<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
--------------------------------
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
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Falcon Holding Group, L.P.
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(Exact name of Registrant as specified in its charter)
Delaware 95-4408577
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10900 Wilshire Boulevard - 15th Floor
Los Angeles, California 90024
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 824-9990
----------------
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
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, September 30,
1996* 1997
------------ -------------
(Unaudited)
(Dollars in Thousands)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 13,633 $ 13,776
Receivables:
Trade, less allowance of $907,000 and
$1,318,000 for possible losses 11,607 12,080
Affiliates 5,793 10,998
Other assets 10,555 11,732
Other investments 3,446 2,250
Property, plant and equipment, less accumulated depreciation
and amortization of $230,920,000 and $268,012,000 309,128 312,505
Franchise cost, less accumulated
amortization of $173,742,000 and $200,130,000 256,461 230,678
Goodwill, less accumulated amortization
of $12,454,000 and $17,011,000 72,956 68,398
Customer lists and other intangible costs, less
accumulated amortization of $8,793,000 and $21,696,000 76,448 63,990
Deferred loan costs, less accumulated amortization
of $5,755,000 and $7,400,000 14,296 12,653
---------- ----------
$ 774,323 $ 739,060
========== ==========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
LIABILITIES:
Notes payable $ 885,786 $ 905,905
Accounts payable 10,561 6,103
Accrued expenses and other 47,228 42,517
Customer deposits and prepayments 1,627 1,693
Deferred income taxes 10,301 8,138
Minority interest 193 169
Equity in losses of affiliated partnerships in excess of investment 3,224 3,232
---------- ----------
TOTAL LIABILITIES 958,920 967,757
---------- ----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PARTNERS' EQUITY 271,902 271,902
---------- ----------
PARTNERS' DEFICIT:
General partner (12,591) (13,034)
Limited partners (443,908) (487,565)
---------- ----------
TOTAL PARTNERS' DEFICIT (456,499) (500,599)
---------- ----------
$ 774,323 $ 739,060
========== ==========
</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
September 30,
---------------------------
1996 1997
---------- --------
(Dollars in Thousands)
<S> <C> <C>
REVENUES $ 59,428 $ 64,515
---------- --------
EXPENSES:
Service costs 17,649 19,320
General and administrative expenses 9,711 11,165
Depreciation and amortization 26,413 28,637
---------- --------
Total expenses 53,773 59,122
---------- --------
Operating income 5,655 5,393
OTHER INCOME (EXPENSE):
Interest expense (19,560) (19,658)
Equity in net income of investee partnerships 68 212
Other expense, net (927) (1,216)
---------- --------
NET LOSS $ (14,764) $(15,269)
========== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 4
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
=======================================================
<TABLE>
<CAPTION>
Unaudited
------------------------------
Nine months ended
September 30,
------------------------------
1996 1997
------------- -------------
(Dollars in Thousands)
<S> <C> <C>
REVENUES $ 153,803 $ 192,482
--------- ---------
EXPENSES:
Service costs 42,933 56,302
General and administrative expenses 26,058 34,072
Depreciation and amortization 66,602 87,270
--------- ---------
Total expenses 135,593 177,644
--------- ---------
Operating income 18,210 14,838
OTHER INCOME (EXPENSE):
Interest expense (50,983) (58,979)
Equity in net income of investee partnerships 134 183
Other income (expense), net 334 (294)
--------- ---------
NET LOSS $ (32,305) $ (44,252)
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE> 5
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
=======================================================
<TABLE>
<CAPTION>
Unaudited
----------------------------
Nine months ended
September 30,
----------------------------
1996 1997
--------- ----------
(Dollars in Thousands)
<S> <C> <C>
Net cash provided by operating activities $ 64,866 $ 56,371
--------- ---------
Cash flows from investing activities:
Acquisition of cable television systems (247,397) -
Capital expenditures (35,380) (46,764)
Increase in intangible assets (3,904) (1,207)
Proceeds from sale of system 15,000 -
Proceeds from sale of cable assets 312 82
Distributions from investee limited partnerships 781 8
--------- ---------
Net cash used in investing activities (270,588) (47,881)
--------- ---------
Cash flows from financing activities:
Borrowings from notes payable 691,382 24,500
Repayment of debt (485,158) (33,038)
Minority interest capital contributions - 192
Contributions from partners 5,000 -
Deferred loan costs (4,676) (1)
--------- ---------
Net cash provided by (used in) financing activities 206,548 (8,347)
--------- ---------
Net increase in cash and cash equivalents 826 143
Cash and cash equivalents
at beginning of period 15,050 13,633
--------- ---------
Cash and cash equivalents
at end of period $ 15,876 $ 13,776
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE> 6
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 condensed consolidated financial statements include the
consolidated accounts of FHGLP, its subsidiary cable television operating
partnerships and corporations (the "Owned Subsidiaries") and those operating
partnerships' general partners which are owned by FHGLP. The condensed
consolidated financial statements also include the accounts of Enstar
Communications Corporation ("ECC"), a wholly-owned subsidiary of one of the
operating partnerships, which is the general partner of the 15 limited
partnerships operating under the name "Enstar" (the "Enstar Partnerships"),
which are Affiliated Systems.
As noted in its latest Annual Report on Form 10-K, on July 12, 1996
the Partnership acquired the assets of Falcon Cable Systems Company ("FCSC"), an
Affiliated Partnership. The results of operations of these Systems have been
included in the condensed consolidated financial statements of FHGLP from July
12, 1996. Management fees and reimbursed expenses received by the Partnership
from FCSC for the period of January 1, 1996 through July 11, 1996 are also
included in the condensed consolidated financial statements and have not been
eliminated in consolidation. Accordingly, the Partnership's results of
operations for the three and nine months ended September 30, 1997 are not
comparable to the prior year's amounts reported in the condensed consolidated
financial statements.
NOTE 2 - INTERIM FINANCIAL STATEMENTS
The interim financial statements for the three and nine months ended
September 30, 1997 and 1996 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 and nine months ended September 30, 1997 are not necessarily indicative of
results for the entire year.
NOTE 3 - MINORITY INTEREST
Included in the operations of Falcon Telecable, one of the Owned
Subsidiaries, 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.
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<PAGE> 7
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
====================================================
NOTE 4 - SALE OF SYSTEMS
On July 1, 1996, the Partnership sold certain Owned Systems located
in Georgia ("Eastern Georgia") that were acquired from Falcon First in December
1995. The sales price of $15 million approximated book value. These cable
systems served approximately 9,500 homes subscribing to cable service at the
time of sale.
