGANIZATION. During the existence of any Reorganization, all
Senior Indebtedness shall first be paid in full before any payment is made on
account of any Subordinated Indebtedness, and in any such proceedings seeking to
effect a Reorganization any payment or distribution of any kind or character,
whether in cash or property or securities, which may be payable or deliverable
in respect of any Subordinated Indebtedness shall be paid or delivered directly
to the Purchasers for application to payment of the Senior Indebtedness, until
all such Senior Indebtedness shall have been paid in full.
.4 SPECIFIC POWERS IN REORGANIZATION. In any proceedings with respect
to a Reorganization, until all Senior Indebtedness shall have been paid in full,
each Holder of Subordinated Indebtedness irrevocably authorizes the Purchasers:
(a) To prove and enforce any claims on the Subordinated Indebtedness
owed by any Obligors to any Holder or Subordinated Indebtedness either in the
Purchasers' name or in the name of such Holder of Subordinated Indebtedness as
the attorney-in-fact of such Holder of Subordinated Indebtedness;
(b) to accept and receive for any payment or distribution made with
respect to any such Subordinated Indebtedness and to apply such payment or
distribution to the payment of the Senior Indebtedness;
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<PAGE> 10
(c) To vote claims comprising any Subordinated Indebtedness and to
accept or reject on behalf of such Holder of Subordinated Indebtedness any plan
proposed in connection with any Reorganization; and
(d) To take any and all action and to execute any and all
instruments reasonably necessary to effectuate the foregoing either in the
Purchasers' name or in the name of such Holder of Subordinated Indebtedness as
the attorney-in-fact of such Holder of Subordinated Indebtedness.
.5 PAYMENTS HELD IN TRUST. If, notwithstanding the foregoing, any
payment or distribution of the assets of the Obligors of any kind or character
in respect of the Subordinated Indebtedness (other than payments permitted by
Section 2.2) shall be received, by set-off or otherwise, by any Holder of
Subordinated Indebtedness before all Senior Indebtedness then outstanding is
paid in full, such payment or distribution and the amount of any such set-off
shall be held in trust by such Holder of Subordinated Indebtedness and promptly
paid over to the Purchasers (who shall have the right to convert any such assets
into cash in a commercially reasonable manner) for application (including the
application of such cash and cash proceeds) to the payment of all Senior
Indebtedness remaining unpaid until all such Senior Indebtedness shall have been
paid in full, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
.6 NO SECURITY. The Obligors shall not give, and no Holder of
Subordinated Indebtedness shall demand or receive, any security, direct or
indirect, for any Subordinated Indebtedness.
.7 RESTRICTIONS ON REMEDIES. No Holder of Subordinated Indebtedness
shall, without the Purchasers' prior written consent, accelerate the maturity
of, or institute proceedings to enforce, any Subordinated Indebtedness
notwithstanding any provision to the contrary contained in any Subordinated
Indebtedness or in any agreement or instrument relating thereto. Without
limiting the generality of the foregoing sentence, no Holder of Subordinated
Indebtedness shall, without the Purchasers' prior written consent commence or
join with any other creditor or creditors of the Obligors in commencing any
proceeding against any of the Obligors seeking to effect a Reorganization of any
of the Obligors or any of their property.
.8 RESTRICTIONS ON ACCELERATION. Notwithstanding any contrary provision
of any Subordinated Indebtedness or of any agreement or instrument relating
thereto, (a) no Subordinated Indebtedness shall become or be declared to be due
and payable
7
<PAGE> 11
prior to the date on which the Senior Indebtedness becomes or is declared to be
due and payable and (b) if any Senior Indebtedness shall have become or been
declared to be due and payable prior to its stated maturity, the Subordinated
Indebtedness shall become immediately due and payable.
.9 PAYMENT IN FULL. For the purposes of this Agreement, no Senior
Indebtedness shall be deemed to have been paid in full unless the holder thereof
shall have received and have been permitted to retain cash equal to the amount
thereof then outstanding and such Senior Indebtedness shall have been fully
indefeasibly discharged.
.10 EFFECT OF PROVISIONS. The provisions hereof as to subordination are
solely for the purpose of defining the relative rights of the holders of Senior
Indebtedness on the one hand and the Holders of Subordinated Indebtedness on the
other hand, and such provisions shall not impair as between the Obligors and any
Holder of Subordinated Indebtedness the obligation of the Obligors, which is
unconditional and absolute, to pay to such Holder of Subordinated Indebtedness
the principal of any Subordinated Indebtedness owed by any Obligors to such
Holder of Subordinated Indebtedness and interest thereon, and all other amounts
in respect thereof, nor shall any such provisions prevent any Holder of
Subordinated Indebtedness from exercising all remedies otherwise permitted by
applicable law or under the terms of such Subordinated Indebtedness upon a
default thereunder, except to the extent set forth in this Agreement.
.11 FURTHER ASSURANCES. The Obligors and each Holder of Subordinated
Indebtedness, for itself and its successors and assigns as Holders of
Subordinated Indebtedness, covenant to execute and deliver to the Purchasers
such further instruments and to take such further action as the Purchasers may
at any time or times reasonably request in order to carry out the provisions and
intent of this Agreement.
.12 LEGEND. The Obligors and each Holder of Subordinated Indebtedness,
for itself and its successors and assigns as Holders of Subordinated
Indebtedness, covenant to cause each instrument or certificate representing or
evidencing any of the Subordinated Indebtedness to have affixed upon it a legend
in substantially the following form:
"This instrument is subject to the Restated Subordination Agreement
restated as of December 28, 1995 as from time to time in effect, among
the maker, the payee, AUSA Life Insurance Company, Inc. and MONY Life
Insurance Company of America, which among other things,
8
<PAGE> 12
subordinates the maker's obligations hereunder to the prior payment of
certain obligations of the maker to the holders of Senior Indebtedness
as defined therein."
.13 FINANCIAL STATEMENTS. Each Holder of Subordinated Indebtedness and
each Obligor shall cause any financial statement describing or listing or
otherwise reflecting the existence of any indebtedness included in the
Subordinated Indebtedness to indicate the existence of such Subordinated
Indebtedness consistent with GAAP.
.14 SUBORDINATION BY THE PURCHASERS. The Purchasers acknowledge and
confirm that the Senior Indebtedness described herein is, pursuant to the terms
of the Note Agreements and the Guaranty Agreements, subject and subordinate to
the Senior Debt, as defined in the Note Agreements and the Guaranty Agreements.
All rights granted herein to the Purchasers shall, to the extent applicable, be
subject and subordinate to similar rights granted under separate agreements to
the holders of Senior Debt.
3 . REPRESENTATIONS AND WARRANTIES. In order to induce the Purchasers
to consent to the transactions contemplated by the Bank Credit Agreement
and to amend the Note Agreements, each Parent Company hereby represents
and warrants that:
.1 ORGANIZATION AND BUSINESS. Holding, L.P. is a duly organized and
validly existing limited partnership, in good standing under the laws of
Delaware, and Holding, Inc. is a duly organized and validly existing
corporation, in good standing under the laws of the State of California, in each
case with all partnership or corporate power and authority necessary to (a)
enter into and perform this Agreement and (b) own its properties and carry on
the business now conducted or proposed to be conducted by it. Each Parent
Company has taken all partnership or corporate action required to execute,
deliver and perform this Agreement. Certified copies of the partnership
agreement or Charter and By-laws, as the case may be, of each Parent Company
have been previously delivered to the Purchasers and are correct complete.
.2 FINANCIAL STATEMENTS. Holding, L.P. has previously furnished to the
Purchasers copies of the Consolidated balance sheets of Holding, L.P. and
certain of its Subsidiaries for the years ended December 31, 1993 and 1994, the
Consolidated statements of earnings, changes in partners' equity and cash flows
for the years then ended, and the unaudited balance sheet of Holding, L.P. and
certain of its Subsidiaries as at September 30, 1995, and the separate unaudited
statements of earnings, changes in partners' equity and cash flows of Holding,
L.P. and certain of its Subsidiaries for the nine (9) month period then ended.
Such
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<PAGE> 13
financial statements have been prepared in accordance with GAAP (subject, in the
case of the unaudited statements, to year-end audit adjustments and the absence
of footnotes) and fairly present the financial condition of the Persons covered
thereby at the date thereof and the results of their operations for the years
covered thereby. Holding, L.P. does not have any known material contingent
liabilities which are not referred to in such financial statements.
.3 ENFORCEABILITY; NO LEGAL OBSTACLE TO AGREEMENTS. This Agreement
constitutes the legal, valid and binding obligation of each Parent Company,
enforceable against such Person in accordance with its terms. Neither the
execution and delivery by either Parent Company of this Agreement, nor the
consummation of any transaction referred to in or contemplated by this
Agreement, nor the fulfillment of the terms hereof or thereof, has constituted
or resulted, or will constitute or result in:
(a) Any breach or termination of the provisions of any agreement,
instrument, deed or lease to which either Parent Company is a party or by which
either Parent Company is bound;
(b) the violation of any law, statute, judgment, decree or
governmental order, rule or regulation applicable to either Parent Company;
(c) The creation under any agreement, instrument, deed or lease of
any Lien upon any of the assets of either Parent Company; or
(d) Any redemption, retirement or other repurchase obligation of
either Parent Company under any partnership agreement, Charter, By-law,
agreement, instrument, deed or lease.
No approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by either Parent Company in connection with the execution,
delivery and performance of this Agreement, or the transactions contemplated
hereby.
4 . GENERAL COVENANTS. Each Parent Company covenants that, until all
of the Obligations shall have been paid in full, it will comply with the
following provisions:
.1 PRESERVATION OF CORPORATE EXISTENCE, ETC. Each Parent Company will
at all times preserve and keep in full force and effect its legal existence,
rights and franchises.
.2 TAXES AND OTHER CHARGES; ACCOUNTS PAYABLE.
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<PAGE> 14
.1 TAXES AND OTHER CHARGES. Each Parent Company will duly pay and
discharge, or cause to be paid and discharged, before the same shall become in
arrears, all taxes, assessments and other governmental charges imposed upon such
Parent Company and its properties, sales or activities, or upon the income or
profits therefrom, as well as all claims for labor, materials or supplies which
if unpaid might by law become a Lien upon any of its property; provided,
however, that any such tax, assessment, charge, or claim need not be paid if the
validity or amount thereof shall at the time be contested in good faith by
appropriate proceedings (or if all such unpaid taxes, assessments, charges or
claims do not exceed $100,000 in the aggregate) and if such Parent Company
shall, in accordance with GAAP, have set aside on its books adequate reserves
with respect thereto; and provided, further, that such Parent Company will pay
or bond all such taxes, assessments, charges or other governmental claims
immediately upon the commencement of proceedings to foreclose any Lien which may
have attached as security therefore (except to the extent such proceedings have
been dismissed or stayed).
.2 ACCOUNTS PAYABLE. Each Parent Company will promptly pay when due, or
in conformity with customary trade terms, all other Indebtedness incident to the
operations of such Parent Company; provided, however, that any such Indebtedness
need not be paid if the validity or amount thereof shall at the time be
contested in good faith and if such Parent Company shall, in accordance with
GAAP, have set aside on its books adequate reserves with respect thereto.
.3 FINANCIAL STATEMENTS AND REPORTS. Holding, L.P. will maintain a
system of accounting in which full and correct entries will be made of all
transactions in relation to its business and affairs in accordance with GAAP.
The fiscal year of Holding, L.P. will end on December 31 in each year.
.1 ANNUAL REPORTS. Holding, L.P. will furnish to the Purchasers as
soon as available, and in any event within ninety (90) days after the end of
each fiscal year, the Consolidated and Consolidating balance sheet of Holding,
L.P. and its Subsidiaries as at the end of such fiscal year, the Consolidated
and Consolidating statements of earnings, changes in partners' equity and cash
flows of Holding, L.P. and its Subsidiaries for such fiscal year (all in
reasonable detail), and together with comparative figures for the preceding
fiscal year all accompanied by:
(a) Unqualified reports of Ernst & Young, LLP (or, if they
cease to be auditors of Holding, L.P., independent certified public accountants
of recognized national standing
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reasonably satisfactory to the Purchasers), to the effect that they have audited
such Consolidated financial statements in accordance with generally accepted
auditing standards and that such Consolidated financial statements present
fairly, in all material respects, the financial position of Holding, L.P. and
its Subsidiaries at the dates thereof and the results of their operations for
the periods covered thereby in conformity with GAAP.
(b) The statement of such accountants that they have caused
this Agreement to be reviewed and that in the course of their audit of Holding,
L.P. and its Subsidiaries no facts have come to their attention that cause them
to believe that any default exists hereunder and in particular that they have no
knowledge of any default under Section 4 or, if such is not the case, specifying
such default and the nature thereof. This statement is furnished by such
accountants with the understanding that the examination of such accountants
cannot be relied upon to give such accountants knowledge of any such default
except as it relates to accounting or auditing matters within the scope of their
audit.
(c) a certificate of a Financial Officer of Holding, L.P. to
the effect that such officer has caused this Agreement to be reviewed and has no
knowledge of any default hereunder, or if such officer has such knowledge,
specifying such default and the nature thereof, and what action the Parent
Companies have taken, are taking or propose to take with respect thereto.
(d) In the event of a material change in GAAP after the date
hereof, Computations, certified by a Financial Officer of Holding, L.P.,
reconciling the financial statements referred to above with financial statements
prepared in accordance with GAAP as applied to the other covenants in Section 4
and related definitions.
(e) Computations demonstrating, as of the end of such fiscal
year, compliance with Section 7.10.4 of the Bank Credit Agreement (as
incorporated into the Note Agreements) and Section 4.5.
.2 QUARTERLY REPORTS. Holding, L.P. will furnish to the Purchasers
as soon as available and, in any event, within forty-five (45) days after the
end of each of the first three fiscal quarters of each fiscal year, the
internally prepared Consolidated balance sheet of Holding, L.P. and its
Subsidiaries as of the end of such fiscal quarter and the Consolidated
statements of earnings, changes in partners' equity and cash flows of Holding,
L.P. and its Subsidiaries for such fiscal quarter and for the portion of the
fiscal year then ending (all in reasonable detail),
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together with comparative figures for the same period in the preceding fiscal
year, all accompanied by:
(a) A certificate signed by a Financial Officer of Holding,
L.P. to the effect that such financial statements have been prepared in
accordance with GAAP and present fairly, in all material respects, the financial
position of Holding, L.P. and its Subsidiaries covered thereby at the dates
thereof and the results of their operations for the periods covered thereby,
subject only to normal year-end audit adjustments and the addition of footnotes.
(b) In the event of a material change in GAAP after the date
hereof, computations, certified by a Financial Officer of Holding, L.P.,
reconciling the financial statements referred to above with financial statements
prepared in accordance with GAAP as applied to the other covenants in Section 5
and related definitions.
(c) Computations demonstrating, as of the end of such fiscal
quarter, compliance with Section 7.10.4 of the Bank Credit Agreement (as
incorporated into the Note Agreements) and Section 4.5.
(d) A certificate signed by a Financial Officer of Holding,
L.P. to the effect that such officer has caused this Agreement to be reviewed
and has no knowledge of any default hereunder, or if such officer has such
knowledge, specifying such default and the nature thereof and what action the
Parent Companies have taken, are taking or propose to take with respect thereto.
.3 OTHER INFORMATION. From time to time upon request of any authorized
officer of either Purchaser, the Parent Companies will furnish to the Purchasers
such other information regarding the business, affairs and condition, financial
or otherwise, of the Parent Companies as such officer may reasonably request.
The authorized officers and representatives of either Purchaser shall have the
right during normal business hours to examine the books and records of the
Parent Companies and to make copies, notes and abstracts therefrom, for the
purpose of verifying the accuracy of the reports delivered by the Parent
Companies pursuant to this Section 4.3 or otherwise and ascertaining compliance
with this Agreement.
.4 NOTICE OF MATERIAL LITIGATION; NOTICE OF DEFAULTS, ETC. The Parent
Companies will promptly furnish to the Purchasers notice of the occurrence of
any litigation or any administrative or arbitration proceeding to which either
Parent Company may hereafter become a party which may involve any material risk
of any material final judgment or liability not adequately
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<PAGE> 17
covered by insurance or which may otherwise result in a Material Adverse Change
(as defined in the Bank Credit Agreement), and notices by any lenders, trustees
or investors of any defaults, acceleration of time for payment or special
prepayments with respect to any other indebtedness of either Parent Company.
.4 MERGER AND CONSOLIDATION. The Parent Companies will not merge or
enter into a consolidation; provided, however, that Holding, L.P. may convert to
a successor corporation that would not result in an Event of Default immediately
after such succession and that enters into assumption agreements with respect to
this Agreement reasonably satisfactory to the Purchasers in all respects.
.5 RESTRICTIONS ON FINANCING DEBT. Neither Parent Company shall create,
incur, assume or otherwise become or remain liable with respect to any Financing
Debt (other than notes evidencing PIK Interest Payments, Holding, L.P. Senior
Subordinated Notes and Financing Debt outstanding on the date hereof and
reflected on the pro-forma balance sheet referred to in Section 3.2 above)
unless:
(a) prior to the incurrence of any such Financing Debt, the Parent
Companies shall have delivered to the Purchasers a certificate signed by a
Financial Officer of Holding, L.P. demonstrating that on a pro-forma basis
(after giving effect to the incurrence of such Financing Debt) Consolidated
Holding, L.P. Total Debt shall not on the date on which such Financing Debt is
to be incurred exceed the percentage indicated in the table below of
Consolidated Holding L.P. Annualized Operating Cash Flow as of the end of the
most recent fiscal quarter for which financial statements have been (or are
required to have been) furnished to the Purchasers in accordance with Section
4.3.2.
<TABLE>
<CAPTION>
Date Percentage
---- ----------
<S> <C>
Prior to June 30, 1998 850%
June 30, 1998 through June 29, 1999 800%
June 30, 1999 through June 29, 2000 750%
June 30, 2000 through June 29, 2001 700%
June 30, 2001 and thereafter 650%
</TABLE>
(b) prior to the incurrence of any such Financing Debt that requires
either cash interest payments at a rate exceeding 14% per annum or principal
repayments or sinking fund payments prior to the final maturity date of the
Notes, the Parent Companies shall
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<PAGE> 18
have received the prior written consent of the Purchasers to the incurrence of
such Financing Debt.
.6 NO CASH PAYMENTS ON SENIOR SUBORDINATED DEBT. Prior to September 30,
2000, neither Parent Company shall make any cash payment of principal of or
interest on the Senior Subordinated Notes issued by Holding, L.P.
.7 TRANSACTIONS WITH AFFILIATES. Each Parent Company shall not effect
any transaction with any Affiliate of a Restricted Company (other than any
Restricted Company) on a basis less favorable to such Parent Company than would
be the case if such transaction had been effected with a non-Affiliate.
.8 SENIOR SUBORDINATED DEBT AMENDMENTS AND WAIVERS. Neither Parent
Company shall permit any amendment or waiver with respect to the Holding, L.P.
Senior Subordinated Notes.
.9 CERTAIN CONSENTS. Holding, L.P. shall proceed in good faith to
obtain all franchise and other consents to the transactions contemplated by the
Bank Credit Agreement which consents have not been obtained on or prior to the
Third Amendment Closing Date.