NOTE 5 - RECLASSIFICATIONS
Certain 1996 amounts have been reclassified to conform to the 1997
presentation.
NOTE 6 - ACQUISITION OF FALCON CABLE SYSTEMS COMPANY
The Partnership acquired FCSC on July 12, 1996. Had FCSC been
acquired on January 1, 1996, revenues would have been increased by $1.7 million
and $27.6 million for the three and nine months ended September 30, 1996 and net
loss would have been increased by $3.3 million and $24.9 million for the three
and nine months ended September 30, 1996 on a pro forma basis. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Results of Operations (Pro Forma)."
NOTE 7 - TRANSACTIONS WITH AFFILIATES
On June 6, 1997, the Partnership and ECC formed Enstar Finance
Company, LLC ("EFC"), an unrestricted subsidiary. On September 30, 1997, EFC
obtained a secured bank facility of up to $35 million from two agent banks in
order to provide funds that would in turn be advanced to certain of the Enstar
Partnerships. $7,500,000 was advanced to EFC, and in turn loaned by EFC to
certain of the Enstar Partnerships, at closing. The EFC loan is non-recourse to
the Partnership and matures on August 31, 2001 at which time all funds
previously advanced will be due in full. Both the EFC loans receivable from the
Enstar Partnerships and the EFC loan payable to its banks are consolidated for
reporting purposes, although this debt is not required to be included in the
Partnership's covenant compliance computations.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
On or about September 2, 1997, the Partnership was named in a
putative class action suit filed against Falcon Classic Cable Income Properties,
L.P. ("Classic" or "Falcon Classic"), its general partner and certain of its
directors and officers with respect to the planned purchase of the Falcon
Classic assets by certain of the Owned Subsidiaries. The Partnership and Falcon
Classic intend to vigorously defend themselves against this suit. For further
discussion, see "Recent Developments" and "Liquidity and Capital Resources."
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<PAGE> 8
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The Cable Television Consumer Protection and Competition Act of 1992
(the "1992 Cable Act") required the Federal Communications Commission ("FCC")
to, among other things, implement extensive regulation of the rates charged by
cable television systems for basic and programming service tiers, installation,
and customer premises equipment leasing. Compliance with those rate regulations
has had a negative impact on the Partnership's revenues and cash flow. The
Telecommunications Act of 1996 (the "1996 Telecom Act") substantially changed
the competitive and regulatory environment for cable television and
telecommunications service providers. Among other changes, the 1996 Telecom Act
provides that the regulation of programming service tiers will be phased out
altogether in 1999. 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 1996 Telecom Act.
There can be no assurance as to what, if any, further 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 historical
financial results as described below are not necessarily indicative of future
performance.
On July 12, 1996, the Partnership, through a newly-formed and
wholly-owned partnership, Falcon Cable Systems Company II, L.P. ("FCSC II"),
acquired the assets of FCSC for approximately $247.4 million in cash. FCSC was
previously managed by the Partnership for a fee and, as such, its systems were
classified as Affiliated Systems in the periods prior to the acquisition date.
Commencing July 12, 1996, the FCSC II systems have been included as Owned
Systems. Management fees and reimbursed expenses received by the Partnership
from FCSC prior to July 12, 1996 are included as revenue from the Affiliated
Systems and have not been eliminated in consolidation. Such fees have been
eliminated in consolidation since July 12, 1996.
This Report includes certain forward looking statements regarding,
among other things, future results of operations, regulatory requirements,
pending business combination and acquisition transactions, competition, capital
needs and general business conditions applicable to the Partnership. Such
forward looking statements involve risks and uncertainties including, without
limitation, the uncertainty of legislative and regulatory changes and the rapid
developments in the competitive environment facing cable television operators
such as the Partnership. In addition to the information provided herein,
reference is made to the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1996 and the other periodic reports filed by the Partnership
with the Securities and Exchange Commission from time to time for additional
information regarding such matters and the effect thereof on the Partnership's
business.
RECENT DEVELOPMENTS
On June 3, 1997, the Partnership entered into a non-binding
memorandum of understanding (the "MOU") with TCI Communications, Inc. ("TCI").
The MOU was approved by the requisite vote of the Partnership's Board of
Representatives and Partners on June 23, 1997. The MOU contemplates the
formation of a newly-formed limited partnership ("Falcon Communications") and
the contribution to Falcon Communications by TCI of the assets of certain cable
television systems serving approximately 300,000 homes subscribing to cable
service, subject to certain indebtedness. FHGLP will contribute to Falcon
-8-
<PAGE> 9
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
RECENT DEVELOPMENTS (CONCLUDED)
Communications its Owned Subsidiaries, representing approximately 592,000 homes
subscribing to cable service. The 592,000 includes approximately 48,000 homes
subscribing to cable service to be acquired from Falcon Classic pursuant to a
pending asset acquisition transaction. The Partnership also intends to acquire
the cable television systems owned by Falcon Video Communications, L.P.
("Video"), an affiliated partnership, and contribute those systems to Falcon
Communications. Video owns cable television systems which serve approximately
70,000 homes subscribing to cable service. The requisite approval of the owners
of Video to this transaction has not, however, been received as of the date of
this Report. As consideration for the contribution of these assets (including
Video), it is currently contemplated that TCI will receive limited partnership
interests representing approximately 43% of the equity of Falcon Communications
and the Partnership will receive 57% of the equity of Falcon Communications.
In addition, in connection with the consummation of the transactions
with TCI and Falcon Communications, (i) all of the Partnership's outstanding
Class C limited partnership units and (ii) certain of the Class A and B limited
partnership units of other partners ("Other Partners") in the Partnership (other
than those interests held by Falcon Holding Group, Inc., the general partner,
members of management of the Partnership and entities controlled by or
affiliated with Marc B. Nathanson or members of the Nathanson family, the
foregoing, collectively, "Falcon Management") will be redeemed for interests in
Falcon Communications. TCI will purchase these interests from the Other Partners
for an aggregate cash payment of approximately $156.3 million. Assuming
completion of these transactions as currently contemplated (including ultimate
approval by the owners of Video), the equity interests in the Partnership will
thereafter be owned approximately 58% by Falcon Management, 33% by the Other
Partners and 9% by the former owners of Video. In exchange for such partial
redemption, the Class A and B limited partnership holders will waive their
liquidity rights and substantially all of their voting rights. See "Liquidity
and Capital Resources."
The consummation of the transactions described above is subject to
TCI, the Partnership and certain other parties entering into definitive
agreements; to the Partnership entering into a definitive agreement with Video;
to the Partnership and TCI obtaining numerous required regulatory and other
related consents and to obtaining satisfactory financing arrangements on
acceptable terms. Further, the ultimate terms of certain of the transactions
described above, including the contribution of assets by TCI and the acquisition
of Video, are subject to changes that may be necessary to accommodate the tax,
accounting, regulatory and other similar constraints applicable to the parties
involved.
Separately, in June 1997 the Partnership also exercised its right to
acquire the cable television systems operated by Falcon Classic for $82 million
in cash, representing the appraised value of those assets and entered into a
related asset purchase agreement. This transaction is pending while the parties
seek the requisite regulatory approvals. See "Liquidity and Capital Resources."
Although the foregoing reflects activities which the Partnership and
certain of its affiliates are currently pursuing with respect to the
Partnership, the foregoing is subject to change at any time. Accordingly, there
can be no assurance that the transactions described above will be successfully
consummated or, if successfully completed, when they might be completed or the
ultimate terms thereof.
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<PAGE> 10
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
RESULTS OF OPERATIONS (PRO FORMA)
The historical results of operations of the Partnership for 1996 did
not include the results of FCSC for the period January 1, 1996 through July 11,
1996. FCSC has been managed by the Partnership prior to and subsequent to the
acquisition and has been affected by the same general trends in operating costs
and revenues as all of the Partnership's cable systems. Accordingly, the
Partnership believes that it is more meaningful to compare 1997 operations to
1996 operations on a pro forma basis assuming that the acquisition of FCSC had
occurred on January 1, 1996. The pro forma results include the effect of
increased amortization relating to the allocated purchase price of the assets
acquired, and the effect of increased interest expense related to the increase
in debt incurred to finance the acquisition. Set forth in the table below are
pro forma results of operations prepared on this basis. These results are not
necessarily indicative of what would have occurred had the acquisition actually
been made as of that date or of results which may occur in the future.
<TABLE>
<CAPTION>
Pro Forma Actual Pro Forma Actual
Three months Three months Nine months Nine months
ended ended ended ended
September 30, September 30, September 30, September 30,
1996 1997 1996 1997
------------- ------------- ------------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
OPERATIONS STATEMENT DATA
Revenues $ 61,138 $ 64,515 $181,388 $192,482
Costs and expenses 28,010 30,485 82,935 90,374
Depreciation and amortization 30,452 28,637 93,284 87,270
-------- -------- -------- --------
Operating income 2,676 5,393 5,169 14,838
Interest expense, net (19,945) (19,658) (62,714) (58,979)
Equity in net income of
investee partnerships 68 212 134 183
Other expense, net (109) (1,416) (398) (1,616)
Income tax benefit (expense) (740) 200 567 1,322
-------- -------- -------- --------
Loss before extraordinary item $(18,050) $(15,269) $(57,242) $(44,252)
======== ======== ======== ========
</TABLE>
The Partnership's revenues increased from $61.1 million to $64.5
million, or by 5.5%, and $181.4 million to $192.5 million, or by 6.1%, for the
three and nine months ended September 30, 1997 compared to the corresponding
periods in 1996. Of the $3.4 million net increase in revenues for the three
months ended September 30, 1997 as compared to the corresponding period in 1996,
$3.3 million was due to increased cable service revenues and $82,000 was due to
increases in management fees. The $3.3 million increase in cable service
revenues was caused principally by increases of $2.6 million related to
increases in regulated service rates implemented during 1996 and 1997, $1.8
million related to increases in unregulated service rates implemented during
1996 and in May 1997 and $393,000 due to increases in advertising sales. These
increases were partially offset by decreases of $1.3 million due to reductions
in the number of premium subscriptions for cable service and $185,000 due to
reductions in the number of regulated subscriptions for cable service. Of the
$11.1 million net increase in revenues for the nine months ended September 30,
1997 compared to the corresponding period in 1996, $10.4 million was due to
increased cable service revenues and
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<PAGE> 11
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
RESULTS OF OPERATIONS (PRO FORMA) (CONTINUED)
$664,000 was due to increased management fees. The $10.4 million increase in
cable service revenues was caused principally by increases of $13.5 million
related to increases in regulated ($10.5 million) and unregulated ($3 million)
service rates, $1.4 million due to the restructuring of The Disney Channel,
$930,000 due to increases in advertising sales and $311,000 due to programmer
incentives. These increases were partially offset by decreases of $3 million due
to reductions in the number of premium subscriptions for cable service, $1.8
million related to the Eastern Georgia cable systems sold on July 1, 1996,
$853,000 due to reductions in the number of regulated subscriptions for cable
service and $116,000 related to decreases in other revenues. As of September 30,
1997, the Owned Systems had approximately 544,400 homes subscribing to cable
service and 176,400 premium service units. Excluding the Eastern Georgia cable
systems sold on July 1, 1996, the Partnership's revenues increased 7.2% for the
nine months ended September 30, 1997 compared to the corresponding period in
1996.
Management and consulting fees earned by the Partnership increased
from $1.2 million and $3.4 million to $1.2 million and $4 million for the three
and nine months ended September 30, 1997 compared to the corresponding periods
in 1996. The increased fees resulted primarily from recording in 1997 the
balance of previously deferred 1995 fees from one of the Affiliated
Partnerships, Falcon Classic.
Service costs increased from $18.1 million to $19.3 million, or by
6.5%, and from $51.6 million to $56.3 million, or by 9.2%, for the three and
nine months ended September 30, 1997 compared to the corresponding periods in
1996. Service costs represent costs directly attributable to providing cable
services to customers. The $1.2 million and $4.7 million increases in service
costs for the three and nine months ended September 30, 1997 compared to the
corresponding periods in 1996 were primarily caused by an increase in
programming fees paid to program suppliers (including primary satellite fees).
General and administrative expenses increased from $9.9 million to
$11.2 million, or by 13.2%, and from $31.4 million to $34.1 million, or by 8.7%,
for the three and nine months ended September 30, 1997 compared to the
corresponding periods in 1996. The $1.3 million and $2.7 million increases for
the three and nine months ended September 30, 1997 compared to the corresponding
periods in 1996 related primarily to increases in bad debt expense and higher
costs associated with advertising sales and marketing.