5 . INFORMATION REGARDING THE OBLIGORS. Each Holder of Subordinated
Indebtedness expressly acknowledges and agrees that such Holder of Subordinated
Indebtedness has made such investigation as it deems desirable of the risks
undertaken by such holder in entering into this Agreement and is fully satisfied
that it understands all such risks. Each Holder of Subordinated Indebtedness
waives any obligation which may now or hereafter exist on the part of the
Purchasers or any holder of any Senior Indebtedness to inform any Holder of
Subordinated Indebtedness of the risks being undertaken by entering into this
Agreement or of any changes in such risks and, from and after the date hereof,
each Holder of Subordinated Indebtedness undertakes to keep itself informed of
such risks and any changes therein. Each Holder of Subordinated Indebtedness
expressly waives (except to the extent prohibited by applicable law which cannot
be waived) any duty which may now or hereafter exist on the part of the
Purchasers or any holder of any Senior Indebtedness to disclose to such Holder
any matter related to the business, operations, character, collateral, credit or
condition (financial or otherwise) or prospects of any of the Obligors whether
now or hereafter known by any Purchaser. Each Holder of Subordinated
Indebtedness represents, warrants and agrees that it assumes sole responsibility
for obtaining from the Obligors all information concerning the Obligations and
all other information as to the Obligors and their properties or management
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<PAGE> 19
or anything relating to any of the above as it deems necessary or desirable.
6 . CONTINUING AGREEMENT, ETC. This Agreement shall be a continuing
agreement, shall be irrevocable and shall remain in full force and effect until
the indefeasible payment in full of the Senior Indebtedness then outstanding in
accordance with the terms thereof. No action which the holders of the Senior
Indebtedness or any Obligors may take or refrain from taking with respect to the
Senior Indebtedness, including any amendments thereto, shall affect the
provisions of this Agreement or the obligations of the Parent Companies or any
Holder of Subordinated Indebtedness hereunder. No right of the Purchasers or any
present or future holder of any of the Senior Indebtedness shall at any time be
prejudiced or impaired by any act or failure to act on the part of the Parent
Companies or by any act or failure to act, in good faith, by any Purchaser or
any such holder, or by any noncompliance by the Parent Companies with the terms
of this Agreement, regardless of any knowledge thereof which any Purchaser or
any such holder may have or otherwise be charged with.
7 . WAIVERS; POWERS, ETC.
.1 SPECIFIC PERFORMANCE. The Purchasers are authorized to demand
specific performance of this Agreement at any time when the Parent Companies or
any Holder of Subordinated Indebtedness shall have failed to comply with any
provision hereof applicable to it, and each of them irrevocably waives any
defense based on the adequacy of a remedy at law which might be asserted as a
bar to the remedy of specific performance hereof in any action brought therefor
by the Purchasers.
.2 CONSENT TO NOTE AGREEMENTS AND GUARANTY AGREEMENTS. The Parent
Companies and each Holder of Subordinated Indebtedness acknowledge receipt from
the Obligors of a correct and complete copy of the Note Agreements and Guaranty
Agreements as in effect as of the date hereof, and consent to all of the
provisions of the Note Agreements and Guaranty Agreements as in effect as of
such date and agree that their consent is not required for any amendments,
modifications or waivers of the provisions thereof.
.3 POWER TO MODIFY, ETC. Each Parent Company and each Holder of
Subordinated Indebtedness grants, to the extent permitted by applicable law that
cannot be waived, the Purchasers full power, in their sole discretion, without
notice to or consent by any Holder of Subordinated Indebtedness and without in
any way affecting the subordination of the Subordinated Indebtedness provided in
this Agreement.
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<PAGE> 20
.1 To waive compliance with any Event of Default under, and to
consent to any amendment or change or any terms of, the Note Agreements or the
Guaranty Agreements (each as from time to time in effect);
.2 To grant one or more extensions or renewals of the Obligations
(for any period, no matter how long), and any other indulgence with respect
thereto and to effect any total or partial release (by operation of law or
otherwise), discharge, compromise or settlement with respect to the obligations
of the Obligors in respect of the Obligations, whether or not rights against the
Obligors under this Agreement are reserved in connection therewith;
.3 To take security in any form for the Obligations and to consent
to the addition to or the substitution, exchange, release, failure to perfect or
any other disposition of, and to deal in any other manner with, to the extent
permitted by applicable law that cannot be waived, all or part of any property
which may from time to time secure the Obligations whether or not the property,
if any, received upon the exercise of such power shall be of a character or
value the same as or different from the character or value of any property
disposed of, and to obtain, modify or release any present or future guarantees
of the Obligations and to proceed against any such guarantees in any order; and
.4 To collect or liquidate any of the Obligations in any manner or
to refrain from collecting or liquidating any of the Obligations.
.4 NO SUBROGATION. Until the Obligations have been indefeasibly paid in
full, each Parent Company hereby agrees with the Purchasers that it waives all
rights of reimbursement, subrogation, contribution, offset and other claims
against the Obligors arising by contract or operation of law in connection with
any payment made or required to be made by such Parent Company under this
Agreement.
8 . TRANSFERS; SUCCESSORS AND ASSIGNS.
.1 TRANSFERS. No Holder of Subordinated Indebtedness will sell, assign,
transfer or otherwise dispose of any Subordinated Indebtedness except to another
Person which shall have entered into this Agreement with the Purchasers.
.2 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure
to the benefit of the Purchasers and their successors and assigns and shall be
binding upon the Obligors and
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<PAGE> 21
the Holders of Subordinated Indebtedness and their respective successors and
assigns.
9 . NOTICES. Except as otherwise specified in this Agreement, any notice
required to be given pursuant to this Agreement shall be given in writing. Any
notice, demand or other communication in connection with this Agreement shall be
deemed to be given if given in writing (including telex, telecopy (confirmed by
telephone or writing) or similar teletransmission) addressed as provided below
(or to the addressee at such other address as the addressee shall have specified
by notice actually received by the addressor), and if either (a) actually
delivered in fully legible form to such address(evidenced in the case of a telex
by receipt of the correct answerback) or (b) in the case of a letter, five days
shall have elapsed after the same shall have been deposited in the United Stats
mails, with first-class postage prepaid and registered or certified.
If to either Parent Company, to it at the address set forth on the
signature page hereof;
If to any Restricted Company, to it at its address set forth in the
Guaranty Agreements;
If to either Purchaser, to it at its address set forth in the Note
Agreements;
or to such other address as provided by any party hereto in writing to the other
parties hereto.
10 . DEFEASANCE. When all Obligations have been paid, performed and
determined by the Purchasers to have been indefeasibly discharged in full, this
Agreement shall terminate.
11 . LIMITED RECOURSE AGAINST PARTNERS. The remedies of the holders of the
Obligations, including any remedy which could be exercised upon the occurrence
of an Event of Default, shall be limited to the extent that none of the partners
of Holding, L.P. shall have any personal liability as a general partner or
limited partner of Holding, L.P. with respect to the Obligations, and in no
event shall any such partner be personally liable as a general partner or
limited partner for any deficiency judgment for any Obligation; provided,
however, that the provisions of this Section 11 shall not impair the ability of
any holder of any Obligation (a) to realize on the assets of any Obligor or any
of its Subsidiaries or (b) to pursue any remedy against any guarantor of the
Obligations.
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<PAGE> 22
12 . VENUE; SERVICE OF PROCESS. Each Parent Company and each Holder of
Subordinated Indebtedness, by its execution hereof:
(a) Irrevocably submits to the nonexclusive jurisdiction of the state
courts of The State of New York and to the nonexclusive jurisdiction of the
United States District Court for the District New York for the purpose of any
suit, action or other proceeding arising out of or based upon this Agreement, or
the subject matter hereof or thereof brought by the Purchasers, any holder of
Senior Indebtedness or their successors or assigns; and
(b) Waives to the extent not prohibited by applicable law, and agrees
not to assert, by way of motion, as a defense or otherwise, in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution, that such proceeding is brought in an inconvenient forum, that the
venue of such proceeding is improper, or that this Agreement, or the subject
matter hereof or thereof, may not be enforced in or by such court.
Each Parent Company and each Holder of Subordinated Indebtedness hereby agrees
that service of process by registered or certified mail, return receipt
requested, at its address specified in or pursuant to Section 9 is reasonably
calculated to give actual notice.
13 . WAIVER OF JURY TRIAL. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
THAT CANNOT BE WAIVED, EACH PARENT COMPANY AND EACH HOLDER OF SUBORDINATED
INDEBTEDNESS AND THE PURCHASERS HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND OR ACTION ARISING OUT
OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR ANY OBLIGATION OR
IN ANY WAY CONNECTED WITH THE DEALINGS OF THE PURCHASERS OR SUCH PARENT COMPANY
OR ANY HOLDER OF SUBORDINATED INDEBTEDNESS IN CONNECTION WITH ANY OF THE ABOVE,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT
OR TORT OR OTHERWISE. Each Parent Company and each Holder of Subordinated
Indebtedness acknowledges that it has been informed by the Purchasers that the
provisions of this Section 13 constitute a material inducement upon which each
of the Purchasers has relied, is relying and will rely in entering into this
Agreement, and that it has reviewed the provisions of this Section 13 with its
counsel. The Purchasers, any Parent Company or any Holder of Subordinated
Indebtedness may file an original counterpart or a copy of this Section 13 with
any court as written evidence of the consent of the Purchasers, any Parent
Company or any Holder of Subordinated Indebtedness to the waiver of their rights
to trial by jury.
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<PAGE> 23
14 . GENERAL. The headings in this Agreement are for convenience of
reference only and shall not limit, alter or otherwise affect the meaning hereof
The invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of any other term or provision hereof.
This Agreement and the other documents referred to herein constitute the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior and current understandings and agreements,
whether written or oral. This Agreement may be executed in any number of
counterparts, which together shall constitute one instrument. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER THAN THE
CONFLICT OF LAWS RULES) OF THE STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
NEXT PAGE IS SIGNATURE PAGE.]
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Each of the undersigned has caused this Agreement to be executed and
delivered by its duly authorized officer as an agreement under seal as of the
date first above written.
FALCON HOLDING GROUP, L.P.
By: FALCON HOLDING GROUP, INC.,
general partner
By______________________________
Title_________________________
FALCON CABLE TV
10900 Wilshire Boulevard
Fifteenth Floor
Los Angeles, CA 90024
FALCON HOLDING GROUP, INC.
By______________________________________
Title_________________________________
FALCON CABLE TV
10900 Wilshire Boulevard
Fifteenth Floor
Los Angeles, CA 90024
AUSA LIFE INSURANCE COMPANY, INC.
By______________________________________
Title_________________________________
MONY LIFE INSURANCE COMPANY
OF AMERICA
By______________________________________
21
<PAGE> 25
Title_________________________________
22
<PAGE> 26
FALCON CABLE MEDIA, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON CABLEVISION, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON COMMUNITY CABLE, L.P.
FALCON COMMUNITY VENTURES I
LIMITED PARTNERSHIP
FALCON TELECABLE, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON COMMUNITY INVESTORS, L.P.
FALCON INVESTORS GROUP, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
FALCON MEDIA INVESTORS GROUP,
A CALIFORNIA LIMITED PARTNERSHIP
FALCON TELECABLE INVESTORS GROUP,
A CALIFORNIA LIMITED PARTNERSHIP
By: FALCON HOLDING GROUP, INC., as
general partner, or general
partner, of each of the fore-
going Restricted Companies
By______________________________
Title_________________________
FALCON FIRST, INC.
By______________________________________
Title_________________________________
ATHENS CABLEVISION, INC.
AUSABLE CABLE TV, INC.
CEDAR BLUFF CABLEVISION, INC.
DALTON CABLEVISION, INC.
EASTERN MISSISSIPPI CABLEVISION, INC.
FALCON FIRST CABLE OF NEW YORK, INC.
FALCON FIRST CABLE OF THE SOUTHEAST,
INC.
FALCON FIRST HOLDINGS, INC.
FF CABLE HOLDINGS, INC.
LAUDERDALE CABLEVISION, INC.
MULTIVISION NORTHEAST, INC.
MULTIVISION OF COMMERCE, INC.
PLATTSBURG CABLEVISION, INC.
23
<PAGE> 27
SCOTTSBORO CABLEVISION, INC.
SCOTTSBORO TV CABLE, INC.
By______________________________________
As an authorized officer of each
of the foregoing corporations
24
<PAGE> 28
RESTATED
GUARANTY AGREEMENT
GUARANTY AGREEMENT (this "Agreement" or this "Guaranty Agreement"),
dated as of March 29, 1993, as restated as of December 28, 1995, jointly and
severally from each of FALCON TELECABLE, A CALIFORNIA LIMITED PARTNERSHIP,
FALCON CABLE MEDIA, A CALIFORNIA LIMITED PARTNERSHIP, FALCON COMMUNITY CABLE,
L.P., a Delaware limited partnership, FALCON COMMUNITY VENTURES I LIMITED
PARTNERSHIP, a California limited partnership, FALCON INVESTORS GROUP, LTD., A
CALIFORNIA LIMITED PARTNERSHIP, FALCON TELECABLE INVESTORS GROUP, A CALIFORNIA
LIMITED PARTNERSHIP, FALCON MEDIA INVESTORS GROUP, A CALIFORNIA LIMITED
PARTNERSHIP, FALCON COMMUNITY INVESTORS, L.P., a California limited partnership,
and FALCON FIRST, INC., a Delaware corporation, (together with each other Person
who is or becomes a guarantor hereunder,herein referred to individually as a
"Guarantor", and collectively, as the "Guarantors"), in favor of the AUSA LIFE
INSURANCE COMPANY, INC. (the "Purchaser", which term shall include its
successors and assigns, including, without limitation, any one or more Persons
holding any one or more of the Notes (as defined below) on or after the date
hereof).
W I T N E S S E T H:
WHEREAS, by a Note Purchase and Exchange Agreement dated as of
September 15, 1988 (as amended from time to time prior to the date hereof, the
"Old Note Purchase Agreement") by and between Falcon Cablevision, a California
limited partnership (the "Company"), and The Mutual Life Insurance Company of
New York, MONY Life Insurance Company of America and MONY Legacy Life Insurance
Company, the Company issued inter alia its 11.54% Subordinated Notes due
September 30, 1998 and such Notes were subsequently exchanged for a like
principal amount of the Company's 12% Subordinated Notes due December 31, 1995
(such notes, and any and all other notes for which such Notes, or any successor
Notes, may be substituted or exchanged pursuant to the Note Purchase Agreement
(defined below), are herein referred to as the "Notes"); and
WHEREAS, certain of the parties hereto entered into that certain
Guaranty Agreement dated March 29, 1993 (the "Original Guaranty"); and
WHEREAS, concurrently herewith, the Purchaser and the Company are
entering into that certain Ninth Amendment to Note Purchase and Exchange
Agreement, dated as of December 28, 1995 (the "Amendment"), pursuant to which,
inter alia, the Company and the Purchaser are amending certain provisions of the
Old Note Purchase Agreement (as amended by the Amendment, and as amended further
from
<PAGE> 29
time to time, the Old Note Purchase Agreement is herein referred to as the "Note
Purchase Agreement"); and
WHEREAS, concurrently with the execution and delivery of the Amendment
by the Company and the Purchaser, each of the Company, Falcon Cablevision, a
California Limited Partnership, Falcon Cable Media, a California limited
partnership, Falcon Community Cable, L.P., a Delaware limited partnership,
Falcon Community Ventures I Limited Partnership, a California limited
partnership and Falcon First, Inc., a Delaware corporation (collectively, the
"Bank Borrowers") are entering into that certain Credit Agreement (the "Bank
Credit Agreement") dated as of December 28, 1995, by and between the Company,
the other Bank Borrowers, the banks signatory thereto as lenders (the "Banks")
and The First National Bank of Boston, as managing agent; and
WHEREAS, the Old Note Purchase Agreement provides, inter alia, for a
limitation on certain actions by the Company; and
WHEREAS, in the absence of the execution and delivery of the Amendment
by the Purchaser, (i) the Company would be unable to enter into the Bank Credit
Agreement and (ii) the Banks would be unwilling to enter into the Bank Credit
Agreement with the Company and the other Bank Borrowers; and
WHEREAS, the Bank Credit Agreement will provide the Company, the other
Bank Borrowers and the Guarantors which are not Bank Borrowers access to credit
and funds in excess of the amount of credit and funds available to them in the
absence of the Bank Credit Agreement; and
WHEREAS, it is a condition precedent to the entry by the Company and
the other Bank Borrowers into the Bank Credit Agreement that the Purchaser and
the Company enter into the Amendment; and
WHEREAS, it is a condition precedent to the entry by the Purchaser and
the Company into the Amendment that the Company and the Guarantors enter into
this Agreement and guarantee the payment and performance of all obligations of
the Company arising under, or in respect of, the Notes and the Note Purchase
Agreement, as further set forth herein; and
WHEREAS, each Guarantor desires that the Purchaser enter into the
Amendment and each is willing to execute this Guaranty Agreement in order to
induce the Purchaser to do so; and
NOW, THEREFORE, in order to induce the Purchaser to enter into the
Amendment, and in consideration therefor, and in consideration of $1.00 and
other good and valuable consideration to each
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<PAGE> 30
Guarantor paid (the receipt and sufficiency of which are hereby acknowledged),
each Guarantor hereby agrees that the Original Guaranty is hereby restated in
full as follows:
1. DEFINITIONS. The capitalized terms used herein, which are defined
or referred to in Section 6 hereof, shall have the respective meanings ascribed
to them in said Section 6. All other capitalized terms used herein but not
defined herein shall have the respective meanings assigned to them within the
Note Purchase Agreement.
2. THE GUARANTY. Each Guarantor hereby irrevocably and
unconditionally, and jointly and severally with each other Guarantor,
guarantees, as and for its own debt, until final and indefeasible payment has
been made, the due and punctual payment of the principal and interest of, and
premium or Make-Whole Amount, if any, on all Notes at any time outstanding and
the due and punctual payment of all moneys payable, and all other indebtedness
owing, by the Company under the Note Purchase Agreement and all other documents
contemplated thereby (collectively, the "Indebtedness") in each case when and as
the same shall become due and payable, whether at maturity, pursuant to
mandatory or optional prepayment, by acceleration or otherwise, all in
accordance with the terms and provisions thereof; it being the intent of each
Guarantor that the guaranty set forth herein shall be a guaranty of payment and
not a guaranty of collection. Each Guarantor hereby further unconditionally,
jointly and severally with each other Guarantor, guarantees the punctual and
faithful performance, keeping, observance and fulfillment by the Company of all
duties, agreements, covenants and obligations of the Company contained in the
Notes, in the Note Purchase Agreement and the other documents to which it is a
party. In the event the Company fails to make, or before the due date thereof,
any payment to be made of any principal amount of, or interest, premium or Make-
Whole Amount (if any) on, or in respect of, the Notes or of any other amounts
due under the Notes, the Note Purchase Agreement or the other documents to which
the Company is a party, or if the Company shall fail to perform, keep, observe
or fulfill any such obligation as aforesaid in the manner provided in any one or
more of the Notes, the Note Purchase Agreement or such other documents, each
Guarantor shall cause forthwith to be paid the moneys or to be performed, kept,
observed or fulfilled each of said obligations in respect of which such failure
has occurred as if such payment or performance, as the case may be, were being
made under the Notes, the Note Purchase Agreement or such other documents, as
appropriate.
Each Guarantor does hereby waive: notice of acceptance hereof; notice
of any purchase of Notes issued under the Note Purchase Agreement or the
extension of credit from time to time given by any Purchaser to the Company and
the creation, existence
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<PAGE> 31
or acquisition of any of the Indebtedness; notice of the amount of the
Indebtedness, subject, however, to each Guarantor's right to make inquiry of the
Purchaser to ascertain the amount of the Indebtedness at any reasonable time;
notice of adverse change in the financial condition of the Company or of any
other fact which might increase any Guarantor's risk; notice of presentment for
payment, demand, protest and notice thereof as to the Notes or any other
instrument; notice of default; all defenses, offsets and counterclaims which any
Guarantor may at any time have to any claim of the Purchaser against the
Company; and all other notices and demands to which any Guarantor might
otherwise be entitled.