Operating income before income taxes, depreciation and amortization
(EBITDA) is a commonly used financial analysis tool for measuring and comparing
cable television companies in several areas, such as liquidity, operating
performance and leverage. EBITDA as a percentage of revenues decreased from
54.2% to 52.7% and from 54.3% to 53.0% for the three and nine months ended
September 30, 1997 compared to the corresponding periods in 1996. The decrease
was primarily caused by increases in programming costs and other expenses in
excess of revenue increases, as described above. EBITDA increased from $33.1
million to $34 million, or by 2.7%, and from $98.4 million to $102.1 million, or
by 3.7% during the three and nine months ended September 30, 1997 compared to
the corresponding periods in 1996. Excluding the Eastern Georgia cable systems
sold on July 1, 1996, the Partnership's EBITDA increased from $33.1 million to
$34 million, or by 2.7% and from $97.5 million to $102.1 million, or by 4.8%.
EBITDA should be considered in addition to and not as a substitute for net
income and cash flows determined in accordance with generally accepted
accounting principles as an indicator of financial performance and liquidity.
-11-
<PAGE> 12
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
RESULTS OF OPERATIONS (PRO FORMA) (CONCLUDED)
Depreciation and amortization expense decreased from $30.4 million to
$28.6 million, or by 6%, and from $93.3 million to $87.3 million, or by 6.4%,
for the three and nine months ended September 30, 1997 compared to the
corresponding periods in 1996. The $1.8 million and $6 million decreases in
depreciation and amortization expense were primarily due to accelerated 1996
depreciation related to asset retirements and to intangible assets becoming
fully amortized.
Operating income increased from $2.7 million to $5.4 million, or by
101.5%, and from $5.2 million to $14.9 million, or by 187.1%, for the three and
nine months ended September 30, 1997 compared to the corresponding periods in
1996. The $2.7 million and $9.7 million increases for the three and nine months
ended September 30, 1997 compared to the corresponding periods in 1996 were
principally due to increases in revenues in excess of increases in operating
expenses and to a decrease in depreciation and amortization expense as discussed
above. Excluding the Eastern Georgia cable systems sold on July 1, 1996, the
Partnership's operating income increased $2.7 million and $10.6 million for the
three and nine months ended September 30, 1997 compared to the corresponding
periods in 1996.
Interest expense, including the effects of interest rate hedging
agreements, decreased from $19.9 million to $19.7 million, or by 1.4%, and from
$62.7 million to $59 million, or by 6%, for the three and nine months ended
September 30, 1997 compared to the corresponding periods in 1996. The decrease
was primarily due to lower average debt balances outstanding. The decrease
during the three and nine months ended September 30, 1997 was partially offset
by the effect of slightly higher average interest rates (8.9% and 8.8% during
the three and nine months ended September 30, 1997 compared to 8.6% and 8.7%
during the corresponding periods in 1996). Payment-in-kind interest expense (in
which interest payment requirements are met by an increase in the principal
amount of the notes) associated with the 11% Senior Subordinated Notes amounted
to $7.4 million and $21.8 million for the three and nine months ended September
30, 1997 compared to $6.7 million and $19.6 million for the corresponding
periods in 1996. Interest rate hedging agreements resulted in additional
interest income of $69,000 during the three months ended September 30, 1997 and
additional interest expense of $279,000 during the nine months ended September
30, 1997 compared to additional interest expense of $238,000 and $870,000 during
the corresponding periods in 1996.
Other, net increased from $849,000 of expense for the three months
ended September 30, 1996 to $1.2 million of expense for the corresponding period
in 1997 and changed from $169,000 of income for the nine months ended September
30, 1996 to $294,000 of expense for the corresponding period in 1997. The
$367,000 and $463,000 changes for the three and nine months ended September 30,
1997 were primarily due to an increase in income tax benefits recorded during
1997 and to a $1.4 million write down of the Partnership's investment in France
in the third quarter of 1997.
Due to the factors described above, the Partnership's net loss
decreased from $18.1 million to $15.3 million, or by 15.4%, and decreased from
$57.2 million to $44.2 million, or by 22.7%, for the three and nine months ended
September 30, 1997 compared to the corresponding periods in 1996.
-12-
<PAGE> 13
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Partnership's primary need for capital has been to
acquire cable systems and to finance plant extensions, rebuilds and upgrades,
and to add addressable converters to certain of the Owned Systems. The
Partnership spent $57.7 million during 1996 on capital expenditures, excluding
the acquisition of FCSC. Management's current plan calls for the expenditure of
approximately $70 million in capital expenditures in 1997, including
approximately $40 million to rebuild and upgrade certain of the Owned Systems.
The Partnership's proposed spending plans (including its plans for 1997), are
constantly being reviewed and revised with respect to changes in technology,
acceptable leverage parameters (including those specified in its debt
agreements), franchise requirements, competitive circumstances and other
factors. The Partnership spent $46.8 million on non-acquisition capital
expenditures during the nine months ended September 30, 1997, including
approximately $28.5 million for rebuilds and upgrades.
As previously discussed in more detail in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1996, on July 12, 1996 the
Partnership amended its principal credit facility with a $775 million Amended
and Restated Credit Agreement (the "Amended and Restated Credit Agreement") in
order to finance the acquisition of the assets of FCSC, pay transaction and
financing costs of approximately $5.6 million and prepay $28.6 million of
subordinated debt.
The Amended and Restated Credit Agreement provides for maximum
available borrowings as follows: $775 million through December 30, 1997; $774
million at December 31, 1997; $773 million at December 31, 1998; $706 million at
December 31, 1999; $611 million at December 31, 2000; $535 million at December
31, 2001; and $439 million at December 31, 2002. As of September 30, 1997, the
amount outstanding under the Amended and Restated Credit Agreement was $601
million and the Partnership had available to it additional borrowings thereunder
of approximately $98 million. The Amended and Restated 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 maintain hedging arrangements with respect to at least 50%
of the outstanding borrowings thereunder. As of September 30, 1997, borrowings
under the Amended and Restated Credit Agreement bore interest at an average rate
of 8% (including the effect of interest rate hedging agreements). The
Partnership has entered into fixed interest rate hedging agreements with an
aggregate notional amount at September 30, 1997 of $600 million. Agreements in
effect at September 30, 1997 totaled $560 million, with the remaining $40
million to become effective as certain of the existing contracts mature during
1997 and 1998. The agreements serve as a hedge against interest rate
fluctuations associated with the Partnership's variable rate debt. These
agreements expire through July 21, 2001. The Amended and Restated 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's management believes that it was in compliance with all such
requirements as of September 30, 1997.
On July 1, 1996, the Partnership sold certain of its Eastern Georgia
cable systems for $15 million, the proceeds being used to temporarily repay
outstanding debt under the former Bank Credit Agreement.
-13-
<PAGE> 14
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Partnership frequently considers opportunities to sell assets that it views
as non-strategic.