Each Guarantor further waives the rights by statute or otherwise to
require the Purchaser to institute suit against the Company or to exhaust its
rights and remedies against the Company or any other guarantor, each Guarantor
being bound to the payment of each and all Indebtedness whether now existing or
hereafter accruing as fully as if such Indebtedness were directly owing to the
Purchaser by each Guarantor. Each Guarantor further waives any defense arising
by reason of any disability or other defense of the Company or by reason of the
cessation from any cause whatsoever of the liability of the Company. Until all
of the Indebtedness shall have been paid in full, each Guarantor shall have no
right of subrogation, reimbursement or indemnity whatsoever and no right of
recourse to or with respect to any assets or property of the Company. Nothing
shall discharge or satisfy the liability of each Guarantor hereunder except the
full and final performance and indefeasible payment of the Indebtedness.
The Purchaser shall have, to the fullest extent permitted by law, the
right of set-off in respect of any and all credits and any and all other
property of any Guarantor, now or at any time whatsoever with, or in the
possession of, the Purchaser for any and all obligations of such Guarantor
hereunder.
Each Guarantor consents and agrees that, without notice to or by such
Guarantor and without affecting or impairing the obligations of such Guarantor
hereunder, the Purchaser may, in the manner provided in the Note, the Note
Purchase Agreement or any other documents to which any is a party, by action or
inaction, compromise or settle, extend the period of duration or the time for
the payment or discharge or performance of, or may refuse to, or otherwise not,
enforce, or may, by action or inaction, release all or any one or more parties
to, any one or more of the Notes, the Note Purchase Agreement or any other
document to which any is a party, or may grant other indulgences to the Company
in respect thereof, or may amend or modify in any manner and at any time (or
from time to time) any one or more of the Notes, the Note Purchase Agreement, or
any other such document, or may, by action or inaction, release or substitute
any one or more of the endorsers or
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<PAGE> 32
guarantors of the Indebtedness, whether parties to this instrument or not.
Each Guarantor consents and agrees that the Purchaser shall be under no
obligation to marshall any assets in favor of such Guarantor, or against or in
payment of any or all of the Indebtedness. Each Guarantor agrees to pay all
expenses incurred by the Purchaser in connection with the protection, assertion
or enforcement of its rights under this Guaranty Agreement, including, without
limitation, court costs, collection charges and reasonable attorneys' fees and
disbursements. Each Guarantor further agrees that, to the extent the Company
makes a payment or payments to the Purchaser, which payment or payments or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required, for any of the foregoing reasons or for any
other reason, to be repaid or paid over to a custodian, trustee, receiver or any
other party under any bankruptcy law or act, state or federal law, common law or
equitable cause, then, to the extent of such payment or repayment, the
obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if said payment had not been made and each
Guarantor shall be primarily liable for such obligation.
In the event that for any reason whatsoever, the Company is now or
hereafter becomes indebted to any Guarantor, such Guarantor agrees that the
amount of such indebtedness and all interest thereon shall at all times be
subordinate as to time of payment and in all other respects to all obligations
of the Company to the Purchaser which are covered by, or referred to in, this
Guaranty Agreement, and that such Guarantor shall not be entitled to enforce or
receive payment thereof until all sums then due and owing to the Purchaser shall
have been in full.
Each Guarantor agrees that the liability of such Guarantor in respect
of this Guaranty Agreement shall be immediate and shall not be contingent upon
the exercise or enforcement by the Purchaser of whatever remedies they may have
against the Company or any other guarantor hereunder or otherwise or the
enforcement of any lien or realization upon any security the Purchaser may at
any time possess or have available for its benefit or upon any action or
exercise or enforcement of any right or remedies by the Purchaser against the
Company or any other guarantor hereunder or otherwise.
The guaranty set forth herein is a primary and original obligation of
each Guarantor and is an absolute, unconditional, continuing and irrevocable
guaranty of payment and performance and shall remain in full force and effect
without respect to future changes in conditions, including change of law or any
invalidity or
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<PAGE> 33
irregularity with respect to the issuance of any obligations (including, without
limitation, the Notes) of the Company to the Purchaser, or with respect to the
execution and delivery of any agreement (including, without limitation, the
Amendment and the Note Purchase Agreement) between the Company and the
Purchaser.
The Purchaser shall have the right to seek recourse against each
Guarantor to the full extent provided for herein, and against the Company, to
the full extent provided for in the Notes and the Note Purchase Agreement. No
election to proceed in one form of action or proceeding, or against any party,
or on any obligation, shall constitute a waiver of the right of the Purchaser to
proceed in any other form of action or proceeding or against other parties
unless the Purchaser has expressly waived such right in writing. Specifically,
with without limiting the generality of the foregoing, no action or proceeding
by the Purchaser against the Company under any document or instrument evidencing
obligations of the Company to the Purchaser shall serve to diminish the
liability of any Guarantor except to the extent that the Purchaser finally and
unconditionally shall have realized payment by such action or proceeding,
notwithstanding the effect of any such action or proceeding upon such
Guarantor's right of subrogation against the Company. Each Guarantor is fully
aware of the financial condition of the Company. Each Guarantor delivers this
guaranty based solely upon its own independent investigation and in no part upon
any representation or statement of the Purchaser with respect thereto. Each
Guarantor is in a position to obtain, and hereby assumes full responsibility for
obtaining, any additional information concerning the financial condition of the
Company as such Guarantor may deem material to its obligations hereunder, and
each Guarantor is not relying upon, nor expecting, the Purchaser to furnish it
any information concerning the financial condition of the Company.
At the request of the Purchaser, each Guarantor shall, from time to
time, prepare and deliver to the Purchaser a complete and current financial
statement of such Guarantor setting forth all the assets and liabilities of such
Guarantor (and, to the extent any person other than such Guarantor has any
interest in said assets or any person other than such Guarantor is jointly
liable for any of said obligations, said matters shall be set forth in their
entirety in the financial statements) all signed by such Guarantor under oath as
being true, correct and complete.
17 . WARRANTIES, REPRESENTATIONS AND COVENANTS.
.1 WARRANTIES AND REPRESENTATIONS TRUE AND CORRECT. Each and every
warranty and representation contained in the Bank Credit Agreement with respect
to the Guarantors (whether the Guarantors are referred to therein specifically
as the "Guarantors", as the "Restricted Companies", as one or more of the
"Subsidiaries", or otherwise), is true and correct and each
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<PAGE> 34
Guarantor hereby affirms, confirms, gives and makes each and every such warranty
and representation as if set forth herein in full. Each statement contained in
the introductory and recital paragraphs of this Guaranty Agreement is accurate.
.2 ADDITIONAL WARRANTIES AND REPRESENTATIONS. Each of the Guarantors
hereby warrants, represents and covenants that:
(a) it is in its best interest and in pursuit of its partnership or
corporate purposes as an integral part of the business conducted and
proposed to be conducted by each Guarantor, and reasonably necessary and
convenient in connection with the conduct of the business conducted and
proposed to be conducted by it, to induce the Purchaser to enter into the
Amendment, which is a condition precedent to the transactions contemplated
by the Bank Credit Agreement;
(b) the credit available to such Guarantor under the Bank Credit
Agreement will directly or indirectly inure to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent consideration from the Purchaser for its guaranty and the other
undertakings and premises contained herein;
(d) it will not be rendered insolvent as a result of entering into
this Agreement;
(e) after giving effect to the transactions contemplated by this
Agreement, that certain Guaranty Agreement between the Company, the
Guarantors, MONY Life Insurance Company of America and the Purchaser of
even date herewith with respect to the 11.56% Subordinated Notes (Series A
and B) due March 31, 2001 of Falcon Telecable, a California Limited
Partnership, the Amendment and the Bank Credit Agreement, such Guarantor
will have assets having a fair saleable value in excess of the amount
required to pay its probable liability on its existing debts as they have
become absolute and matured;
(f) it has, and will have, access to adequate capital for the
conduct of its business;
(g) it has the ability to pay its debts from time to time incurred
in connection therewith as such debts mature; and
(h) it has been advised by the Company, the Purchaser and the Banks
that the Purchaser is unwilling to
7
<PAGE> 35
enter into the Amendment unless the guaranties and other undertakings
contemplated hereunder are given by it.
.3 NO AMENDMENT TO BANK CREDIT AGREEMENT; COMPLIANCE WITH COVENANTS.
(a) The Guarantors and the Company covenant, individually and
together, jointly and severally, that they will not enter into any
amendment, modification, supplement or other alteration to, or extension
of, the Bank Credit Agreement or the Pledge and Subordination Agreement
dated as of December 28, 1995 among Falcon Holding Group, L.P., Falcon
Holding Group, Inc., the Company, the Guarantors and The First National
Bank of Boston, which would materially interfere with the ability of the
Guarantors and the Company to pay the indebtedness without the written
consent of the Purchaser.
(b) Each of the Guarantors will comply, or cause the Company to
comply, with each of the covenants, terms and requirements contained in
Section 7 of the Note Purchase Agreement.
4. SUBORDINATED NATURE OF CERTAIN OBLIGATIONS. The Indebtedness
guarantied by each of the Guarantors hereunder is subordinate and junior to
"Senior Debt" (as defined in the Note Purchase Agreement), as provided in the
Note Purchase Agreement. The obligations of the Guarantors hereunder in respect
of the Indebtedness are subordinate and junior in right of payment to Senior
Debt with respect to which such Guarantors are liable, in the same manner and
with the same effect as "Subordinated Debt" (as defined in the Note Purchase
Agreement) is subordinate and junior to Senior Debt as provided in section 10 of
the Note Purchase Agreement.
5. DEFAULTS--REMEDIES.
.1 NATURE OF EVENTS. An "Event of Default" hereunder shall exist if an
"Event of Default" under, and as defined in, the Note Purchase Agreement, occurs
and is continuing.
.2 DEFAULT REMEDIES. If an Event of Default exists hereunder, then the
Purchaser (as provided in the Note Purchase Agreement) shall have certain
rights, including, without limitation, the right to declare the entire principal
(and in certain cases, premium or Make-Whole Amount) and all interest accrued
on, or payable in respect of, all the Notes then outstanding to be, and such
Notes and interest shall thereupon become, together with certain other sums as
provided in the Note
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<PAGE> 36
Purchase Agreement, forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which have been expressly waived by
the Company and each Guarantor. In any such event, the Purchaser shall have
immediate recourse to each Guarantor to the fullest extent set forth herein.
All covenants, conditions, provisions, warranties, guaranties,
indemnities and other undertakings of each Guarantor contained in this Guaranty
Agreement and in any other document to which the Purchaser and any Guarantor are
party shall be deemed cumulative to and not in derogation or substitution of any
of the terms, covenants, conditions or agreements of such Guarantor herein or
therein contained.
.3 OTHER ENFORCEMENT RIGHTS. The Purchaser may proceed to protect and
enforce this Guaranty Agreement by suit or suits or proceedings in equity, at
law or in bankruptcy, and whether for the specific performance of any covenant
or agreement herein contained or in execution or aid of any power herein granted
or for the recovery of judgment for the obligations hereby guaranteed or for the
enforcement of any other proper, legal or equitable remedy available under
applicable law.
.4 DELAY OR OMISSION; NO WAIVER. No course of dealing on the part of
the Purchaser nor any delay or failure on the part of the Purchaser to exercise
any right shall impair such right or operate as a waiver of such right or
otherwise prejudice the Purchaser's rights, powers and remedies. Every right and
remedy given by this Guaranty Agreement or by law to the Purchaser may be
exercised from time to time as often as may be deemed expedient by the
Purchaser.
.5 RESTORATION OF RIGHTS AND REMEDIES. If the Purchaser shall have
instituted any proceeding to enforce any right or remedy under this Guaranty
Agreement or under any one or more of the Notes or the Note Purchase Agreement
and such proceeding shall have been discontinued or abandoned for any reason, or
shall have been determined adversely to the Purchaser, then and in every such
case the Purchaser, the Company and each Guarantor shall, subject to any
determination in such proceeding, be restored severally and respectively to
their respective former positions hereunder and thereunder, and thereafter all
rights and remedies of the Purchaser shall continue as though no such proceeding
had been instituted.
.6 CUMULATIVE REMEDIES. No delay or omission of the Purchaser to
exercise any right or power arising from any Default or Event of Default
hereunder shall exhaust or impair any such right or power or prevent its
exercise during the continuance of such Default or Event of Default. No waiver
by the Purchaser of
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<PAGE> 37
any Default or Event of Default hereunder or under the Note Purchase Agreement,
whether such waiver be full or partial, shall extend to or be taken to affect
any subsequent Default or Event of Default hereunder or under the Note Purchase
Agreement, or to impair the rights resulting therefrom except as may be
otherwise expressly provided herein. No remedy hereunder or under any of the
Notes, the Note Purchase Agreement or any other document to which the Company or
any of the Guarantors and the Purchaser are party is intended to be exclusive of
any other remedy, but each and every remedy shall be cumulative and in addition
to any and every other remedy given hereunder or under any of the Notes, the
Note Purchase Agreement, such other documents or otherwise existing; nor shall
the giving, taking or enforcement of any or any additional security, collateral
or guaranty for the payment or performance of the Indebtedness operate to
prejudice, waive or affect the security of this Guaranty Agreement or any
rights, powers or remedies hereunder, nor shall the Purchaser be required to
first look to, enforce or exhaust any such other or additional security,
collateral or guaranties.
6. INTERPRETATION OF THIS AGREEMENT.
.1 CERTAIN DEFINITIONS. For purposes of this Guaranty Agreement,
the following terms shall have the respective meanings set forth below or
provided for in the section of this Guaranty Agreement referred to immediately
following such term (such definitions to be equally applicable to both the
singular and plural forms of the terms defined).
AGREEMENT -- preamble to this Agreement.
AMENDMENT -- third "whereas" clause hereof.
BANK BORROWERS -- fourth "whereas" clause hereof.
BANK CREDIT AGREEMENT -- fourth "whereas" clause hereof.
BANKS -- fourth "whereas" clause hereof.
COMPANY -- first "whereas" clause hereof.
DEFAULT -- an event or condition the occurrence of which would,
with the lapse of time or the giving of notice or both, become an Event of
Default.
EVENT OF DEFAULT -- Section 5.1.
EXCLUDED PERSON -- means, at any time, (a) each current or
former general or limited partner of any Guarantor,
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<PAGE> 38
(b) each current or former general or limited partner of any Person
referred to in clause (a) of this definition and (c) each partner,
director, trustee or other fiduciary, officer, employee, stockholder or
controlling Person of any Person referred to in clause (a) or (b) of this
definition.
GUARANTY AGREEMENT -- preamble to this Agreement.
GUARANTOR, GUARANTORS -- preamble to this Agreement.
INDEBTEDNESS -- Section 2 hereof.
MAKE-WHOLE AMOUNT -- has the meaning ascribed to it in the Note
Purchase Agreement.
NOTE PURCHASE AGREEMENT -- third "whereas" clause hereof.
NOTES -- first "whereas" clause hereof.
OLD NOTE PURCHASE AGREEMENT -- first "whereas" clause hereof.
PERSON -- means any individual, firm, partnership, joint
venture, corporation, association, business enterprise, trust,
Governmental Body or other entity, whether acting in an individual,
fiduciary or other capacity.
PURCHASER -- preamble to this Agreement.
SENIOR DEBT -- Section 4 hereof.
SUBORDINATED DEBT -- Section 4 hereof.
.2 HEADINGS, ETC. All headings and captions preceding the text
of the several sections hereof are intended solely for convenience of reference
and shall not constitute a part of this Guaranty Agreement nor shall they affect
its meaning, construction or effect. Each covenant contained in this Guaranty
Agreement shall be construed (absent an express contrary provision therein) as
being independent of each and every other covenant contained herein and
compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any and all other covenants.
.3 DIRECTLY OR INDIRECTLY. Where any provision in this Guaranty
Agreement refers to action to be taken by any person, or which such person is
prohibited from taking, such provision
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shall be applicable whether such action is taken directly or indirectly by such
person.
7. MISCELLANEOUS.
.1 NOTICES. Any notice or other communication required or desired
to be served, given or delivered hereunder shall be in writing, and shall be
deemed to have been validly served, given or delivered upon deposit in the
United States mails, as registered or certified mail (return receipt requested),
with proper postage prepaid and addressed to the party to be notified as
follows:
(a) if to the Guarantors, at the addresses in respect thereof
set forth on Exhibit A attached hereto; and
(b) if to the Purchaser, at:
The Mutual Life Insurance Company of New York
1740 Broadway
New York, New York 10019
Attn: MONY Capital Management Unit
and
Aegon USA Investment Management, Inc.
1111 N. Charles Street
Baltimore, MD 21201
Attn: Don Chamberlain
or to such other address as any Guarantor or any Purchaser may hereafter
designate for itself by written notice to such other person in the
manner herein prescribed.
.2 SURVIVAL; BENEFIT OF GUARANTY. All warranties, representations
and covenants made by each Guarantor herein or on any certificate or other
document or instrument delivered by it or on its behalf under this Guaranty
Agreement or the Note Purchase Agreement shall be considered to have been relied
upon by the Purchaser and shall survive the delivery to the Purchaser of the
Notes and the payment thereof regardless of any investigation made by the
Purchaser or on its behalf. All statements in any such certificate or other
instrument shall constitute warranties and representations by each Guarantor
hereunder. This Guaranty Agreement shall be binding upon each Guarantor and its
successors and assigns and inure to the benefit of and be enforceable by the
Purchaser and its respective successors and assigns. No provision of this
Guaranty Agreement shall be waived, amended, modified or supplemented except by
a written instrument consented to by the
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<PAGE> 40
party or parties against whom such waiver, amendment, modification or supplement
would be sought to be enforced.
Each Guarantor agrees to take such action as may be requested by
the Purchaser in connection with the transfer of the Notes of the Purchaser in
accordance with the requirements of the Note Purchase Agreement in connection
with providing an executed copy of this Guaranty Agreement to the new holder or
holders of such Notes, it being the intention of this provision that no
additional obligations of any Guarantor shall thereby be created but rather that
the existing obligations of the Guarantors shall be more particularly stated in
respect of one or more future holders of Notes that are the subject of this
Guaranty Agreement.
.3 GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
.4 COUNTERPARTS. This Guaranty Agreement may be executed and
delivered in any number of counterparts, each of such counterparts constituting
an original but all together one and the same Agreement.
.5 MISCELLANEOUS. Each Guarantor (to the fullest extent that it
may lawfully do so) expressly waives any claim of any nature arising out of any
right of indemnity, contribution, reimbursement or any similar right in respect
of any payment made under this Guaranty Agreement or in connection with this
Guaranty Agreement, or any claim or subrogation arising in connection with
respect to any payment made under this Guaranty Agreement, against the Company
or the estate of the Company (including liens on the property of the Company or
the estate of the Company), in each case if, and for so long as, the Company is
the subject of any proceeding brought under Title 11 of the United States Code,
or any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and further agrees that it will not file any claims against
the Company or the estate of the Company in the course of such proceeding in
respect of the rights referred to in this paragraph, and further agrees that the
Purchaser may specifically enforce the provisions of this paragraph.
.6 LIMITED RECOURSE AGAINST CERTAIN PERSONS.