On October 9, 1997, the Partnership sold its 98,431 shares of Reseaux
Cable de France stock for approximately $701,000.
On March 29, 1993, the Partnership issued $175 million aggregate
principal amount of its 11% Senior Subordinated Notes (the "Notes") in
connection with the Partnership's formation. As a result of payment-in-kind
interest payments, the aggregate principal of the Notes outstanding as of
September 30, 1997 had increased to $282 million. Future interest payments are
expected to be paid in kind until the year 2000, when cash payment is required.
The Notes also contain various restrictions relating to, among other things,
mergers and acquisitions, a change in control and the incurrence of additional
indebtedness. The incurrence of additional indebtedness test limits the ratio of
the total debt of the Partnership to Operating Cash Flow (as defined in the
indenture) to 7.5 to 1 if such indebtedness is incurred through December 31,
1999 and 6.5 to 1 thereafter.
As of September 30, 1997, the Partnership also had outstanding an
aggregate of $15 million in principal amount of other subordinated debt.
On June 6, 1997, the Partnership and ECC formed EFC, an unrestricted
subsidiary. The sole purpose of EFC is to obtain a bank facility in order to
provide funds that will in turn be advanced to certain of the Enstar
Partnerships to repay existing bank obligations and other liabilities and to
provide capital to fund future rebuild and upgrade requirements. Based on
discussions with prospective lenders, ECC believes that this structure provides
capital to the Enstar Partnerships on terms more favorable than could be
obtained on a stand-alone basis. The Partnership's capital contribution to EFC
was $250,000. On September 30, 1997, EFC obtained a secured bank facility of $35
million from two agent banks. At closing, $7,500,000 was advanced to EFC, and in
turn loaned by EFC to certain of the Enstar Partnerships. EFC paid $515,000 in
transaction and financing costs, which in turn were charged to certain of the
Enstar Partnerships. The EFC loan is non-recourse to the Partnership; therefore,
while both the EFC loans receivable from the Enstar Partnerships and the EFC
loan payable to its banks are consolidated for reporting purposes, the debt is
not included in the Partnership's covenant compliance computations. As a result
of the EFC financing, on September 30, 1997 the Partnership also received
payment of $1.5 million of previously deferred management fees and reimbursed
expenses and $590,000 of deferred programming fees from certain Enstar
Partnerships.
The Partnership (i.e., FHGLP) is a separate, stand-alone holding
company which employs all of the management personnel. All of the Owned Systems
are owned by subsidiaries of the Partnership. Accordingly, the Partnership is
financially dependent on the receipt of permitted payments from the Owned
Systems, management and consulting fees from both domestic and the remaining
international cable ventures, and the reimbursement of specified expenses by
certain of the Affiliated Systems to fund its
-14-
<PAGE> 15
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
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 Amended and Restated Credit
Agreement permits the Owned Partnerships to remit to FHGLP no more than 4.25% of
their net cable revenues, as defined, in any year. For the period ended
September 30, 1997 the limit was approximately $7.8 million ($4.7 million was
actually remitted). Receivables from the Affiliated Systems for services and
reimbursements described above amounted to approximately $3.5 million at
September 30, 1997.
The Partnership has historically pursued a strategy of seeking to
acquire attractive acquisition candidates, with an emphasis on the acquisition
of systems which can be integrated with its existing operations. Over the past
two years, the Partnership has emphasized the acquisition of Affiliated Systems
due to its familiarity with these assets and because, in many cases, these
assets were already operationally integrated with Owned Systems located nearby.
In August 1996, the Partnership's Board of Representatives authorized its
management to commence the "Appraisal Process," as defined in the partnership
agreement of Falcon Classic, in order to determine whether the Partnership
should exercise its right under that partnership agreement to acquire some or
all of Falcon Classic's cable systems, all of which constitute Affiliated
Systems. On June 27, 1997, certain of the Owned Subsidiaries entered into a
definitive purchase agreement to acquire the cable television systems operated
by Classic for $82 million in cash, representing the appraised value of those
assets (the "Sale"). The parties are seeking the necessary regulatory and other
consents. As of September 30, 1997, the Falcon Classic cable systems had
approximately 48,000 homes subscribing to cable service.
The consummation of the Sale is conditioned upon the receipt of the
necessary regulatory approvals, principally including those required pursuant to
certain cable television system franchises and federal communications law.
There can be no assurance that the receipt of the remainder of such approvals
will occur in a timely manner, if at all. As of the date of this Report, a
number of these approvals have not yet been obtained, and if not obtained, may
jeopardize the ultimate consummation of the Sale. The Partnership presently
expects to finance the Sale with borrowings under its Amended and Restated
Credit Agreement. For further information regarding the Falcon Classic Appraisal
Process, see the information provided or referred to under the caption "Item
13., Certain Relationships and Related Transactions - Affiliated Partnerships -
Falcon Classic Appraisal Process" in the Partnership's Annual Report on Form
10-K for the year ended December 31, 1996 and the related reports filed by
Falcon Classic.
On or about September 2, 1997, Paul J. Issac, a Unitholder of Falcon
Classic, purporting to act on behalf of himself and other similarly situated
Unitholders, filed a putative class action suit in Los Angeles County Superior
Court against its general partner, the Partnership and certain of its directors
and officers alleging "Breach of Fiduciary Duty, Breach of Contract, [and]
Breach of the Implied Covenant of Good Faith and Fair Dealing" in connection
with the pending sale of Falcon Classic's assets to certain of the Owned
Subsidiaries pursuant to the terms of Falcon Classic's Partnership Agreement
(the "Lawsuit").
The Partnership and Falcon Classic believe the Lawsuit lacks merit
and intend to vigorously defend themselves and to proceed with the sale
transaction. There can be, however, no assurance that the pendency of the
lawsuit will not delay, or lead to the termination of, the pending Sale
transaction.
-15-
<PAGE> 16
FALCON HOLDING GROUP, L.P. AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES (CONCLUDED)
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 September 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 Amended and Restated 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. As previously discussed in "Recent Developments," if the proposed
transaction with TCI is consummated, the Group I, II, III and IV limited
partners will waive these liquidity rights. If the TCI transaction is not
consummated, 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.
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (HISTORICAL)
Cash provided by operating activities (including interest expense and
management fee income) decreased from $64.9 million to $56.4 million for the
nine months ended September 30, 1997 compared to the corresponding period in
1996, a decrease of $8.5 million. The decrease resulted primarily from a net
decrease of $10.7 million in other operating items (receivables, other assets,
payables, accrued expenses and subscriber deposits and prepayments) partially
offset by a $2.2 million increase in payment-in-kind interest expense related to
the 11% Subordinated Notes.
Cash used in investing activities decreased from $270.6 million to
$47.9 million for the nine months ended September 30, 1997 compared to the
corresponding period in 1996. The decrease was primarily due to the absence in
1997 of a $247.4 million acquisition of cable assets and a $2.7 million decrease
in intangible assets, partially offset by the absence in 1997 of $15 million
cash provided in connection with the sale of a system and to an increase in
capital expenditures of $11.4 million.
Cash from financing activities decreased from cash provided of $206.5
million to a use of cash of $8.3 million for the nine months ended September 30,
1997 compared to the corresponding period in 1996 primarily due to decreased
borrowings of debt in 1997.
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.
-16-
<PAGE> 17
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 10.56 - Credit Agreement dated as of
September 30, 1997 among Enstar Finance
Company, LLC, Banque Paribas, as
Administrative Agent, and Bank of America
National Trust and Savings Association, as
Documentation Agent.
Exhibit 10.57 - Amended and Restated Credit
Agreement Consent No. 1 dated as of July 11,
1997 between the affiliates of Falcon
Holding Group, L.P., BankBoston, The First
National Bank of Boston, as Managing Agent,
Toronto-Dominion (Texas) Inc., as
Administrative Agent and NationsBank of
Texas, N.A., as Syndication Agent.
Exhibit 10.58 - Amended and Restated Credit
Agreement Amendment No. 2 dated as of
September 3, 1997, among the affiliates of
Falcon Holding Group, L.P., BankBoston,
N.A., as Managing Agent for itself and the
other lenders, Toronto-Dominion (Texas)
Inc., as Administrative Agent and
NationsBank of Texas, N.A., as Syndication
Agent.
(b) No Reports on Form 8-K were filed for the
quarter for which this Report is filed.
<PAGE> 18
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
General Partner
Date: November 13, 1997 By: /s/ Michael K. Menerey
-----------------------------
Michael K. Menerey, Secretary
and Chief Financial Officer
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
10.56 Credit Agreement dated as of September 30, 1997 among Enstar Finance
Company, LLC, Banque Paribas, as Administrative Agent, and Bank of
America National Trust and Savings Association, as Documentation
Agent.
10.57 Amended and Restated Credit Agreement Consent No. 1 dated as of July
11, 1997 between the affiliates of Falcon Holding Group, L.P.,
BankBoston, The First National Bank of Boston, as Managing Agent,
Toronto-Dominion (Texas) Inc., as Administrative Agent and
NationsBank of Texas, N.A., as Syndication Agent.
10.58 Amended and Restated Credit Agreement Amendment No. 2 dated as of
September 3, 1997, among the affiliates of Falcon Holding Group,
L.P., BankBoston, N.A., as Managing Agent for itself and the other
lenders, Toronto-Dominion (Texas) Inc., as Administrative Agent and
NationsBank of Texas, N.A., as Syndication Agent.
</TABLE>
E-1
<PAGE> 1
EXHIBIT 10.56
CREDIT AGREEMENT
Dated as of September 30, 1997
among
ENSTAR FINANCE COMPANY, LLC,
BANQUE PARIBAS,
as Administrative Agent,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent,
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C> <C>
ARTICLE I
DEFINITIONS........................................... 1
1.01 Certain Defined Terms....................................................... 1
1.02 Other Interpretive Provisions............................................... 22
1.03 Accounting Principles....................................................... 23
ARTICLE II
THE CREDIT............................................ 24
2.01 Amounts and Terms of Commitments............................................ 24
2.02 Loan Accounts............................................................... 24
2.03 Procedure for Borrowing..................................................... 24
2.04 Conversion and Continuation Elections....................................... 25
2.05 Voluntary Termination or Reduction of Commitments........................... 27
2.06 Optional Prepayments........................................................ 27
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions............. 27
(a) Asset Dispositions................................................ 27
(b) Repayment of Partnership Loans.................................... 28
(c) Debt Issuance..................................................... 28
(d) Prepayment Due to Reduction of Commitments........................ 28
(e) General........................................................... 28
(f) Reduction of Commitment........................................... 28
2.08 Repayment................................................................... 29
2.09 Interest.................................................................... 29
2.10 Fees........................................................................ 30
(a) Arrangement, Agency Fees.......................................... 30
(b) Commitment Fees................................................... 30
2.11 Computation of Fees and Interest............................................ 30
2.12 Payments by the Company..................................................... 31
2.13 Payments by the Banks to the Administrative Agent........................... 32
2.14 Sharing of Payments, Etc.................................................... 32
2.15 Security.................................................................... 33
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY............................. 33
3.01 Taxes....................................................................... 33
3.02 Illegality.................................................................. 35
3.03 Increased Costs and Reduction of Return..................................... 35
3.04 Funding Losses.............................................................. 36
3.05 Inability to Determine Rates................................................ 37
3.06 Survival.................................................................... 37
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C> <C>
3.07 Substitution of Banks....................................................... 37
ARTICLE IV
CONDITIONS PRECEDENT....................................... 38
4.01 Conditions of Initial Loans................................................. 38
(i) Credit Agreement and Notes........................................ 38
(ii) Resolutions; Incumbency........................................... 38
(iii) Organization Documents; Good Standing............................. 38
(iv) Legal Opinions.................................................... 39
(v) Payment of Fees................................................... 39
(vi) Collateral Documents.............................................. 39
(vii) Insurance Policies................................................ 40
(viii) Certificate....................................................... 40
(ix) Other Documents................................................... 40
4.02 Conditions to All Borrowings................................................ 41
(a) Notice of Borrowing or Conversion/Continuation.................... 41
(b) Continuation of Representations and Warranties.................... 41
(c) No Existing Default............................................... 41
(d) No Future Advance Notice.......................................... 41
ARTICLE V
REPRESENTATIONS AND WARRANTIES................................. 42
5.01 Corporate Existence and Power............................................... 42
5.02 Corporate Authorization; No Contravention................................... 43
5.03 Governmental Authorization.................................................. 43
5.04 Binding Effect.............................................................. 43
5.05 Litigation.................................................................. 43
5.06 No Default.................................................................. 44
5.07 ERISA Compliance............................................................ 44
5.08 Use of Proceeds; Margin Regulations......................................... 45
5.09 Title to Properties......................................................... 45
5.10 Taxes....................................................................... 45
5.11 Financial Condition......................................................... 45
5.12 Collateral Documents........................................................ 46
5.13 Regulated Entities.......................................................... 46
5.14 No Burdensome Restrictions.................................................. 46
5.15 Copyrights, Patents, Trademarks and Licenses, etc........................... 46
5.16 Subsidiaries................................................................ 47
5.17 Insurance................................................................... 47
5.18 Solvency.................................................................... 47
5.19 Swap Obligations............................................................ 47
5.20 Full Disclosure............................................................. 47
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C> <C>