(a) The remedies of the Purchaser including, without
limitation, any remedy which could be exercised upon the occurrence of
an Event of Default, shall be limited to the
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<PAGE> 41
extent that no Excluded Person shall have any personal liability hereunder as a
general partner or limited partner of any Guarantor with respect to the
indebtedness as guarantied hereunder, and in no event shall any Excluded Person
be personally liable as a general partner or limited partner for any deficiency
judgment in respect of any such obligation; provided, however, that the
provisions of this Section 7.6 shall not impair the ability of any Purchaser (i)
from proceeding against any Guarantor, (ii) from realizing on the assets of any
Guarantor or (iii) from proceeding against any general partner of any Guarantor
with respect to actions such general partner caused such Guarantor to take
involving such Guarantor's obligations under this Agreement which would
constitute fraud, gross negligence or willful misconduct by such general partner
(b) The Purchaser acknowledges and agrees that Excluded Persons
are express third party beneficiaries of this Section 7.6, and that the
provisions hereof may be enforced by any Excluded Person directly against the
Purchaser.
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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty
Agreement to be executed by their duly authorized representatives as of the date
first hereinabove mentioned.
GUARANTORS:
FALCON TELECABLE, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON CABLE MEDIA, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON COMMUNITY CABLE, L.P.
FALCON COMMUNITY VENTURES I LIMITED
PARTNERSHIP
FALCON INVESTORS GROUP, LTD., A
CALIFORNIA LIMITED PARTNERSHIP
FALCON TELECABLE INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP
FALCON MEDIA INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP
FALCON COMMUNITY INVESTORS, L.P.
By: FALCON HOLDING GROUP, INC., as
general partner, or general
partner of the general partner,
of each of the foregoing
By_____________________________
Name_________________________
Title________________________
FALCON FIRST, INC.
By_____________________________________
Name_________________________________
Title________________________________
15
<PAGE> 43
ATHENS CABLEVISION, INC.
AUSABLE CABLE TV, INC.
CEDAR BLUFF CABLEVISION, INC.
DALTON CABLEVISION, INC.
EASTERN MISSISSIPPI CABLEVISION, INC.
FALCON FIRST CABLE OF NEW YORK, INC.
FALCON FIRST CABLE OF THE SOUTHEAST,
INC.
FALCON FIRST HOLDINGS, INC.
FF CABLE HOLDINGS, INC.
LAUDERDALE CABLEVISION, INC.
MULTIVISION NORTHEAST, INC.
MULTIVISION OF COMMERCE, INC.
PLATTSBURG CABLEVISION, INC.
SCOTTSBORO CABLEVISION, INC.
SCOTTSBORO TV CABLE, INC.
By_____________________________________
As an authorized officer of each
of the foregoing corporations
ACKNOWLEDGED BY THE COMPANY:
FALCON CABLEVISION, A CALIFORNIA
LIMITED PARTNERSHIP
By: FALCON HOLDING GROUP, INC., as
general partner, or general
partner of the general partner
By_____________________________
Name_________________________
Title________________________
16
<PAGE> 44
ACKNOWLEDGED AND ACCEPTED:
AUSA LIFE INSURANCE COMPANY, INC.
By_______________________________
Name___________________________
Title__________________________
17
<PAGE> 45
EXHIBIT A
ADDRESSES OF GUARANTORS
Communications to each Guarantor should be addressed as follows:
[Name of Guarantor]
10900 Wilshire Boulevard
Fifteenth Floor
Los Angeles, CA 90024
<PAGE> 46
RESTATED
GUARANTY AGREEMENT
GUARANTY AGREEMENT (this "Agreement" or this "Guaranty Agreement"),
dated as of March 29, 1993, as restated as of December 28, 1995, jointly and
severally from each of FALCON CABLEVISION, A CALIFORNIA LIMITED PARTNERSHIP,
FALCON CABLE MEDIA, A CALIFORNIA LIMITED PARTNERSHIP, FALCON COMMUNITY CABLE,
L.P., a Delaware limited partnership, FALCON COMMUNITY VENTURES I LIMITED
PARTNERSHIP, a California limited partnership, FALCON INVESTORS GROUP, LTD., A
CALIFORNIA LIMITED PARTNERSHIP, FALCON TELECABLE INVESTORS GROUP, A CALIFORNIA
LIMITED PARTNERSHIP, FALCON MEDIA INVESTORS GROUP, A CALIFORNIA LIMITED
PARTNERSHIP, FALCON COMMUNITY INVESTORS, L.P., a California limited partnership,
and FALCON FIRST, INC., a Delaware corporation, (together with each other Person
who is or becomes a guarantor hereunder,herein referred to individually as a
"Guarantor", and collectively, as the "Guarantors"), in favor of each of AUSA
LIFE INSURANCE COMPANY, INC. and MONY LIFE INSURANCE COMPANY OF AMERICA
(collectively, the "Purchasers", which term shall include the successors and
assigns of each, including, without limitation, any one or more Persons holding
any one or more of the Notes (as defined below) on or after the date hereof).
W I T N E S S E T H:
WHEREAS, by a Note Purchase and Exchange Agreement dated as of October
21, 1991 (as amended from time to time prior to the date hereof, the "Old Note
Purchase Agreement") by and between Falcon Telecable, a California limited
partnership (the "Company"), and The Mutual Life Insurance Company of New York
and MONY Life Insurance Company of America, the Company issued its 11.56% Series
A Subordinated Notes due March 31, 2001 and its 11.56% Series B Subordinated
Notes due March 31, 2001 (collectively, as amended from time to time, such
notes, and any and all other notes for which such Notes, or any successor Notes,
may be substituted or exchanged pursuant to the Note Purchase Agreement (defined
below), are herein referred to as the "Notes"); and
WHEREAS, certain of the parties hereto entered into that certain
Guaranty Agreement dated March 29, 1993 (the "Original Guaranty"); and
WHEREAS, concurrently herewith, the Purchasers and the Company are
entering into that certain Third Amendment to Note Purchase and Exchange
Agreement, dated as of December 28, 1995 (the "Amendment"), pursuant to which,
inter alia, the Company and the Purchasers are amending certain provisions of
the Old Note Purchase Agreement (as amended by the Amendment, and as amended
further from
<PAGE> 47
time to time, the Old Note Purchase Agreement is herein referred to as the "Note
Purchase Agreement"); and
WHEREAS, concurrently with the execution and delivery of the Amendment
by the Company and the Purchasers, each of the Company, Falcon Cablevision, a
California Limited Partnership, Falcon Cable Media, a California limited
partnership, Falcon Community Cable, L.P., a Delaware limited partnership,
Falcon Community Ventures I Limited Partnership, a California limited
partnership and Falcon First, Inc., a Delaware corporation (collectively, the
"Bank Borrowers") are entering into that certain Credit Agreement (the "Bank
Credit Agreement") dated as of December 28, 1995, by and between the Company,
the other Bank Borrowers, the banks signatory thereto as lenders (the "Banks")
and The First National Bank of Boston, as managing agent; and
WHEREAS, the Old Note Purchase Agreement provides, inter alia, for a
limitation on certain actions by the Company; and
WHEREAS, in the absence of the execution and delivery of the Amendment
by the Purchasers, (i) the Company would be unable to enter into the Bank Credit
Agreement and (ii) the Banks would be unwilling to enter into the Bank Credit
Agreement with the Company and the other Bank Borrowers; and
WHEREAS, the Bank Credit Agreement will provide the Company, the other
Bank Borrowers and the Guarantors which are not Bank Borrowers access to credit
and funds in excess of the amount of credit and funds available to them in the
absence of the Bank Credit Agreement; and
WHEREAS, it is a condition precedent to the entry by the Company and
the other Bank Borrowers into the Bank Credit Agreement that the Purchasers and
the Company enter into the Amendment; and
WHEREAS, it is a condition precedent to the entry by the Purchasers and
the Company into the Amendment that the Company and the Guarantors enter into
this Agreement and guarantee the payment and performance of all obligations of
the Company arising under, or in respect of, the Notes and the Note Purchase
Agreement, as further set forth herein; and
WHEREAS, each Guarantor desires that the Purchasers enter into the
Amendment and each is willing to execute this Guaranty Agreement in order to
induce the Purchasers to do so; and
NOW, THEREFORE, in order to induce the Purchasers to enter into the
Amendment, and in consideration therefor, and in consideration of $1.00 and
other good and valuable consideration to
2
<PAGE> 48
each Guarantor paid (the receipt and sufficiency of which are hereby
acknowledged), each Guarantor hereby agrees that the Original Guaranty is hereby
restated in full as follows:
1. DEFINITIONS. The capitalized terms used herein, which are defined or
referred to in Section 6 hereof, shall have the respective meanings ascribed to
them in said Section 6. All other capitalized terms used herein but not defined
herein shall have the respective meanings assigned to them within the Note
Purchase Agreement.
2. THE GUARANTY. Each Guarantor hereby irrevocably and unconditionally,
and jointly and severally with each other Guarantor, guarantees, as and for its
own debt, until final and indefeasible payment has been made, the due and
punctual payment of the principal and interest of, and premium or Make-Whole
Amount, if any, on all Notes at any time outstanding and the due and punctual
payment of all moneys payable, and all other indebtedness owing, by the Company
under the Note Purchase Agreement and all other documents contemplated thereby
(collectively, the "Indebtedness") in each case when and as the same shall
become due and payable, whether at maturity, pursuant to mandatory or optional
prepayment, by acceleration or otherwise, all in accordance with the terms and
provisions thereof; it being the intent of each Guarantor that the guaranty set
forth herein shall be a guaranty of payment and not a guaranty of collection.
Each Guarantor hereby further unconditionally, jointly and severally with each
other Guarantor, guarantees the punctual and faithful performance, keeping,
observance and fulfillment by the Company of all duties, agreements, covenants
and obligations of the Company contained in the Notes, in the Note Purchase
Agreement and the other documents to which it is a party. In the event the
Company fails to make, or before the due date thereof, any payment to be made of
any principal amount of, or interest, premium or Make- Whole Amount (if any) on,
or in respect of, the Notes or of any other amounts due under the Notes, the
Note Purchase Agreement or the other documents to which the Company is a party,
or if the Company shall fail to perform, keep, observe or fulfill any such
obligation as aforesaid in the manner provided in any one or more of the Notes,
the Note Purchase Agreement or such other documents, each Guarantor shall cause
forthwith to be paid the moneys or to be performed, kept, observed or fulfilled
each of said obligations in respect of which such failure has occurred as if
such payment or performance, as the case may be, were being made under the
Notes, the Note Purchase Agreement or such other documents, as appropriate.
Each Guarantor does hereby waive: notice of acceptance hereof; notice
of any purchase of Notes issued under the Note Purchase Agreement or the
extension of credit from time to time given by any Purchaser to the Company and
the creation, existence
3
<PAGE> 49
or acquisition of any of the Indebtedness; notice of the amount of the
Indebtedness, subject, however, to each Guarantor's right to make inquiry of the
Purchasers to ascertain the amount of the Indebtedness at any reasonable time;
notice of adverse change in the financial condition of the Company or of any
other fact which might increase any Guarantor's risk; notice of presentment for
payment, demand, protest and notice thereof as to the Notes or any other
instrument; notice of default; all defenses, offsets and counterclaims which any
Guarantor may at any time have to any claim of any of the Purchasers against the
Company; and all other notices and demands to which any Guarantor might
otherwise be entitled.
Each Guarantor further waives the rights by statute or otherwise to
require the Purchasers to institute suit against the Company or to exhaust their
rights and remedies against the Company or any other guarantor, each Guarantor
being bound to the payment of each and all Indebtedness whether now existing or
hereafter accruing as fully as if such Indebtedness were directly owing to the
Purchasers by each Guarantor. Each Guarantor further waives any defense arising
by reason of any disability or other defense of the Company or by reason of the
cessation from any cause whatsoever of the liability of the Company. Until all
of the Indebtedness shall have been paid in full, each Guarantor shall have no
right of subrogation, reimbursement or indemnity whatsoever and no right of
recourse to or with respect to any assets or property of the Company. Nothing
shall discharge or satisfy the liability of each Guarantor hereunder except the
full and final performance and indefeasible payment of the Indebtedness.
The Purchasers shall have, to the fullest extent permitted by law, the
right of set-off in respect of any and all credits and any and all other
property of any Guarantor, now or at any time whatsoever with, or in the
possession of, any of the Purchasers for any and all obligations of such
Guarantor hereunder.
Each Guarantor consents and agrees that, without notice to or by such
Guarantor and without affecting or impairing the obligations of such Guarantor
hereunder, the Purchasers may, in the manner provided in the Note, the Note
Purchase Agreement or any other documents to which any is a party, by action or
inaction, compromise or settle, extend the period of duration or the time for
the payment or discharge or performance of, or may refuse to, or otherwise not,
enforce, or may, by action or inaction, release all or any one or more parties
to, any one or more of the Notes, the Note Purchase Agreement or any other
document to which any is a party, or may grant other indulgences to the Company
in respect thereof, or may amend or modify in any manner and at any time (or
from time to time) any one or more of the Notes, the Note Purchase Agreement, or
any other such document, or may, by action or inaction, release or substitute
any one or more of the endorsers or
4
<PAGE> 50
guarantors of the Indebtedness, whether parties to this instrument or not.
Each Guarantor consents and agrees that the Purchasers shall be under
no obligation to marshall any assets in favor of such Guarantor, or against or
in payment of any or all of the Indebtedness. Each Guarantor agrees to pay all
expenses incurred by any of the Purchasers in connection with the protection,
assertion or enforcement of their rights under this Guaranty Agreement,
including, without limitation, court costs, collection charges and reasonable
attorneys' fees and disbursements. Each Guarantor further agrees that, to the
extent the Company makes a payment or payments to any Purchaser, which payment
or payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required, for any of the foregoing
reasons or for any other reason, to be repaid or paid over to a custodian,
trustee, receiver or any other party under any bankruptcy law or act, state or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the obligation or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if said payment had not been
made and each Guarantor shall be primarily liable for such obligation.
In the event that for any reason whatsoever, the Company is now or
hereafter becomes indebted to any Guarantor, such Guarantor agrees that the
amount of such indebtedness and all interest thereon shall at all times be
subordinate as to time of payment and in all other respects to all obligations
of the Company to the Purchasers which are covered by, or referred to in, this
Guaranty Agreement, and that such Guarantor shall not be entitled to enforce or
receive payment thereof until all sums then due and owing to the Purchasers
shall have been in full.
Each Guarantor agrees that the liability of such Guarantor in respect
of this Guaranty Agreement shall be immediate and shall not be contingent upon
the exercise or enforcement by the Purchasers of whatever remedies they may have
against the Company or any other guarantor hereunder or otherwise or the
enforcement of any lien or realization upon any security any Purchaser may at
any time possess or have available for its benefit or upon any action or
exercise or enforcement of any right or remedies by any Purchaser against the
Company or any other guarantor hereunder or otherwise.
The guaranty set forth herein is a primary and original obligation of
each Guarantor and is an absolute, unconditional, continuing and irrevocable
guaranty of payment and performance and shall remain in full force and effect
without respect to future changes in conditions, including change of law or any
invalidity or
5
<PAGE> 51
irregularity with respect to the issuance of any obligations (including, without
limitation, the Notes) of the Company to any of the Purchasers, or with respect
to the execution and delivery of any agreement (including, without limitation,
the Amendment and the Note Purchase Agreement) between the Company and any one
or more of the Purchasers.
The Purchasers shall have the right to seek recourse against each
Guarantor to the full extent provided for herein, and against the Company, to
the full extent provided for in the Notes and the Note Purchase Agreement. No
election to proceed in one form of action or proceeding, or against any party,
or on any obligation, shall constitute a waiver of the right of any Purchaser to
proceed in any other form of action or proceeding or against other parties
unless such Purchaser has expressly waived such right in writing. Specifically,
with without limiting the generality of the foregoing, no action or proceeding
by any of the Purchasers against the Company under any document or instrument
evidencing obligations of the Company to any one or more of the Purchasers shall
serve to diminish the liability of any Guarantor except to the extent that such
Purchaser finally and unconditionally shall have realized payment by such action
or proceeding, notwithstanding the effect of any such action or proceeding upon
such Guarantor's right of subrogation against the Company. Each Guarantor is
fully aware of the financial condition of the Company. Each Guarantor delivers
this guaranty based solely upon its own independent investigation and in no part
upon any representation or statement of any one or more of the Purchasers with
respect thereto. Each Guarantor is in a position to obtain, and hereby assumes
full responsibility for obtaining, any additional information concerning the
financial condition of the Company as such Guarantor may deem material to its
obligations hereunder, and each Guarantor is not relying upon, nor expecting,
the Purchasers to furnish it any information concerning the financial condition
of the Company.
At the request of any of the Purchasers, each Guarantor shall, from
time to time, prepare and deliver to such Purchaser a complete and current
financial statement of such Guarantor setting forth all the assets and
liabilities of such Guarantor (and, to the extent any person other than such
Guarantor has any interest in said assets or any person other than such
Guarantor is jointly liable for any of said obligations, said matters shall be
set forth in their entirety in the financial statements) all signed by such
Guarantor under oath as being true, correct and complete.
3. WARRANTIES, REPRESENTATIONS AND COVENANTS.
.1 WARRANTIES AND REPRESENTATIONS TRUE AND CORRECT. Each and every
warranty and representation contained in the Bank Credit Agreement with respect
to the Guarantors (whether the
6
<PAGE> 52
Guarantors are referred to therein specifically as the "Guarantors", as the
"Restricted Companies", as one or more of the "Subsidiaries", or otherwise), is
true and correct and each Guarantor hereby affirms, confirms, gives and makes
each and every such warranty and representation as if set forth herein in full.
Each statement contained in the introductory and recital paragraphs of this
Guaranty Agreement is accurate.
.2 ADDITIONAL WARRANTIES AND REPRESENTATIONS. Each of the Guarantors
hereby warrants, represents and covenants that:
(a) it is in its best interest and in pursuit of its partnership or
corporate purposes as an integral part of the business conducted and
proposed to be conducted by each Guarantor, and reasonably necessary and
convenient in connection with the conduct of the business conducted and
proposed to be conducted by it, to induce the Purchasers to enter into the
Amendment, which is a condition precedent to the transactions contemplated
by the Bank Credit Agreement;
(b) the credit available to such Guarantor under the Bank Credit
Agreement will directly or indirectly inure to its benefit;
(c) by virtue of the foregoing it is receiving at least reasonably
equivalent consideration from the Purchasers for its guaranty and the other
undertakings and premises contained herein;
(d) it will not be rendered insolvent as a result of entering
into this Agreement;
(e) after giving effect to the transactions contemplated by this
Agreement, that certain Guaranty Agreement between the Company, the
Guarantors and the Purchasers of even date herewith with respect to the 12%
Subordinated Notes due December 31, 1995 of Falcon Cablevision, a
California Limited Partnership, the Amendment and the Bank Credit
Agreement, such Guarantor will have assets having a fair saleable value in
excess of the amount required to pay its probable liability on its existing
debts as they have become absolute and matured;
(f) it has, and will have, access to adequate capital for the
conduct of its business;
(g) it has the ability to pay its debts from time to time incurred
in connection therewith as such debts mature; and
7
<PAGE> 53
(h) it has been advised by the Company, the Purchasers and the
Banks that the Purchasers are unwilling to enter into the Amendment unless
the guaranties and other undertakings contemplated hereunder are given by
it.
.3 NO AMENDMENT TO BANK CREDIT AGREEMENT; COMPLIANCE WITH COVENANTS.
(a) The Guarantors and the Company covenant, individually and
together, jointly and severally, that they will not enter into any
amendment, modification, supplement or other alteration to, or extension
of, the Bank Credit Agreement or the Pledge and Subordination Agreement
dated as of December 28, 1995 among Falcon Holding Group, L.P., Falcon
Holding Group, Inc., the Company, the Guarantors and The First National
Bank of Boston, which would materially interfere with the ability of the
Guarantors and the Company to pay the indebtedness without the written
consent of the Purchasers.