ARTICLE VI
AFFIRMATIVE COVENANTS...................................... 48
6.01 Financial Statements........................................................ 48
6.02 Certificates; Other Information............................................. 50
6.03 Notices..................................................................... 51
6.04 Preservation of Corporate Existence, Etc.................................... 53
6.05 Maintenance of Property..................................................... 53
6.06 Insurance................................................................... 53
6.07 Payment of Obligations...................................................... 54
6.08 Compliance with Laws........................................................ 54
6.09 Compliance with ERISA....................................................... 54
6.10 Inspection of Property and Books and Records................................ 54
6.11 Environmental Laws.......................................................... 55
6.12 Use of Proceeds............................................................. 55
6.13 Enforcement of Enstar Partnership Loan Agreements........................... 55
6.14 Further Assurances.......................................................... 55
ARTICLE VII
NEGATIVE COVENANTS....................................... 56
7.01 Limitation on Liens......................................................... 56
7.02 Disposition of Assets....................................................... 57
7.03 Consolidations and Mergers.................................................. 57
7.04 Loans and Investments....................................................... 57
7.05 Limitation on Indebtedness.................................................. 58
7.06 Transactions with Affiliates................................................ 58
7.07 Use of Proceeds............................................................. 58
7.08 Contingent Obligations...................................................... 58
7.09 Joint Ventures.............................................................. 58
7.10 Lease Obligations........................................................... 59
7.11 Restricted Payments......................................................... 59
7.12 ERISA....................................................................... 59
7.13 Change in Business.......................................................... 59
7.14 Accounting Changes.......................................................... 59
7.15 Subsidiaries................................................................ 59
7.16 Financial Covenants......................................................... 59
7.17 Hedging Requirements........................................................ 60
7.18 Amendment of Enstar Partnership Loan Agreements............................. 60
ARTICLE VIII
EVENTS OF DEFAULT........................................ 61
8.01 Event of Default............................................................ 61
(a) Non-Payment....................................................... 61
(b) Representation or Warranty........................................ 61
(c) Specific Defaults................................................. 61
(d) Other Defaults.................................................... 61
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C> <C> <C>
(e) Cross-Default..................................................... 61
(f) Insolvency; Voluntary Proceedings................................. 62
(g) Involuntary Proceedings........................................... 62
(h) ERISA............................................................. 62
(i) Monetary Judgments................................................ 63
(j) Non-Monetary Judgments............................................ 63
(k) Change of Control................................................. 63
(l) Loss of Licenses.................................................. 63
(m) Adverse Change.................................................... 63
(p) Collateral........................................................ 63
8.02 Remedies.................................................................... 64
8.03 Specified Swap Contract Remedies............................................ 64
8.04 Rights Not Exclusive........................................................ 65
ARTICLE IX
THE AGENTS............................................ 65
9.01 Appointment and Authorization; "Agent"...................................... 65
9.02 Delegation of Duties........................................................ 65
9.03 Liability of Agent.......................................................... 65
9.04 Reliance by Agent........................................................... 66
9.05 Notice of Default........................................................... 66
9.06 Credit Decision............................................................. 67
9.07 Indemnification of Agent.................................................... 68
9.08 Agent in Individual Capacity................................................ 68
9.09 Successor Agent............................................................. 68
9.10 Withholding Tax............................................................. 69
9.11 Collateral Matters.......................................................... 70
ARTICLE X
MISCELLANEOUS.......................................... 71
10.01 Amendments and Waivers..................................................... 71
10.02 Notices.................................................................... 72
10.03 No Waiver; Cumulative Remedies............................................. 73
10.04 Costs and Expenses......................................................... 73
10.05 Company Indemnification.................................................... 74
10.06 Marshalling; Payments Set Aside............................................ 75
10.07 Successors and Assigns..................................................... 76
10.08 Assignments, Participations, etc........................................... 76
10.09 Confidentiality............................................................ 78
10.10 Set-off.................................................................... 79
10.11 Notification of Addresses, Lending Offices, Etc............................ 79
10.12 Counterparts............................................................... 79
10.13 Severability............................................................... 79
10.14 No Third Parties Benefited................................................. 79
10.15 Governing Law and Jurisdiction............................................. 80
10.16 Waiver of Jury Trial....................................................... 80
10.17 Entire Agreement........................................................... 81
</TABLE>
iv
<PAGE> 6
SCHEDULES
Schedule 2.01 Commitments
Schedule 5.18 Insurance Matters
Schedule 7.01 Permitted Liens
Schedule 10.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Promissory Note
Exhibit G Form of ECC Pledge Agreement
Exhibit H Form of ECC Security Agreement
Exhibit I Form of Enstar Partnership Loan Agreement
Exhibit J Form of Falcon Pledge Agreement
Exhibit K Form of FHGLP Pledge Agreement
Exhibit L Form of Pledge Agreement
Exhibit M Form of Security Agreement
v
<PAGE> 7
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of September 30, 1997, among
Enstar Finance Company, LLC, a Delaware limited liability company (the
"Company"), the several financial institutions from time to time party to this
Agreement (collectively, the "Banks"; individually, a "Bank"), Banque Paribas,
as administrative agent for the Banks and Bank of America National Trust and
Savings Association, as documentation agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a secured
revolving credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a Person,
or of any business or division of a Person, (b) the acquisition of in
excess of 50% of the capital stock, partnership interests, membership
interests or equity of any Person, or otherwise causing any Person to
become a Subsidiary, or (c) a merger or consolidation or any other
combination with another Person.
"Administrative Agent" means Banque Paribas in its capacity as
administrative agent for the Banks hereunder, and any successor
administrative agent arising under Section 9.09.
"Administrative Agent's Payment Office" means the address for
payments set forth on Schedule 10.02 or such other address as the
Administrative Agent may from time to time specify.
"Affiliate" means, as to any Person, any other Person
1
<PAGE> 8
which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, membership interests, by contract, or otherwise.
"Agent" means the Administrative Agent or the Documentation Agent.
"Agent-Related Persons" means the Administrative Agent, the
Documentation Agent and any successor agent arising under Section 9.09,
together with their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and Affiliates.
"Aggregate Specified Swap Amount" means, at any time, the sum of all
Specified Swap Amounts owing to all Swap Providers.