(b) Each of the Guarantors will comply, or cause the Company to
comply, with each of the covenants, terms and requirements contained in
Section 7 of the Note Purchase Agreement.
4. SUBORDINATED NATURE OF CERTAIN OBLIGATIONS. The Indebtedness
guarantied by each of the Guarantors hereunder is subordinate and junior to
"Senior Debt" (as defined in the Note Purchase Agreement), as provided in the
Note Purchase Agreement. The obligations of the Guarantors hereunder in respect
of the Indebtedness are subordinate and junior in right of payment to Senior
Debt with respect to which such Guarantors are liable, in the same manner and
with the same effect as "Subordinated Debt" (as defined in the Note Purchase
Agreement) is subordinate and junior to Senior Debt as provided in section 10 of
the Note Purchase Agreement.
5. DEFAULTS--REMEDIES.
.1 NATURE OF EVENTS. An "Event of Default" hereunder shall exist if
an "Event of Default" under, and as defined in, the Note Purchase Agreement,
occurs and is continuing.
.2 DEFAULT REMEDIES. If an Event of Default exists hereunder, then
the Purchasers (as provided in the Note Purchase Agreement) shall have certain
rights, including, without limitation, the right to declare the entire principal
(and in certain cases, premium or Make-Whole Amount) and all interest accrued
on, or payable in respect of, all the Notes then
8
<PAGE> 54
outstanding to be, and such Notes and interest shall thereupon become, together
with certain other sums as provided in the Note Purchase Agreement, forthwith
due and payable, without any presentment, demand, protest or other notice of any
kind, all of which have been expressly waived by the Company and each Guarantor.
In any such event, the Purchasers shall have immediate recourse to each
Guarantor to the fullest extent set forth herein.
All covenants, conditions, provisions, warranties, guaranties,
indemnities and other undertakings of each Guarantor contained in this Guaranty
Agreement and in any other document to which any of the Purchasers and any
Guarantor are party shall be deemed cumulative to and not in derogation or
substitution of any of the terms, covenants, conditions or agreements of such
Guarantor herein or therein contained.
.3 OTHER ENFORCEMENT RIGHTS. The Purchasers may proceed to protect and
enforce this Guaranty Agreement by suit or suits or proceedings in equity, at
law or in bankruptcy, and whether for the specific performance of any covenant
or agreement herein contained or in execution or aid of any power herein granted
or for the recovery of judgment for the obligations hereby guaranteed or for the
enforcement of any other proper, legal or equitable remedy available under
applicable law.
.4 DELAY OR OMISSION; NO WAIVER. No course of dealing on the part of
any of the Purchasers nor any delay or failure on the part of any of the
Purchasers to exercise any right shall impair such right or operate as a waiver
of such right or otherwise prejudice any Purchaser's rights, powers and
remedies. Every right and remedy given by this Guaranty Agreement or by law to
the Purchasers or any of them may be exercised from time to time as often as may
be deemed expedient by any Purchaser.
.5 RESTORATION OF RIGHTS AND REMEDIES. If any Purchaser shall have
instituted any proceeding to enforce any right or remedy under this Guaranty
Agreement or under any one or more of the Notes or the Note Purchase Agreement
and such proceeding shall have been discontinued or abandoned for any reason, or
shall have been determined adversely to such Purchaser, then and in every such
case such Purchaser, the Company and each Guarantor shall, subject to any
determination in such proceeding, be restored severally and respectively to
their respective former positions hereunder and thereunder, and thereafter all
rights and remedies of such Purchaser shall continue as though no such
proceeding had been instituted.
.6 CUMULATIVE REMEDIES. No delay or omission of any of the Purchasers
to exercise any right or power arising from any
9
<PAGE> 55
Default or Event of Default hereunder shall exhaust or impair any such right or
power or prevent its exercise during the continuance of such Default or Event of
Default. No waiver by any of the Purchasers of any Default or Event of Default
hereunder or under the Note Purchase Agreement, whether such waiver be full or
partial, shall extend to or be taken to affect any subsequent Default or Event
of Default hereunder or under the Note Purchase Agreement, or to impair the
rights resulting therefrom except as may be otherwise expressly provided herein.
No remedy hereunder or under any of the Notes, the Note Purchase Agreement or
any other document to which the Company or any of the Guarantors and any of the
Purchasers are party is intended to be exclusive of any other remedy, but each
and every remedy shall be cumulative and in addition to any and every other
remedy given hereunder or under any of the Notes, the Note Purchase Agreement,
such other documents or otherwise existing; nor shall the giving, taking or
enforcement of any or any additional security, collateral or guaranty for the
payment or performance of the Indebtedness operate to prejudice, waive or affect
the security of this Guaranty Agreement or any rights, powers or remedies
hereunder, nor shall any Purchaser be required to first look to, enforce or
exhaust any such other or additional security, collateral or guaranties.
6. INTERPRETATION OF THIS AGREEMENT.
.1 CERTAIN DEFINITIONS. For purposes of this Guaranty Agreement, the
following terms shall have the respective meanings set forth below or provided
for in the section of this Guaranty Agreement referred to immediately following
such term (such definitions to be equally applicable to both the singular and
plural forms of the terms defined).
AGREEMENT -- preamble to this Agreement.
AMENDMENT -- third "whereas" clause hereof.
BANK BORROWERS -- fourth "whereas" clause hereof.
BANK CREDIT AGREEMENT -- fourth "whereas" clause hereof.
BANKS -- fourth "whereas" clause hereof.
COMPANY -- first "whereas" clause hereof.
DEFAULT -- an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of
Default.
EVENT OF DEFAULT -- Section 5.1.
10
<PAGE> 56
EXCLUDED PERSON -- means, at any time, (a) each current or former
general or limited partner of any Guarantor, (b) each current or former
general or limited partner of any Person referred to in clause (a) of this
definition and (c) each partner, director, trustee or other fiduciary,
officer, employee, stockholder or controlling Person of any Person referred
to in clause (a) or (b) of this definition.
GUARANTY AGREEMENT -- preamble to this Agreement.
GUARANTOR, GUARANTORS -- preamble to this Agreement.
INDEBTEDNESS -- Section 2 hereof.
MAKE-WHOLE AMOUNT -- has the meaning ascribed to it in the Note
Purchase Agreement.
NOTE PURCHASE AGREEMENT -- third "whereas" clause hereof.
NOTES -- first "whereas" clause hereof.
OLD NOTE PURCHASE AGREEMENT -- first "whereas" clause hereof.
PERSON -- means any individual, firm, partnership, joint venture,
corporation, association, business enterprise, trust, Governmental Body or
other entity, whether acting in an individual, fiduciary or other capacity.
PURCHASERS -- preamble to this Agreement.
SENIOR DEBT -- Section 4 hereof.
SUBORDINATED DEBT -- Section 4 hereof.
.2 HEADINGS, ETC. All headings and captions preceding the text of the
several sections hereof are intended solely for convenience of reference and
shall not constitute a part of this Guaranty Agreement nor shall they affect its
meaning, construction or effect. Each covenant contained in this Guaranty
Agreement shall be construed (absent an express contrary provision therein) as
being independent of each and every other covenant contained herein and
compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any and all other covenants.
11
<PAGE> 57
.3 DIRECTLY OR INDIRECTLY. Where any provision in this Guaranty
Agreement refers to action to be taken by any person, or which such person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such person.
7. MISCELLANEOUS.
.1 NOTICES. Any notice or other communication required or desired to
be served, given or delivered hereunder shall be in writing, and shall be deemed
to have been validly served, given or delivered upon deposit in the United
States mails, as registered or certified mail (return receipt requested), with
proper postage prepaid and addressed to the party to be notified as follows:
(a) if to the Guarantors, at the addresses in respect thereof set
forth on Exhibit A attached hereto; and
(b) if to the Purchasers or any of them, at:
The Mutual Life Insurance Company of New York
MONY Life Insurance Company of America
1740 Broadway
New York, New York 10019
Attn: MONY Capital Management Unit
and
Aegon USA Investment Management, Inc.
1111 N. Charles Street
Baltimore, MD 21201
Attn: Don Chamberlain
or to such other address as any Guarantor or any Purchaser may hereafter
designate for itself by written notice to such other person in the manner herein
prescribed.
.2 SURVIVAL; BENEFIT OF GUARANTY. All warranties, representations and
covenants made by each Guarantor herein or on any certificate or other document
or instrument delivered by it or on its behalf under this Guaranty Agreement or
the Note Purchase Agreement shall be considered to have been relied upon by the
Purchasers and shall survive the delivery to the Purchasers of the Notes and the
payment thereof regardless of any investigation made by the Purchasers or on
their behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by each Guarantor hereunder. This
Guaranty Agreement shall be binding upon each Guarantor and its successors
12
<PAGE> 58
and assigns and inure to the benefit of and be enforceable by the Purchasers and
their respective successors and assigns. No provision of this Guaranty Agreement
shall be waived, amended, modified or supplemented except by a written
instrument consented to by the party or parties against whom such waiver,
amendment, modification or supplement would be sought to be enforced.
Each Guarantor agrees to take such action as may be requested by
any of the Purchasers in connection with the transfer of the Notes of any
Purchaser in accordance with the requirements of the Note Purchase Agreement in
connection with providing an executed copy of this Guaranty Agreement to the new
holder or holders of such Notes, it being the intention of this provision that
no additional obligations of any Guarantor shall thereby be created but rather
that the existing obligations of the Guarantors shall be more particularly
stated in respect of one or more future holders of Notes that are the subject of
this Guaranty Agreement.
.3 GOVERNING LAW. THIS GUARANTY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
.4 COUNTERPARTS. This Guaranty Agreement may be executed and delivered
in any number of counterparts, each of such counterparts constituting an
original but all together one and the same Agreement.
.5 MISCELLANEOUS. Each Guarantor (to the fullest extent that it may
lawfully do so) expressly waives any claim of any nature arising out of any
right of indemnity, contribution, reimbursement or any similar right in respect
of any payment made under this Guaranty Agreement or in connection with this
Guaranty Agreement, or any claim or subrogation arising in connection with
respect to any payment made under this Guaranty Agreement, against the Company
or the estate of the Company (including liens on the property of the Company or
the estate of the Company), in each case if, and for so long as, the Company is
the subject of any proceeding brought under Title 11 of the United States Code,
or any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, and further agrees that it will not file any claims against
the Company or the estate of the Company in the course of such proceeding in
respect of the rights referred to in this paragraph, and further agrees that the
Purchasers may specifically enforce the provisions of this paragraph.
.6 LIMITED RECOURSE AGAINST CERTAIN PERSONS.
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<PAGE> 59
(a) The remedies of the Purchasers including, without limitation,
any remedy which could be exercised upon the occurrence of an Event of Default,
shall be limited to the extent that no Excluded Person shall have any personal
liability hereunder as a general partner or limited partner of any Guarantor
with respect to the indebtedness as guarantied hereunder, and in no event shall
any Excluded Person be personally liable as a general partner or limited partner
for any deficiency judgment in respect of any such obligation; provided,
however, that the provisions of this Section 7.6 shall not impair the ability of
any Purchaser (i) from proceeding against any Guarantor, (ii) from realizing on
the assets of any Guarantor or (iii) from proceeding against any general partner
of any Guarantor with respect to actions such general partner caused such
Guarantor to take involving such Guarantor's obligations under this Agreement
which would constitute fraud, gross negligence or willful misconduct by such
general partner
(b) The Purchasers acknowledge and agree that Excluded Persons are
express third party beneficiaries of this Section 7.6, and that the provisions
hereof may be enforced by any Excluded Person directly against any Purchaser.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
NEXT PAGE IS SIGNATURE PAGE.]
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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty
Agreement to be executed by their duly authorized representatives as of the date
first hereinabove mentioned.
GUARANTORS:
FALCON CABLEVISION, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON CABLE MEDIA, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON COMMUNITY CABLE, L.P.
FALCON COMMUNITY VENTURES I LIMITED
PARTNERSHIP
FALCON INVESTORS GROUP, LTD., A
CALIFORNIA LIMITED PARTNERSHIP
FALCON TELECABLE INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP
FALCON MEDIA INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP
FALCON COMMUNITY INVESTORS, L.P.
By: FALCON HOLDING GROUP, INC., as
general partner, or general
partner of the general partner,
of each of the foregoing
By_______________________________
Name___________________________
Title__________________________
FALCON FIRST, INC.
By_______________________________________
Name___________________________________
Title__________________________________
15
<PAGE> 61
ATHENS CABLEVISION, INC.
AUSABLE CABLE TV, INC.
CEDAR BLUFF CABLEVISION, INC.
DALTON CABLEVISION, INC.
EASTERN MISSISSIPPI CABLEVISION, INC.
FALCON FIRST CABLE OF NEW YORK, INC.
FALCON FIRST CABLE OF THE SOUTHEAST,
INC.
FALCON FIRST HOLDINGS, INC.
FF CABLE HOLDINGS, INC.
LAUDERDALE CABLEVISION, INC.
MULTIVISION NORTHEAST, INC.
MULTIVISION OF COMMERCE, INC.
PLATTSBURG CABLEVISION, INC.
SCOTTSBORO CABLEVISION, INC.
SCOTTSBORO TV CABLE, INC.
By_______________________________________
As an authorized officer of each
of the foregoing corporations
ACKNOWLEDGED BY THE COMPANY:
FALCON TELECABLE, A CALIFORNIA
LIMITED PARTNERSHIP
By: FALCON HOLDING GROUP, INC., as
general partner, or general
partner of the general partner
By_______________________________
Name___________________________
Title__________________________
16
<PAGE> 62
ACKNOWLEDGED AND ACCEPTED:
AUSA LIFE INSURANCE COMPANY, INC.
By______________________________
Name__________________________
Title_________________________
MONY LIFE INSURANCE COMPANY OF AMERICA
By______________________________
Name__________________________
Title_________________________
17
<PAGE> 63
EXHIBIT A
ADDRESSES OF GUARANTORS
Communications to each Guarantor should be addressed as follows:
[Name of Guarantor]
10900 Wilshire Boulevard
Fifteenth Floor
Los Angeles, CA 90024
<PAGE> 64
CERTIFICATE
FALCON HOLDING GROUP, INC., a California corporation, hereby certifies
that it is the general partner, or the general partner of the general partner,
of each of FALCON CABLE MEDIA, A CALIFORNIA LIMITED PARTNERSHIP, FALCON
COMMUNITY CABLE, L.P., a Delaware limited partnership, FALCON COMMUNITY VENTURES
I LIMITED PARTNERSHIP, a California limited partnership, FALCON INVESTORS GROUP,
LTD., A CALIFORNIA LIMITED PARTNERSHIP, FALCON TELECABLE INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP, FALCON MEDIA INVESTORS GROUP, A CALIFORNIA
LIMITED PARTNERSHIP, and FALCON COMMUNITY INVESTORS, L.P., a California limited
partnership, (collectively, the "Partnerships") and that the Partnerships are
under common ownership with Falcon First, Inc., Athens Cablevision, Inc.,
Ausable Cable TV, Inc., Cedar Bluff Cablevision, Inc., Dalton Cablevision, Inc.,
Eastern Mississippi Cablevision, Inc., Falcon First Cable of New York, Inc.,
Falcon First Cable of the Southeast, Inc., Falcon First Holdings, Inc., FF Cable
Holdings, Inc., Lauderdale Cablevision, Inc., Multivision Northeast, Inc.,
Multivision of Commerce, Inc., Plattsburg Cablevision, Inc., Scottsboro
Cablevision, Inc. and Scottsboro TV Cable, Inc. (collectively with the
Partnerships, the "Companies"), and that, as such, has access to the partnership
or corporate records of each and is familiar with the matters herein certified,
and is authorized to execute and deliver this certificate in the name and on
behalf of each of the Companies, and that:
1. This certificate is being delivered pursuant to:
(a) that certain Ninth Amendment (the "Ninth Amendment"), dated as
of December __, 1995, to that certain Note Purchase and Exchange Agreement
dated as of September 15, 1988 (as amended up to and including the date
hereof, the "Cablevision Note Purchase Agreement"), by and between Falcon
Cablevision, A California Limited Partnership ("Cablevision"), The Mutual
Life Insurance Company of New York ("MONY"), MONY Life Insurance Company of
America ("MONY Life") and MONY Legacy Life Insurance Company, pursuant to
which, inter alia, AUSA Life Insurance Company, Inc. ("AUSA") and
Cablevision are amending the Cablevision Note Purchase Agreement,
(b) that certain Third Amendment (together with the Ninth Amendment,
the "Amendments"), dated as of December __, 1995, to that certain Note
Purchase and Exchange Agreement dated as of October 21, 1991 (as amended up
to and including the date hereof, the "Telecable Note Purchase Agreement"),
by and between Falcon Telecable, A California Limited Partnership
("Telecable") and The Mutual Life Insurance Company of New
<PAGE> 65
York and MONY Life Insurance Company of America ("MONY Life"), pursuant to
which, inter alia, MONY Life and AUSA and Telecable are amending the
Telecable Note Purchase Agreement,
(c) that certain Guaranty Agreement dated as of March 29, 1993 as
restated as of December __, 1995 (the "Telecable Guaranty Agreement"), by
the Companies and Cablevision, in favor of AUSA, in respect of certain
obligations of Telecable to AUSA, and
(d) that certain Guaranty Agreement dated as of March 29, 1993 as
restated as of December __, 1995 (together with the Telecable Guaranty
Agreement, the "Guaranty Agreements"), by the Companies and Telecable, in
favor of MONY Life and AUSA, in respect of certain obligations of
Cablevision to MONY Life and AUSA.
2. The Companies are executing and delivering this certificate and the
Guaranty Agreements in order to, inter alia, induce MONY Life and AUSA to enter
into the Amendments. MONY Life and AUSA have indicated their unwillingness to
enter into the Amendments if they are not express beneficiaries of the Guaranty
Agreements. In the absence of the execution and delivery of the Amendments by
MONY Life and AUSA, certain of the Companies would be unable to enter into the
Bank Credit Agreement (as such term is defined in the Cablevision Note Purchase
Agreement) and the Companies would be unable to obtain the benefits afforded
them thereunder.
3. The warranties and representations contained in Section 8 of the
Bank Credit Agreement (as such term is defined in the Cablevision Note Purchase
Agreement) and in the Guaranty Agreements are true and correct in all material
respects on the date hereof with the same effect as though made on and as of the
date hereof. MONY Life and AUSA may rely on all such warranties and
representations as though the same were made to each of them directly. It is
understood and acknowledged by the Companies that MONY Life and AUSA is relying
on the truth and accuracy of such warranties and representations in entering
into the Amendments and consummating the transactions contemplated thereby.
4. The General Partner has executed and delivered the documents listed
below on the Companies' (which are partnerships) behalf as the general partner
or the general partner of the general partner of each, and the execution and
delivery of each such document was within its authority and authorization as
such Person (no action or approval of any of the Companies' limited partners
being required by law or by any of the Companies' partnership agreements):
2
<PAGE> 66
(a) the Amendments,
(b) the Subordination Agreement, and
(c) Guaranty Agreements.
5. An authorized officer of each of the corporate Guarantors has executed
and delivered the Guaranty Agreements and the execution and delivery of the
Guaranty Agreements was within such officers authority and authorization.
6. The transactions contemplated by the Bank Credit Agreement (as defined
in the Cablevision Note Purchase Agreement) to be completed on the Ninth
Amendment Closing Date (as defined in the Cablevision Note Purchase Agreement)
have been completed, all conditions thereto have been fulfilled, the Bank Credit
Agreement is in full force and effect and the initial funding thereunder has
been effected.
3
<PAGE> 67
IN WITNESS WHEREOF, we have executed this certificate in the name and
on behalf of each of the Companies on December __, 1995.
FALCON CABLE MEDIA, A CALIFORNIA
LIMITED PARTNERSHIP
FALCON COMMUNITY CABLE, L.P.
FALCON COMMUNITY VENTURES I
LIMITED PARTNERSHIP
FALCON INVESTORS GROUP, LTD., A
CALIFORNIA LIMITED PARTNERSHIP
FALCON TELECABLE INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP
FALCON MEDIA INVESTORS GROUP, A
CALIFORNIA LIMITED PARTNERSHIP
FALCON COMMUNITY INVESTORS, L.P.
BY: FALCON HOLDING GROUP, INC., as
general partner, or general
partner of the general partner,
of each of the foregoing
By_____________________________
Name_________________________
Title________________________
ATHENS CABLEVISION, INC.
AUSABLE CABLE TV, INC.
CEDAR BLUFF CABLEVISION, INC.
DALTON CABLEVISION, INC.
EASTERN MISSISSIPPI CABLEVISION, INC.
FALCON FIRST CABLE OF NEW YORK, INC.
FALCON FIRST CABLE OF THE SOUTHEAST, INC.
FALCON FIRST HOLDINGS, INC.
FF CABLE HOLDINGS, INC.
LAUDERDALE CABLEVISION, INC.
MULTIVISION NORTHEAST, INC.
MULTIVISION OF COMMERCE, INC.
PLATTSBURG CABLEVISION, INC.
SCOTTSBORO CABLEVISION, INC.
SCOTTSBORO TV CABLE, INC.
4
<PAGE> 68
By_________________________________
As an authorized officer of each
of the foregoing corporations
5
<PAGE> 69
FALCON TELECABLE,
A CALIFORNIA LIMITED PARTNERSHIP
CERTIFICATE
Falcon Telecable Investors Group, a California limited partnership (the
"General Partner"), hereby certifies that it is the general partner of FALCON
TELECABLE, A CALIFORNIA LIMITED PARTNERSHIP (the "Company"), and that, as such,
has access to its partnership records and is familiar with the matters herein
certified, and is authorized to execute and deliver this certificate in the name
and on behalf of the Company, and that:
1. This certificate is being delivered pursuant to:
(a) that certain Third Amendment (the "Amendment"), dated as of December
__, 1995 to that certain Note Purchase and Exchange Agreement dated as of
October 21, 1991 (as amended up to and including the date hereof, the "Note
Purchase Agreement"), by and between the Company, The Mutual Life Insurance
Company of New York and MONY Life Insurance Company of America ("MONY
Life"), pursuant to which, inter alia, MONY Life and AUSA Life Insurance
Company, Inc. (collectively, the "Purchasers") and the Company are amending
the Note Purchase Agreement, and
(b) that certain Guaranty Agreement dated as of December __, 1995 (the
"Guaranty Agreement"), by the Company and the other parties executing such
agreement as "Guarantors", in favor of the Purchasers, in respect of
certain obligations of Falcon Cablevision, a California Limited
Partnership, to the Purchasers.
The terms used in this certificate and not defined herein have the respective
meanings specified in the Note Purchase Agreement.
2. The Company is executing and delivering the Guaranty Agreement in order
to, inter alia, induce the Purchasers to enter into the Amendment. The
Purchasers have indicated their unwillingness to enter into the Amendment if
they are not express beneficiaries of the Guaranty Agreement. In the absence of
the execution and delivery of the Amendment by the Purchasers, the Company would
be unable to enter into the Bank Credit Agreement (as such term is defined in
the Note Purchase Agreement) and obtain the benefits afforded it thereunder.
3. The warranties and representations contained in Section 8 of the Bank
Credit Agreement (as such term is defined in the Note Purchase Agreement) and in
the Guaranty Agreement are true and
<PAGE> 70
correct in all material respects on the date hereof with the same effect as
though made on and as of the date hereof. Each of the Purchasers may rely on all
such warranties and representations as though the same were made to each
Purchaser directly. It is understood and acknowledged by the Company that each
Purchaser is relying on the truth and accuracy of such warranties and
representations in entering into the Amendment and consummating the transactions
contemplated thereby.
4. No Default or Event of Default exists on the date hereof or will exist
after giving effect to the transactions contemplated to be completed on the date
hereof.
5. The Company has performed and complied with all agreements and
conditions contained in the Amendment that are required to be performed or
complied with by the Company before or at the date hereof.
6. The General Partner has executed and delivered the documents listed
below on the Company's behalf as its general partner and the execution and
delivery of each such document was within its authority and authorization as
general partner (no action or approval of the Company's limited partners being
required by law or by the Company's Partnership Agreement);
(a) the Amendment,
(b) the Subordination Agreement, and
(c) the Guaranty Agreement.
7. An authorized officer of each of the corporate Guarantors has
executed and delivered the Guaranty Agreement and the execution and delivery of
the Guaranty Agreement was within the authority and authorization as such
officer.
8. The transactions contemplated by the Bank Credit Agreement (as
defined in the Note Purchase Agreement) to be completed on the Third Amendment
Closing Date (as defined in the Amendment) have been completed, all conditions
thereto have been fulfilled, the Bank Credit Agreement is in full force and
effect and the initial funding thereunder has been effected.
2
<PAGE> 71
IN WITNESS WHEREOF, we have executed this Certificate in the name and on
behalf of the Company on December __, 1995.
FALCON TELECABLE, A CALIFORNIA
LIMITED PARTNERSHIP
BY: FALCON INVESTORS GROUP, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP,
ITS GENERAL PARTNER
BY: FALCON HOLDING GROUP, INC.,
A CALIFORNIA CORPORATION,
ITS GENERAL PARTNER
By____________________________
Name________________________
Title_______________________
3
<PAGE> 72
THIRD AMENDMENT TO NOTE PURCHASE
AND EXCHANGE AGREEMENT
This THIRD AMENDMENT (this "Third Amendment") is made as of this 28th
day of December, 1995, between Falcon Telecable, a California limited
partnership (the "Company"), AUSA Life Insurance Company, Inc. and MONY Life
Insurance Company of America (the "Purchasers").
WHEREAS, by a Note Purchase and Exchange Agreement dated as of October
21, 1991, as heretofore amended, (the "Agreement"), between the Company and The
Mutual Life Insurance Company of New York and MONY Life Insurance Company of
America, the Company issued its 11.56% Series A Subordinated Notes due March 31,
2001 and its 11.56% Series B Subordinated Notes due March 31, 2001
(collectively, the "Notes"); and
WHEREAS, the Purchasers are the holders of the entire outstanding
principal amount of the Notes; and
WHEREAS, the Company and the Purchasers wish to amend the Agreement as
set forth below.
NOW, THEREFORE, in consideration of the mutual covenants set out herein,
the parties hereto agree as follows:
1. Section 7 of the Agreement is amended as follows:
a. Section 7.19 is amended to read as follows:
"7.19 Compliance With Bank Credit Agreement. The Company
shall comply, and shall cause the Restricted Companies to comply, with each of
the covenants contained in Section 7 of the Bank Credit Agreement (other than
Sections 7.5.2 and 7.15) as in effect on the Third Amendment Closing Date
(except as such covenants may be amended pursuant to Section 7.20 below, other
than those set forth in the immediately following paragraph), a copy of which is
attached hereto as Exhibit E. All references therein to Lenders, Managing Agent
and similar Persons shall be deemed, for purposes of this Agreement, to be the
holders of the Notes."
For purposes of this Agreement, the incorporated provisions of
Sections 7.5.1, 7.5.3 and 7.5.4 of the Bank Credit Agreement (as defined in
Section 3 below) are amended to read as
<PAGE> 73
follows and shall not be subject to amendment or modification without the
consent of the holders of the Notes:
"Consolidated Total Debt to Consolidated Annualized
Operating Cash Flow. Consolidated Total Debt shall not on any
date exceed the percentage indicated in the table below of
Consolidated Annualized Operating Cash Flow for the period of
three consecutive months then most recently ended for which
financial statements have been (or are required to have been)
furnished in accordance with Section 8:
<TABLE>
<CAPTION>
Date Percentage
---- ----------
<S> <C>
Third Amendment Closing Date
through June 29, 1996 615%
June 30, 1996 through
December 30, 1996 600%
December 31, 1996 through
June 29, 1997 575%
June 30, 1997 through
September 29, 1997 550%
September 30, 1997 through
June 29, 1998 540%
June 30, 1998 through
December 30, 1998 500%
December 31, 1998 through
June 29, 1999 475%
June 30, 1999 through
December 30, 1999 425%
December 31, 1999 through
June 29, 2000 400%
June 30, 2000 through
December 30, 2000 340%
December 31, 2000 and
thereafter 310%
</TABLE>
Consolidated Annualized Operating Cash Flow to
Consolidated Pro Forma Debt Service. As of the last day of each
month, Consolidated Annualized Operating Cash Flow for the
period of three consecutive months ended on such date shall
exceed 105% of Consolidated Pro Forma Debt Service for the
period of twelve consecutive months beginning immediately after
such date.
2
<PAGE> 74
Consolidated Operating Cash Flow Plus Cash and Cash
Equivalents to Consolidated Total Fixed Charges. As of the last day of
each month commencing March 31, 1999, the sum of (a) Consolidated
Operating Cash Flow for the period of twelve consecutive months ended on
such date plus (b) the lesser of (i) cash and Cash Equivalents owned by
the Restricted Companies as of such date determined in accordance with
GAAP on a Consolidated basis or (ii) $1,250,000 shall exceed 95% of
Consolidated Total Fixed Charges for such period."
2. Section 9 of the Agreement is amended as follows:
(a) Section 9.1(c) is amended to read as follows:
"(c) the Company fails to perform or observe any
covenant or condition contained in Section 2.2, Section 7.20,
Section 7.21, or, to the extent resulting from a failure to
comply with Section 7.5 through Section 7.12, inclusive, Section
7.14, Section 7.15 or Section 7.17 of the Bank Credit Agreement
(as and to the extent modified and incorporated herein);"
(b) The incorporation by reference of Sections 10.1.5,
10.1.6, 10.1.8 and 10.1.9 of the Bank Credit Agreement into Section 9 is hereby
deleted. Sections 9.1.5, 9.1.6, 9.1.8 and 9.1.9 of the Bank Credit Agreement are
incorporated into Section 9 of the Agreement by reference; such provisions are
subject to amendment or modification only with the consent of the holders of the
Notes.
3. Section 11.1 of the Agreement is amended by incorporating by
reference each of the definitions set forth in Section 1 of the Bank Credit
Agreement (as defined in this Section 11 below) as in effect on the Third
Amendment Closing Date (as defined in this Section 11 below) (except as such
definitions are amended pursuant to Section 7.20 of the Agreement) to the extent
such definitions are referred to in, or are necessary to construe or further
define, the provisions and terms of the Bank Credit Agreement incorporated
herein, provided, that, all references therein to Lenders, Administrative Agent,
Managing Agent or similar Persons shall be deemed, for purposes of this
Agreement, to be the holders of Notes. To the extent that any definition so
incorporated by reference from the Bank Credit Agreement shall conflict with, or
be inconsistent with, any existing definition in
3
<PAGE> 75
the Agreement, the definition so incorporated by reference shall prevail. In
addition, the following are added or substituted for existing definitions:
"'Bank Credit Agreement' means the Credit Agreement dated as of
December 28, 1995, among the Company and other borrowers and guarantors
thereunder, the banks signatory thereto as lenders and The First National Bank
of Boston, as managing agent, a copy of which is attached hereto as Exhibit E,
as amended, supplemented or otherwise modified from time to time, including any
amendment, supplement or modification to effect the refunding or refinancing of
the indebtedness outstanding thereunder.
'Bank Pledge Agreement' means the Pledge and Subordination
Agreement dated as of December 28, 1995 among Holding, L.P., Holding, Inc., the
Guarantors and The First National Bank of Boston, as managing agent, as amended,
supplemented or otherwise modified from time to time, including any amendment,
supplement or modification to reflect the refunding or refinancing of the
indebtedness outstanding under the Bank Credit Agreement.
'Third Amendment Closing Date' means the date described in
Section 4 of the Third Amendment.
'Third Amendment' means that certain Third Amendment to Note
Purchase and Exchange Agreement dated December 28, 1995 between the Company and
the Purchasers."
There is hereby added to the Agreement a revised Exhibit E which
shall be in the form of Exhibit A to this Third Amendment. The Bank Credit
Agreement is set forth in Exhibit A to this Third Amendment.
4. The following are conditions precedent to the effectiveness of
this Third Amendment. The date on which all such conditions are met (or waived
by the Purchasers) shall be referred to herein as the "Third Amendment Closing
Date".
(a) The transactions contemplated by the Bank Credit Agreement
to be completed on the Initial Closing Date (as defined in the Bank Credit
Agreement) shall be completed and all conditions theretofore shall have been
fulfilled and the Bank Credit Agreement shall be in full force and effect.
4
<PAGE> 76
(b) All representations and warranties set forth in Section 8 of
the Bank Credit Agreement shall be true and correct as of the Closing Date, and
each of the Purchasers shall have received a certificate from an authorized
officer of each Person making such representations stating that such
representations and warranties are true and correct, stating that each Purchaser
may rely on such representations and warranties as though the same were made to
such Purchaser and acknowledging that each Purchaser is relying on the truth and
accuracy of such representations and warranties in entering into this Third
Amendment and consummating the transactions contemplated herein.
(c) The Ninth Amendment to Note Purchase and Exchange Agreement
dated as of December 28, 1995 (the "Ninth Amendment") between Falcon Cablevision
and AUSA Life Insurance Company, Inc. shall have been executed and delivered by
all parties thereto.
(d) The Purchasers shall have received from Weinstein, Boldt,
Racine & Halfhide counsel to the Company and the Restricted Companies (as such
term is defined in the Bank Credit Agreement), an opinion addressed to the
Purchasers to the effect and in the form of opinion attached hereto as Exhibit
B.
(e) The Purchasers shall have received evidence satisfactory to
the Purchasers (which may be a satisfactory opinion of counsel) that the
Restricted Companies have received all necessary regulatory approvals required
in connection with the transactions contemplated by the Bank Credit Agreement,
this Third Amendment and the Ninth Amendment, with respect to franchises
covering at least 80% of the subscribers in cable systems owned or operated by
Falcon First, Inc.
(f) The fees and expenses incurred by the Purchasers in
connection with this Third Amendment and the Ninth Amendment, including the fees
and disbursements of counsel to the Purchasers, shall have been paid, or the
Company shall have agreed to pay such amounts within 10 days of receipt of an
invoice therefor.
(g) The Purchasers shall have received such certificates and
other evidence as they may reasonably
5
<PAGE> 77
request with respect to the due authorization and the taking of all
necessary corporate and partnership action in connection with the
execution and delivery by the Company, Holding, L.P. and Holding, Inc.
of the agreements and instruments contemplated by this Third Amendment.
(h) All proceedings taken in connection with this Third
Amendment and all documents and papers relating thereto shall be
satisfactory to the Purchasers and their special counsel. The Purchasers
and their special counsel shall have received copies of such documents
and papers as they may reasonably request in connection therewith, all
in form and substance satisfactory to the Purchasers and their special
counsel.
5. Each party hereby represents to the other that the individuals
executing this Third Amendment on its behalf are the duly appointed signatories
of the respective parties to this Third Amendment and that they are authorized
to execute this Third Amendment by or on behalf of the respective party for whom
they are signing and to take any and all action required by the terms of the
Third Amendment.
6. Except as amended hereby, the Agreement remains unchanged and,
as amended hereby, the Agreement remains in full force and effect. The Company
hereby reaffirms all of its obligations and undertakings under the Agreement as
amended hereby, and the Notes (as such term is defined in the Agreement), as
amended hereby. All references to the Agreement, the 11.56% Series A
Subordinated Notes (as defined in the Agreement) and the 11.56% Series B
Subordinated Notes (as defined in the Agreement) shall mean the Agreement and
such Notes as amended by this Third Amendment.
7. This Third Amendment may be executed in multiple counterparts,
each of which shall be deemed an original and all of which shall constitute an
agreement, notwithstanding that all of the parties are not signatories on the
same date or the same counterpart. A signature page may be detached from one
counterpart when executed and attached to another counterpart.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
NEXT PAGE IS SIGNATURE PAGE.]
6
<PAGE> 78
IN WITNESS WHEREOF, the parties have executed this Third Amendment
to the Note Purchase and Exchange Agreement as of the date first written
above.
FALCON TELECABLE, A CALIFORNIA
LIMITED PARTNERSHIP
By: Falcon Telecable
Investors Group Ltd., a
California limited
partnership, Its General
Partner
By: Falcon Holding Group, Inc.,
a California corporation,
Its General Partner
By_____________________________
MICHAEL K. MENEREY
Chief Financial Officer
AUSA LIFE INSURANCE
COMPANY, INC.
By_____________________________
Title________________________
MONY LIFE INSURANCE COMPANY
OF AMERICA
By_____________________________
Title________________________
7
<PAGE> 79
FALCON CABLEVISION,
A CALIFORNIA LIMITED PARTNERSHIP
CERTIFICATE
Falcon Investors Group, Ltd., a California limited partnership (the
"General Partner"), hereby certifies that it is the general partner of FALCON
CABLEVISION, A CALIFORNIA LIMITED PARTNERSHIP (the "Company"), and that, as
such, has access to its partnership records and is familiar with the matters
herein certified, and is authorized to execute and deliver this certificate in
the name and on behalf of the Company, and that:
1. This certificate is being delivered pursuant to:
(a) that certain Ninth Amendment (the "Amendment"), dated as of
December __, 1995, to that certain Note Purchase and Exchange Agreement
dated as of September 15, 1988 (as amended up to and including the date
hereof, the "Note Purchase Agreement"), by and between the Company, The
Mutual Life Insurance Company of New York, MONY Life Insurance
Company of America and MONY Legacy Life Insurance Company
(collectively, "MONY Life"), pursuant to which, inter alia, AUSA Life
Insurance Company, Inc. (the "Purchaser") and the Company are
amending the Note Purchase Agreement, and
(b) that certain Guaranty Agreement dated as of December __, 1995
(the "Guaranty Agreement"), by the Company and the other parties
executing such agreement as "Guarantors", in favor of the Purchaser,
in respect of certain obligations of Falcon Telecable, a California
Limited Partnership, to the Purchasers.
The terms used in this certificate and not defined herein have the
respective meanings specified in the Note Purchase Agreement.
2. The Company is executing and delivering the Guaranty Agreement in
order to, inter alia, induce the Purchaser to enter into the Amendment. The
Purchaser has indicated its unwillingness to enter into the Amendment if
it is not express beneficiary of the Guaranty Agreement. In the absence of
the execution and delivery of the Amendment by the Purchaser, the Company would
be unable to enter into the Bank Credit Agreement (as such term is defined in
the Note Purchase Agreement) and obtain the benefits afforded it thereunder.
3. The warranties and representations contained in Section 8 of the
Bank Credit (as such term is defined in the Note Purchase Agreement) and in
the Guaranty Agreement are true and correct in
<PAGE> 80
all material respects on the date hereof with the same effect as though made on
and as of the date hereof. Each of the Purchasers may rely on all such
warranties and representations as though the same were made to each Purchaser
directly. It is understood and acknowledged by the Company that each Purchaser
is relying on the truth and accuracy of such warranties and representations in
entering into the Amendment and consummating the transactions contemplated
thereby.
46 No Default or Event of Default exists on the date hereof or will
exist after giving effect to the transactions contemplated to be completed on
the date hereof.
47 The Company has performed and complied with all agreements and
conditions contained in the Amendment that are required to be performed or
complied with by the Company before or at the date hereof.
48 The General Partner has executed and delivered the documents listed
below on the Company's behalf as its general partner and the execution and
delivery of each such document was within its authority and authorization as
general partner (no action or approval of the Company's limited partners being
required by law or by the Company's Partnership Agreement);
.1 the Amendment,
.2 the Subordination Agreement, and
.3 the Guaranty Agreement.
49 An authorized officer of each of the corporate Guarantors has
executed and delivered the Guaranty Agreement and the execution and delivery of
the Guaranty Agreement was within the authority and authorization as such
officer.
50 The transactions contemplated by the Bank Credit Agreement (as
defined in the Note Purchase Agreement) to be completed on the Third Amendment
Closing Date (as defined in the Amendment) have been completed, all conditions
thereto have been fulfilled, the Bank Credit Agreement is in full force and
effect and the initial funding thereunder has been effected.
2
<PAGE> 81
IN WITNESS WHEREOF, we have executed this Certificate in the name and
on behalf of the Company on December __, 1995.
FALCON CABLEVISION, A CALIFORNIA
LIMITED PARTNERSHIP
By: FALCON INVESTORS GROUP, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP,
as general partner
By: FALCON HOLDING GROUP, INC.,
as general partner
By_________________________
Name_____________________
Title____________________
3
<PAGE> 82
NINTH AMENDMENT TO NOTE PURCHASE
AND EXCHANGE AGREEMENT
This NINTH AMENDMENT (this "Ninth Amendment") is made as of this 28th
day of December, 1995, between Falcon Cablevision, a California limited
partnership (the "Company") and AUSA LIFE INSURANCE COMPANY, INC. (the
"Purchaser").
WHEREAS, by a Note Purchase and Exchange Agreement dated as of
September 15, 1988, as heretofore amended (the "Agreement"), between the Company
and The Mutual Life Insurance Company of New York, MONY Life Insurance Company
of America and MONY Legacy Life Insurance Company, the Company issued inter alia
its 11.54% Subordinated Notes due September 30, 1998 and such Notes were
subsequently exchanged for a like principal amount of the Company's 12%
Subordinated Notes due December 31, 1995 (the "Notes"); and
WHEREAS, the Purchaser is the holder of the entire outstanding
principal amount of the Notes; and
WHEREAS, the Company and the Purchaser wishes to further amend the
Agreement as set forth below.
NOW, THEREFORE, in consideration of the mutual covenants set out
herein, the parties hereto agree as follows:
1. Section 7 of the Agreement is amended as follows:
a. Section 7.15 is amended to read as follows:
"7.15 Compliance With Bank Credit Agreement. The Company
shall comply, and shall cause the Restricted Companies to
comply, with each of the covenants contained in Section 7 of the
Bank Credit Agreement (other than Sections 7.5.2 and 7.15) as in
effect on the Ninth Amendment Closing Date (except as such
covenants may be amended pursuant to Section 7.16 below, other
than those set forth in the immediately following paragraph), a
copy of which is attached hereto as Exhibit E. All references
therein to Lenders, Managing Agent and similar Persons shall be
deemed, for purposes of this Agreement, to be the holders of the
Notes."
For purposes of this Agreement, the incorporated provisions of
Sections 7.5.1, 7.5.3 and 7.5.4 of the Bank Credit Agreement (as defined in
Section 3 below) are amended to read as
<PAGE> 83
follows and shall not be subject to amendment or modification without the
consent of the holders of the Notes:
"Consolidated Total Debt to Consolidated Annualized
Operating Cash Flow. Consolidated Total Debt shall not on any
date exceed the percentage indicated in the table below of
Consolidated Annualized Operating Cash Flow for the period of
three consecutive months then most recently ended for which
financial statements have been (or are required to have been)
furnished in accordance with Section 8:
<TABLE>
<CAPTION>
Date Percentage
---- ----------
<S> <C>
Ninth Amendment Closing Date
through June 29, 1996 615%
June 30, 1996 through
December 30, 1996 600%
December 31, 1996 through
June 29, 1997 575%
June 30, 1997 through
September 29, 1997 550%
September 30, 1997 through
June 29, 1998 540%
June 30, 1998 through
December 30, 1998 500%
December 31, 1998 through
June 29, 1999 475%
June 30, 1999 through
December 30, 1999 425%
December 31, 1999 through
June 29, 2000 400%
June 30, 2000 through
December 30, 2000 340%
December 31, 2000 and
thereafter 310%
</TABLE>
Consolidated Annualized Operating Cash Flow to
Consolidated Pro Forma Debt Service. As of the last day of each
month, Consolidated Annualized Operating Cash Flow for the
period of three consecutive months ended on such date shall
exceed 105% of Consolidated Pro Forma Debt Service for the
period of twelve consecutive months beginning immediately after
such date.
2
<PAGE> 84
Consolidated Operating Cash Flow Plus Cash and Cash
Equivalents to Consolidated Total Fixed Charges. As of the last
day of each month commencing March 31, 1999, the sum of (a)
Consolidated Operating Cash Flow for the period of twelve
consecutive months ended on such date plus (b) the lesser of (i)
cash and Cash Equivalents owned by the Restricted Companies as
of such date determined in accordance with GAAP on a
Consolidated basis or (ii) $1,250,000 shall exceed 95% of
Consolidated Total Fixed Charges for such period."
2. Section 9 of the Agreement is amended as follows:
(a) Section 9.1(c) is amended to read as follows:
"(c) the Company fails to perform or observe any
covenant or condition contained in Section 2.2, Section 7.16,
Section 7.17, or, to the extent resulting from a failure to
comply with Section 7.5 through Section 7.12, inclusive, Section
7.14, Section 7.15 or Section 7.17 of the Bank Credit Agreement
(as and to the extent modified and incorporated herein);"
(b) The incorporation by reference of Sections 10.1.5, 10.1.6,
10.1.8 and 10.1.9 of the Bank Credit Agreement into Section 9 is hereby deleted.
Sections 9.1.5, 9.1.6, 9.1.8 and 9.1.9 of the Bank Credit Agreement are
incorporated into Section 9 of the Agreement by reference; such provisions are
subject to amendment or modification only with the consent of the holders of the
Notes.
3. Section 11.1 of the Agreement is amended by incorporating by
reference each of the definitions set forth in Section 1 of the Bank Credit
Agreement (as defined in this Section 11 below) as in effect on the Ninth
Amendment Closing Date (as defined in this Section 11 below) (except as such
definitions are amended pursuant to Section 7.16 of the Agreement) to the extent
such definitions are referred to in, or are necessary to construe or further
define, the provisions and terms of the Bank Credit Agreement incorporated
herein, provided, that, all references therein to Lenders, Administrative Agent,
Managing Agent or similar Persons shall be deemed, for purposes of this
Agreement, to be the holders of Notes. To the extent that any definition so
incorporated by reference from the Bank Credit Agreement shall conflict with, or
be inconsistent with, any existing definition in
3
<PAGE> 85
the Agreement, the definition so incorporated by reference shall prevail. In
addition, the following are added or substituted for existing definitions:
"'Bank Credit Agreement' means the Credit Agreement dated as of
December 28, 1995, among the Company and other borrowers and guarantors
thereunder, the banks signatory thereto as lenders and The First National Bank
of Boston, as managing agent, a copy of which is attached hereto as Exhibit E,
as amended, supplemented or otherwise modified from time to time, including any
amendment, supplement or modification to effect the refunding or refinancing of
the indebtedness outstanding thereunder.
'Bank Pledge Agreement' means the Pledge and Subordination
Agreement dated as of December 28, 1995 among Holding, L.P., Holding, Inc., the
Guarantors and The First National Bank of Boston, as managing agent, as amended,
supplemented or otherwise modified from time to time, including any amendment,
supplement or modification to reflect the refunding or refinancing of the
indebtedness outstanding under the Bank Credit Agreement.
'Ninth Amendment Closing Date' means the date described in
Section 4 of the Ninth Amendment.
'Ninth Amendment' means that certain Ninth Amendment to Note
Purchase and Exchange Agreement dated December 28, 1995 between the Company and
the Purchaser."
There is hereby added to the Agreement a revised Exhibit E which
shall be in the form of Exhibit A to this Ninth Amendment. The Bank Credit
Agreement is set forth in Exhibit A to this Ninth Amendment.
4. The following are conditions precedent to the effectiveness of
this Ninth Amendment. The date on which all such conditions are met (or waived
by the Purchaser) shall be referred to herein as the "Ninth Amendment Closing
Date".
(a) The transactions contemplated by the Bank Credit Agreement
to be completed on the Initial Closing Date (as defined in the Bank Credit
Agreement) shall be completed and all conditions theretofore shall have been
fulfilled and the Bank Credit Agreement shall be in full force and effect.
4
<PAGE> 86
(b) All representations and warranties set forth in Section 8 of
the Bank Credit Agreement shall be true and correct as of the Closing
Date, and the Purchaser shall have received a certificate from an
authorized officer of each Person making such representations stating
that such representations and warranties are true and correct, stating
that the Purchaser may rely on such representations and warranties as
though the same were made to the Purchaser and acknowledging that the
Purchaser is relying on the truth and accuracy of such representations
and warranties in entering into this Ninth Amendment and consummating
the transactions contemplated herein.
(c) The Third Amendment to Note Purchase and Exchange Agreement
dated as of December 28, 1995 (the "Third Amendment") among Falcon
Telecable, MONY Life Insurance Company of America and the Purchaser
shall have been executed and delivered by all parties thereto.
(d) The Purchaser shall have received from Weinstein, Boldt,
Racine & Halfhide counsel to the Company and the Restricted Companies
(as such term is defined in the Bank Credit Agreement), an opinion
addressed to the Purchaser to the effect and in the form of opinion
attached hereto as Exhibit B.
(e) The Purchaser shall have received evidence satisfactory to
the Purchaser (which may be a satisfactory opinion of counsel) that the
Restricted Companies have received all necessary regulatory approvals
required in connection with the transactions contemplated by the Bank
Credit Agreement, this Ninth Amendment and the Third Amendment, with
respect to franchises covering at least 80% of the subscribers in cable
systems owned or operated by Falcon First, Inc.
(f) The fees and expenses incurred by the Purchaser and MONY
Life Insurance Company of America in connection with this Ninth
Amendment and the Third Amendment, including the fees and disbursements
of counsel to the Purchaser and MONY Life Insurance Company of America,
shall have been paid, or the Company shall have agreed to pay such
amounts within 10 days of receipt of an invoice therefor.
(g) The Purchaser shall have received such certificates and
other evidence as it may reasonably
5
<PAGE> 87
request with respect to the due authorization and the taking of all
necessary corporate and partnership action in connection with the
execution and delivery by the Company, Holding, L.P. and Holding, Inc.
of the agreements and instruments contemplated by this Ninth Amendment.
(h) All proceedings taken in connection with this Ninth
Amendment and all documents and papers relating thereto shall be
satisfactory to the Purchaser and its special counsel. The Purchaser
and its special counsel shall have received copies of such documents
and papers as they may reasonably request in connection therewith, all
in form and substance satisfactory to the Purchaser and its special
counsel.
5. Each party hereby represents to the other that the individuals
executing this Ninth Amendment on its behalf are the duly appointed signatories
of the respective parties to this Ninth Amendment and that they are authorized
to execute this Ninth Amendment by or on behalf of the respective party for whom
they are signing and to take any and all action required by the terms of the
Ninth Amendment.
6. Except as amended hereby, the Agreement remains unchanged and,
as amended hereby, the Agreement remains in full force and effect. The Company
hereby reaffirms all of its obligations and undertakings under the Agreement as
amended hereby, and the Notes. All references to the Agreement and the Notes
shall mean the Agreement and such Notes as amended by this Ninth Amendment.
7. This Ninth Amendment may be executed in multiple counterparts,
each of which shall be deemed an original and all of which shall constitute an
agreement, notwithstanding that all of the parties are not signatories on the
same date or the same counterpart. A signature page may be detached from one
counterpart when executed and attached to another counterpart.
[Remainder of page intentionally blank;
next page is signature page.]
6
<PAGE> 88
IN WITNESS WHEREOF, the parties have executed this Ninth Amendment to
the Note Purchase and Exchange Agreement as of the date first written above.
FALCON CABLEVISION, A
CALIFORNIA LIMITED PARTNERSHIP
By: Falcon Investors
Group Ltd., a California
limited partnership,
Its General Partner
By: Falcon Holding Group, Inc.,
a California corporation,
Its General Partner
By__________________________________
MICHAEL K. MENEREY
Chief Financial Officer
AUSA LIFE INSURANCE COMPANY, INC.
By__________________________________
Title_____________________________
7
<PAGE> 89
CERTIFICATE OF JON LUNSFORD, VICE PRESIDENT OF FINANCE
AND CORPORATE DEVELOPMENT
OF FALCON HOLDING GROUP, INC.
This certificate is delivered to Goldman & Kagon Law Corporation
("G&K") in connection with the legal opinion to be given by G&K pursuant to (i)
Section 4.(e) of that certain Third Amendment dated as of December 28, 1995, to
that certain Note Purchase and Exchange Agreement dated as of October 21, 1991
(as amended up to and including the date hereof, the "Telecable Agreement") by
and among Falcon Telecable, a California limited partnership ("Telecable"), on
the one hand, and AUSA Life Insurance Company, Inc. ("AUSA") and MONY Life
Insurance Company of America ("MONY Life"), on the other hand, pursuant to
which, inter alia, AUSA, MONY Life (herein collectively referred to as the
"Purchasers") and Telecable are amending the Telecable Agreement; and (ii)
Section 4.(e) of that certain Ninth Amendment dated as of December 28, 1995, to
that certain Note Purchase and Exchange Agreement dated as of September 15, 1988
(as amended up to and including the date hereof, the "Cablevision Agreement") by
and between Falcon Cablevision, a California limited partnership ("Cablevision"
and, together with Telecable, the "Companies"), and AUSA, pursuant to which,
inter alia, AUSA and Cablevision are amending the Cablevision Agreement. In
rendering such opinion, G&K may rely on the accuracy and truthfulness of all of
the statements set forth below. All capitalized terms not otherwise defined
herein shall have the respective meanings assigned to them in the Telecable
Agreement.
I, Jon Lunsford, in my capacity as Vice President of Finance and
Corporate Development of Falcon Holding Group, Inc., hereby certify to G&K as
follows:
1. Exhibit "A" hereto accurately sets forth all of the franchise areas
and numbers of Subscribers for all of the cable television systems presently
owned or operated by Falcon First or its Subsidiaries, and the numbers of
Subscribers set forth therein have been calculated in conformance with the
definition of "Subscribers" in the Bank Credit Agreement. Furthermore, there
have been no material changes in the information contained in Exhibit "A"
between the date of its preparation and the date hereof.
2. The franchise documentation delivered to G&K in October and
November, 1995, for use in G&K's analysis of the franchise consent requirements
that would apply in connection with the transaction contemplated in the Falcon
First Reorganization Agreement (the "Reorganization"), contained all of the
franchise agreements, enabling ordinances, and other written evidence of the
provisions governing the franchisee's relationship with each respective
franchisor with respect to all franchises held by Falcon First or its
Subsidiaries, or otherwise relating to any of the Systems.
-1-
<PAGE> 90
3. Falcon Holding Group, L.P.'s system of local and regional management
of the Systems will not be affected in any material respect by the
Reorganization.
Dated:___________________ FALCON HOLDING GROUP, INC.,
a California corporation
BY:_______________________________________
Jon Lunsford, Vice President of Finance
and Corporate Development
-2-
<PAGE> 91
December 28, 1995
To the Persons Listed on
Annex 1 hereto
Ladies and Gentlemen:
This opinion is furnished to you pursuant to:
(a) that certain Third Amendment (the "Telecable Amendment")
dated as of December 28, 1995, to that certain Note Purchase and
Exchange Agreement dated as of October 21, 1991 (as amended up to and
including the date hereof, the "Telecable Agreement") by and between
Falcon Telecable, a California limited partnership ("Telecable"), AUSA
Life Insurance Company, Inc. ("AUSA") and MONY Life Insurance Company
of America ("MONY Life"), pursuant to which, inter alia, AUSA, MONY
Life (herein collectively referred to as the "Purchasers") and
Telecable are amending the Telecable Agreement, and
(b) that certain Ninth Amendment (the "Cablevision Amendment")
dated as of December 28, 1995, to that certain Note Purchase and
Exchange Agreement dated as of September 15, 1988 (as amended up to and
including the date hereof, the "Cablevision Agreement") by and between
Falcon Cablevision, a California limited partnership ("Cablevision,"
and, together with Telecable, individually, a "Company" and,
collectively the "Companies"), and AUSA pursuant to which, inter alia,
AUSA and Cablevision are amending the Cablevision Agreement.
Capitalized terms used herein and not defined herein have the respective
meanings assigned to them in the Telecable Agreement.
We are special counsel for the Companies, the Guarantors (defined
below), Falcon Holding Group, L.P., a Delaware limited partnership ("Holding,
L.P."), and Falcon Holding Group, Inc., a California corporation ("Holding,
Inc."), and as such, we are generally familiar with the financial and business
affairs of each. We have acted as counsel for such parties in connection with
the
<PAGE> 92
December 28, 1995
Page 2
Telecable Amendment, the Cablevision Amendment, the Subordination Agreement,
the Telecable Guaranty, the Cablevision Guaranty and the transactions
contemplated by each thereof.
In the preparation of this opinion we have examined:
(a) the Telecable Amendment and the Cablevision Amendment
(collectively, the "Amendments");
(b) the Telecable Agreement and the Cablevision Agreement
(collectively, the "Agreements");
(c) the 11.56% Series A Subordinated Notes due March 31,
2001 and the 11.56% Series B Subordinated Notes due March 31, 2001,
each issued and outstanding pursuant to the Telecable Agreement
(collectively, the "Telecable Notes");
(d) the 12% Subordinated Notes due December 31, 1995,
each issued and outstanding pursuant to the Cablevision Agreement (the
"Cablevision Notes," and, together with the Telecable Notes, the
"Notes");
(e) the Restated Subordination Agreement (the
"Subordination Agreement") dated as of December 28, 1995, among
Holding, L.P., Holding, Inc., the Companies, the Guarantors and the
Purchasers;
(f) that certain Restated Guaranty Agreement (the
"Telecable Guaranty") dated as of December 28, 1995, by each of Falcon
Cable Media, a California limited partnership, Falcon Community Cable,
L.P., a Delaware limited partnership, Falcon Community Ventures I
Limited Partnership, a California limited partnership, Falcon Investors
Group, Ltd., a California limited partnership, Falcon Telecable
Investors Group, a California limited partnership, Falcon Media
Investors Group, a California limited partnership, Falcon Community
Investors, L.P., a California limited partnership, Falcon First, Inc.,
Athens Cablevision, Inc., Ausable Cable TV, Inc., Cedar Bluff
Cablevision, Inc., Dalton Cablevision, Inc., Eastern Mississippi
Cablevision, Inc., Falcon First Cable of New York, Inc., Falcon First
Cable of the Southeast, Inc., Falcon First Holdings, Inc., FF Cable
Holdings, Inc., Lauderdale Cablevision, Inc., Multivision Northeast,
Inc., Multivision of Commerce, Inc., Plattsburg Cablevision, Inc.,
<PAGE> 93
December 28, 1995
Page 3
Scottsboro Cablevision, Inc., and Scottsboro TV Cable, Inc.
(collectively, the "Guarantors") and Cablevision, in favor of and for
the benefit of the Purchasers in respect of the Telecable Agreement and
the Telecable Notes;
(g) that certain Restated Guaranty Agreement (the
"Cablevision Guaranty," and, together with the Telecable Guaranty, the
"Guaranty Agreements") dated as of December 28, 1995, by each of the
Guarantors and Telecable, in favor of and for the benefit of AUSA in
respect of the Cablevision Agreement and the Cablevision Notes; and
(h) such other documents, certificates and papers as we
have deemed necessary to enable us to render the opinions expressed
below.
We have made such examination of law and such investigation of fact as we have
deemed necessary to enable us to render the opinions expressed below. We have
also relied upon representations and covenants contained in and made pursuant to
the Amendments and the Agreements as to matters of fact (other than facts
constituting conclusions of law) contained in the Amendments and the Agreements
and in the certificates delivered to you today pursuant to the Amendments.
In rendering this opinion, we point out that our opinion is limited to
matters of law of the State of California, the United States of America, the
Delaware General Corporation Law and the Delaware Revised Uniform Limited
Partnership Act, and we express no opinion as to the laws of any other states or
jurisdictions.
We call your attention to the fact that we do not represent the
Companies or the Guarantors with respect to matters governed by the
Communications Act of 1934 or the Copyright Act of 1976, or with respect to CATV
Franchises and our opinion expressed in paragraph 15 with respect to CATV
Franchises are made without any independent check or verification.
For the purposes of this opinion, we have assumed that you have all
requisite power and authority and have taken all necessary corporate action to
execute and deliver the Amendments and the Agreements. You have not asked us to
pass upon the application to your authority to do so of any federal or state law
or regulation.
<PAGE> 94
December 28, 1995
Page 4
Based upon the foregoing, we are of the opinion that:
1. Telecable (i) has been duly organized as a limited partnership
under the laws of the State of California, (ii) is validly existing and in good
standing under the laws of the State of California, (iii) has all requisite
partnership power and authority to own, or hold under lease, its properties and
assets, to conduct its business as currently conducted and (iv) has all
requisite partnership power and authority to execute, deliver and perform the
Telecable Amendment, the Subordination Agreement and the Cablevision Guaranty.
2. Cablevision (i) has been duly organized as a limited partnership
under the laws of the State of California, (ii) is validly existing and in good
standing under the laws of the State of California, (iii) has all requisite
partnership power and authority to own, or hold under lease, its properties and
assets, to conduct its business as currently conducted, and (iv) has all
requisite partnership power and authority to execute, deliver and perform the
Cablevision Amendment, the Subordination Agreement and the Telecable Guaranty.
3. Each of the Guarantors which are partnerships and Holding, L.P.
(i) has been duly organized as a limited partnership under the laws of the State
of California (except for Falcon Community Cable, L.P. and Holding, L.P., each
of which has been duly organized as a limited partnership under the laws of the
State of Delaware), (ii) is validly existing and in good standing under the laws
of the State of California (except for Falcon Community Cable, L.P. and Holding,
L.P., each of which is validly existing and in good standing under the laws of
the State of Delaware) and (iii) has all requisite partnership power and
authority to own, or hold under lease, its properties and assets, and to conduct
is business as currently conducted. Each of the Guarantors which are
partnerships has all requisite partnership power and authority to execute,
deliver and perform the Subordination Agreement, the Telecable Guaranty and the
Cablevision Guaranty; Holding, L.P. has all requisite partnership power and
authority to execute, deliver and perform the Subordination Agreement.
4. Each of the Guarantors which are corporations and Holding, Inc.
(i) has been duly organized as a corporation under the laws of their respective
states of organization, (ii) is validly existing and in good standing under the
laws of their
<PAGE> 95
December 28, 1995
Page 5
respective states of organization, and (iii) has all requisite corporate power
and authority to own, or hold under lease, its properties and assets, and to
conduct its business as currently conducted. Each of the Guarantors which are
corporations has all requisite corporate power and authority to execute, deliver
and perform the Subordination Agreement, the Telecable Guaranty and the
Cablevision Guaranty; Holding, Inc. has all requisite corporate power and
authority to execute, deliver and perform the Subordination Agreement.
5. Each of the Companies, the Guarantors, Holding, L.P. and
Holding, Inc. has duly qualified to do business as a foreign entity and is in
good standing in all jurisdictions wherein the character of the properties or
assets owned or held under lease by it, or the nature of the business conducted
by it, makes such qualification necessary.
6. A certificate of limited partnership in respect of each of
the Companies and each of the Guarantors which are partnerships (except for
Falcon Community Cable, L.P. and Holding L.P.) has been duly recorded in the
Office of the Secretary of State of California, in full compliance with the
California Revised Limited Partnership Act, CAL. CORPNS. CODE Section 15621. A
certificate of limited partnership in respect of each of Falcon Community Cable,
L.P. and Holding, L.P. has been duly recorded in the Office of the Secretary of
State of Delaware, in full compliance with the Delaware Revised Limited
Partnership Act.
7. To the best of our knowledge after due inquiry with appropriate
officers of Holding, L.P., Holding, Inc., each of the Companies and each of the
Guarantors, there are no actions, suits, proceedings, inquiries or
investigations pending or threatened against or affecting Holding, L.P.,
Holding, Inc., the Companies or the Guarantors, and there is no basis for any
thereof, which, if adversely determined, might materially adversely affect:
(a) the business, operations, properties, earnings, reasonably
foreseeable prospects or financial condition of Holding, L.P., Holding,
Inc., the Companies or the Guarantors,
(b) the ability of either of the Companies to perform their
respective obligations set forth in the Amendments, the Agreements, the
Guaranty Agreements, the Notes and the Subordination Agreement,
<PAGE> 96
December 28, 1995
Page 6
(c) the ability of the Guarantors to perform their respective
obligations set forth in the Guaranty Agreements and the Subordination
Agreement,
(d) the ability of Holding, L.P., and Holding, Inc. to perform
their respective obligations set forth in the Subordination Agreement,
or
(e) the ability of either of the Companies to pay when due, in
accordance with the terms of the Notes and the Agreements, the
principal of, interest on, and Make-Whole Amount with respect to, the
Notes issued by them.
8. The Telecable Amendment, the Cablevision Guaranty and the
Subordination Agreement have been duly authorized by all necessary action on the
part of Telecable (including all necessary action on the part of the partners
under its Partnership Agreement (as defined in the Telecable Agreement)), have
been duly executed and delivered and constitute the legal, valid and binding
obligations of Telecable and (subject to the qualifications stated in the
paragraphs following paragraph 15 hereof) are enforceable in accordance with
their respective terms.
9. The Cablevision Amendment, the Telecable Guaranty and the
Subordination Agreement have been duly authorized by all necessary action on the
part of Cablevision (including all necessary action on the part of the partners
under its Partnership Agreement (as defined in the Cablevision Agreement)), have
been duly executed and delivered and constitute the legal, valid and binding
obligations of Cablevision and (subject to the qualifications stated in the
paragraphs following paragraph 15 hereof) are enforceable in accordance with
their respective terms.
10. Each of the Cablevision Guaranty, the Telecable Guaranty and the
Subordination Agreement has been duly authorized by all necessary action on the
part of each of the Guarantors (including all necessary action on the part of
the partners, directors or shareholders, as the case may be, of each of the
Guarantors pursuant to their respective partnership agreements, articles or
certificates of incorporation or by-laws, as the case may be), has been duly
executed and delivered and constitutes the legal, valid and binding obligation
of each of the Guarantors and (subject to
<PAGE> 97
December 28, 1995
Page 7
the qualifications stated in the paragraphs following paragraph 15 hereof) is
enforceable in accordance with its respective terms.
11. The Subordination Agreement has been duly authorized by all
necessary action on the part of each of Holding, L.P. and Holding, Inc.
(including all necessary action on the part of the partners of Holding, L.P.
pursuant to its partnership agreement), has been duly executed and delivered and
constitutes the legal, valid and binding obligation of each of Holding, L.P. and
Holding, Inc. and (subject to the qualifications stated in the paragraphs
following paragraph 15 hereof) is enforceable in accordance with its respective
terms.
12. To the best of our knowledge after due investigation with respect
thereto, neither the execution and delivery of the Telecable Amendment, the
Cablevision Guaranty or the Subordination Agreement, nor the consummation of the
transactions therein contemplated, nor compliance with the terms, conditions and
provisions thereof, by Telecable, will conflict with, or result in a breach or
violation of, or constitute a default under, any Requirement of Law on the part
of Telecable or will conflict with, or result in a breach or violation of, or
constitute a default in the performance, observance or fulfillment of any
obligation, covenant or condition contained in, or will constitute, or, but for
any requirement of notice or lapse of time, or both, would constitute, an event
of default by Telecable under, any Contractual Obligation, or will result in the
creation or imposition of any lien upon any of the properties or assets of
Telecable (other than liens arising pursuant to the Bank Credit Agreement), or
will require any filing with, or other action involving, any Governmental Body.
Neither the execution and delivery of the Telecable Amendment, the Cablevision
Guaranty or the Subordination Agreement, nor the consummation of the
transactions therein contemplated, nor compliance with the terms, conditions and
provisions thereof, by Telecable, will conflict with, or result in a breach or
violation of, or constitute a default under, the Partnership Agreement (as such
term is defined in the Telecable Agreement) of Telecable.
13. To the best of our knowledge after due investigation with respect
thereto, neither the execution and delivery of the Cablevision Amendment, the
Telecable Guaranty or the Subordination Agreement, nor the consummation of the
transactions therein contemplated, nor compliance with the terms, conditions and
<PAGE> 98
December 28, 1995
Page 8
provisions thereof, by Cablevision, will conflict with, or result in a breach or
violation of, or constitute a default under, any Requirement of Law on the part
of Cablevision or will conflict with, or result in a breach or violation of, or
constitute a default in the performance, observance or fulfillment of any
obligation, covenant or condition contained in, or will constitute, or, but for
any requirement of notice or lapse of time, or both, would constitute, an event
of default by Cablevision under, any Contractual Obligation, or will result in
the creation or imposition of any lien upon any of the properties or assets of
Cablevision (other than liens arising pursuant to the Bank Credit Agreement), or
will require any filing with or other action involving, any Governmental Body.
Neither the execution and delivery of the Cablevision Amendment, the Telecable
Guaranty or the Subordination Agreement, nor the consummation of the
transactions therein contemplated, nor compliance with the terms, conditions and
provisions thereof, by Cablevision, will conflict with, or result in a breach or
violation of, or constitute a default under, the Partnership Agreement (as such
term is defined in the Cablevision Agreement) of Cablevision.
14. To the best of our knowledge after due investigation with respect
thereto, neither the execution and delivery of the Subordination Agreement, nor
the consummation of the transactions therein contemplated, nor compliance with
the terms, conditions and provisions thereof, by each of Holding, L.P. and
Holding, Inc. will conflict with, or result in a breach or violation of, or
constitute a default under, any Requirement of Law on the part of either of
Holding, L.P. or Holding, Inc., or will conflict with, or result in a breach or
violation of, or constitute a default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in, or will
constitute, or, but for any requirement of notice or lapse of time, or both,
would constitute, an event of default by either of Holding, L.P. or Holding,
Inc. under, any Contractual Obligation, or will result in the creation or
imposition of any lien upon any of the properties or assets of either of
Holding, L.P. or Holding, Inc., or will require any filing with, or other action
involving, any Governmental Body. Neither the execution and delivery of the
Subordination Agreement, nor the consummation of the transactions therein
contemplated, nor compliance with the terms, conditions and provisions thereof,
by each of Holding, L.P. and Holding, Inc. will conflict with, or result in a
breach or violation of, or constitute a default under
<PAGE> 99
December 28, 1995
Page 9
the partnership agreement of Holding, L.P. or the certificate of incorporation
or bylaws of Holding, Inc.
15. Except with respect to consents under CATV Franchises permitted
under Section 4(e) of the Cablevision Amendment and Section 4(e) of the
Telecable Amendment, to the best of our knowledge after due inquiry of the chief
operating officer of Holding, L.P., Holding, Inc., each of the Companies and
each of the Guarantors, but without any independent check or verification,
Holding, L.P., Holding, Inc., each of the Companies and each of the Guarantors
owns or possesses all CATV Franchises and all other Governmental Body and
private authorizations, or rights with respect to the foregoing, necessary to
own and operate its respective properties and for the current and currently
proposed future conduct of its business, without any known conflict with the
rights of others; all the same are in full force and effect and there is no
event or lapse of time, or both, which would permit the revocation or
termination of any thereof.
Our opinions that the Amendments, the Subordination Agreement and the
Guaranty Agreements are enforceable in accordance with their respective terms is
subject to the qualifications that:
(a) the enforcement of the rights and remedies created thereby
is subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applications, affecting the rights and remedies
of creditors and secured parties, and
(b) the availability of the remedies of specific enforcement
or of injunctive or other equitable relief is subject to the discretion
of the court before which any proceeding therefor may be brought.
In addition, we advise you that a California court may not strictly enforce
certain covenants contained in the Amendments or the Agreements if it concludes
that such enforcement would be unreasonable under the then existing
circumstances and might not give effect to any provisions providing for
increased interest rates for nonpayment of principal or interest.
This opinion is limited to the matters expressed herein and no opinion
is implied or may be inferred beyond the matters expressly stated herein.
<PAGE> 100
December 28, 1995
Page 10
This opinion is delivered by the undersigned to the addressees hereof
and only the addressees shall be entitled to rely thereon.
Very truly yours,
WEINSTEIN, BOLDT
RACINE & HALFHIDE
Professional Corporation
<PAGE> 101
ANNEX 1
ADDRESSEES
AUSA Life Insurance Company, Inc.
c/o Aegon USA Investment Management, Inc.
1111 North Charles Street
Baltimore, MD 21201
Attn: Don Chamberlain
MONY Life Insurance Company of America
1740 Broadway
New York, New York 10019
Attn: MONY Capital Management Unit
<PAGE> 102
December 28, 1995
<TABLE>
<S> <C>
AUSA Life Insurance Company, Inc. The Mutual Life Insurance
c/o Aegon USA Investment Management, Inc Company of New York
1111 North Charles Street MONY Life Insurance Company of America
Baltimore, MD 21201 1740 Broadway
Attn: Don Chamberlain New York, New York 10019
Attn: MONY Capital Management Unit
</TABLE>
Ladies and Gentlemen:
This opinion is being delivered to you pursuant to:
(a) Section 4.(e) of that certain Third Amendment dated as of
December 28, 1995, to that certain Note Purchase and Exchange Agreement dated as
of October 21, 1991 (as amended up to and including the date hereof, the
"Telecable Agreement") by and among Falcon Telecable, a California limited
partnership ("Telecable"), on the one hand, and AUSA Life Insurance Company,
Inc. ("AUSA") and MONY Life Insurance Company of America ("MONY Life"), on the
other hand, pursuant to which, inter alia, AUSA, MONY Life (herein collectively
referred to as the "Purchasers") and Telecable are amending the Telecable
Agreement; and
(b) Section 4.(e) of that certain Ninth Amendment dated as of
December 28 Falcon Cablevision, a California limited partnership ("Cablevision"
and, together with Telecable, the "Companies"), and AUSA, pursuant to which,
inter alia, AUSA and Cablevision are amending the Cablevision Agreement.
All capitalized terms not otherwise defined herein shall have the respective
meanings assigned to them in the Telecable Agreement.
<PAGE> 103
AUSA Life Insurance Company, Inc.
MONY Life Insurance Company of America
December ___, 1995
Page 2
We are attorneys admitted to practice in the State of California. While
we generally represent Falcon Cable Media, a California limited partnership;
Falcon Community Cable, L.P., a Delaware limited partnership; Falcon Community
Ventures I Limited Partnership, a California limited partnership; Falcon First,
Inc., a Delaware corporation ("Falcon First"), and its Subsidiaries; Falcon
Media Investors Group, a California limited partnership; Falcon Investors Group,
Ltd., a California limited partnership; Falcon Community Investors, L.P., a
California limited partnership; Falcon Telecable Investors Group, a California
limited partnership; Falcon Holding Group, L.P., a Delaware limited partnership
("FHGLP"); Falcon Holding Group, Inc., a California corporation; and the
Companies, our engagement with respect to the transactions contemplated in the
Bank Credit Agreement has been limited to a review of the Franchises held by
Falcon First or its Subsidiaries for use in their operation of Systems owned or
operated by them. We have not reviewed any files or documents other than (i) the
Franchises (limited as hereinbelow set forth); (ii) the Bank Credit Agreement;
(iii) the Falcon First Reorganization Agreement; (iv) the Second Amended and
Restated Agreement of Limited Partnership of Falcon Holding Group, L.P. dated as
of March 29, 1993; (v) the Second Amended and Restated Agreement of Limited
Partnership of the Falcon First Communications, L.P., dated as of October 19,
1990; (vi) the Third Amended and Restated Agreement of Limited Partnership of
the Falcon First Investors, L.P., dated as of July 16, 1991; and (vii) the Third
Amended and Restated Agreement of Limited Partnership of Falcon Holding Group,
L.P. dated as of December 28, 1995.
In rendering this opinion, we have assumed the genuineness of all
signatures on, and the authenticity of, all documents submitted to us as
originals; and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. We have also assumed the due and valid
execution, delivery, and performance of all aspects of the transaction
contemplated in the Falcon First Reorganization Agreement (the "Reorganization")
by all parties thereto, and the legality, validity, binding effect, and
enforceability thereof with respect to all parties thereto. With respect to
factual matters, including but not limited to matters regarding the management
of FHGLP and the operations of the entities owning the Systems before and after
the effectuation of the Reorganization, we have relied solely upon the
"Certificate of Jon Lunsford, Vice President of Finance and Corporate
Development of Falcon Holding Group, Inc." attached hereto (the "Officer's
Certificate"). The term "Franchises", as used herein, is expressly limited to
the extent of the information provided to us, as set forth in the Officer's
Certificate, and our opinion assumes no changes in the pertinent language
thereof have occurred or will occur between the dates of our review thereof and
the effectuation of the Reorganization. We have not conducted any independent
investigation beyond that which is set forth above.
<PAGE> 104
AUSA Life Insurance Company, Inc.
MONY Life Insurance Company of America
December ___, 1995
Page 3
Based on the foregoing, we are of the opinion that no consents by
franchisors of the Franchises to any aspect of the Reorganization are required
for Franchises which, in the aggregate, govern the delivery of cable television
service to at least eighty percent (80%) of the aggregate number of Subscribers
in Systems owned or operated by Falcon First or its Subsidiaries, such that the
failure to obtain any such consent would have a material adverse effect on
Falcon First or its Subsidiaries.
This opinion is given solely for the benefit of the Purchasers, and no
other person or entity is entitled to rely hereon.
Very truly yours,
GOLDMAN & KAGON
LAW CORPORATION
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT MARCH 31, 1996, AND THE STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 11,019
<SECURITIES> 0
<RECEIVABLES> 19,030
<ALLOWANCES> 278
<INVENTORY> 4,170
<CURRENT-ASSETS> 0
<PP&E> 441,431
<DEPRECIATION> 216,728
<TOTAL-ASSETS> 567,871
<CURRENT-LIABILITIES> 43,139
<BONDS> 673,238
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 567,871
<SALES> 0
<TOTAL-REVENUES> 46,203
<CGS> 0
<TOTAL-COSTS> 40,890
<OTHER-EXPENSES> (1,203)
<LOSS-PROVISION> 780
<INTEREST-EXPENSE> 15,602
<INCOME-PRETAX> (9,086)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,086)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,086)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