"Agreement" means this Credit Agreement.
"Applicable Margin" means (i) with respect to Base Rate Loans,
0.625%; and (ii) with respect to Offshore Rate Loans, 1.875%.
"Assignee" has the meaning specified in subsection 10.08(a).
"Attorney Costs" means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal
legal services and all disbursements of internal counsel.
"Authorized Officer" means, with respect to the Company the
Secretary or Assistant Secretary of its manager, with respect to ECC, its
Secretary or Assistant Secretary and with respect to Falcon, the Secretary
or Assistant Secretary of the general partner of its general partner.
"Bank" means the institutions specified in the introductory clause
hereto. Unless the context otherwise clearly requires, "Bank" includes any
such institution in its capacity as Swap Provider. Unless the context
otherwise clearly requires, references to any such institution as a "Bank"
shall also include any of such institution's Affiliates that may at any
time of determination be Swap Providers.
2
<PAGE> 9
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978
(11 U.S.C. Section 101, et seq.).
"Banque Paribas" means Banque Paribas, Los Angeles Agency.
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in
effect for such day as publicly announced from time to time by Banque
Paribas in Los Angeles, California, as its "base rate." (The "base rate"
is a rate set by Banque Paribas based upon various factors including
Banque Paribas' costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate.) Any change
in the base rate announced by Banque Paribas shall take effect at the
opening of business on the day specified in the public announcement of
such change.
"Base Rate Loan" means a Loan that bears interest based on the Base
Rate.
"BofA" means Bank of America National Trust and Savings Association,
a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by the Banks under Article
II, and, in the case of Offshore Rate Loans, having the same Interest
Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.
"Borrowing Enstar Partnership" means an Enstar Partnership that is a
party to an Enstar Partnership Loan Agreement under which there are
outstanding Advances or Loans (as each such term is defined in such Enstar
Partnership Loan Agreement) or any commitment of the Lender (as defined in
such Enstar Partnership Loan Agreement) to make any such Loan or Advance.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Los Angeles are
authorized or required by law to close and, if the applicable Business Day
relates to any Offshore Rate Loan, means such a day on which dealings are
carried on in the applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline,
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<PAGE> 10
request or directive of any central bank or other Governmental Authority,
or any other law, rule or regulation, whether or not having the force of
law, in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cash Interest Expense" means, for any Person and for any period,
total interest expense (including that portion attributable to capital
leases in accordance with GAAP and capitalized interest) of such Person
and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of such Person and its Subsidiaries payable in
cash during such period, including, all commissions, discounts and other
fees and charges owed with respect to letters of credit and banker's
acceptance financing and net costs under Swap Contracts.
"CERCLA" has the meaning specified in the definition of
"Environmental Laws."
"Change of Control" means any of the following events or
circumstances: (i) the failure of Falcon Holding Group, L.P. or Falcon
Holding Group Inc. to hold, directly or indirectly, in the aggregate 100%
of the membership interests of the Company, (ii) the failure of Falcon
Holding Group Inc. or Falcon Holding Group L.P. to hold, directly or
indirectly, in the aggregate 100% of the outstanding stock of ECC, (iii)
the failure of Falcon Holding Group Inc. to be the sole general partner of
Falcon Holding Group, L.P. and (iv) if any Person or Persons acting in
concert (other than Telecommunications, Inc. or an Affiliate of
Telecommunications Inc., Marc Nathanson, Greg Nathanson, Stanley
Itskowitch and/or any Nathanson Family Trust), together with Affiliates
thereof, shall in the aggregate, directly or indirectly, control or own
(beneficially or otherwise) more than 25% of the issued and outstanding
stock of Falcon Holding Group Inc.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by all Banks (or, in the
case of subsection 4.01(e), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Collateral" means all property and interests in property and
proceeds thereof now owned or hereafter acquired by the Company or ECC or
Falcon and their respective Subsidiaries in or upon which a Lien now or
hereafter exists in favor of the Banks, or an Agent on
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<PAGE> 11
behalf of the Banks, whether under this Agreement, the Collateral
Documents or under any other documents executed by any such Person and
delivered to an Agent or Banks.
"Collateral Documents" means, collectively, (i) the Security
Agreement, the Pledge Agreement, the Falcon Pledge Agreement, the FHGLP
Pledge Agreement, the ECC Security Agreement, the ECC Pledge Agreement and
all other security agreements, mortgages, deeds of trust, patent and
trademark assignments, lease assignments, guarantees and other similar
agreements between the Company or ECC or Falcon and the Banks or an Agent
for the benefit of the Banks now or hereafter delivered to the Banks or an
Agent pursuant to or in connection with the transactions contemplated
hereby, and all financing statements (or comparable documents now or
hereafter filed in accordance with the Uniform Commercial Code or
comparable law) against the Company or ECC or Falcon as debtor in favor of
the Banks or an Agent for the benefit of the Banks as secured party, and
(ii) any amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Commitment", as to each Bank, has the meaning specified in Section
2.01.
"Company" has the meaning specified in the introductory paragraph of
this Agreement.
"Compliance Certificate" means a certificate substantially in the
form of Exhibit C.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for
the payment or discharge of any such primary obligation, or to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the
owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or
hold harmless the holder of any such primary obligation against loss in
respect thereof (each, a
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<PAGE> 12
"Guaranty Obligation"); (b) with respect to any Surety Instrument issued
for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered, or (d) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations other than in respect of Swap
Contracts, shall be equal to the maximum reasonably anticipated liability
in respect thereof and, in the case of Contingent Obligations in respect
of Swap Contracts, shall be equal to the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document
or agreement to which such Person is a party or by which it or any of its
property is bound.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Loans of one Type to another Type,
or (b) continues as Loans of the same Type, but with a new Interest
Period, Loans having Interest Periods expiring on such date.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Disposition" means the sale, lease, conveyance or other disposition
of property, other than sales or other dispositions expressly permitted
under subsection 7.02(i).
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"EBITDA" means, with respect to any Person and with respect to any
period, net income for such period, plus
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<PAGE> 13
income tax expense for such period, plus gross interest expense for such
period (including net payments under Swap Contracts), plus depreciation
and amortization expense for such period, plus losses on sales of fixed
assets during such period, plus other non-cash charges, minus gains on
sales of fixed assets during such period, minus extraordinary gains for
such period, and minus non-operating income for such period, all
determined in accordance with GAAP.
"EBTDA" means, with respect to any Person and with respect to any
period, net income for such period, plus income tax expense for such
period, plus depreciation and amortization expense for such period, plus
losses on sales of fixed assets during such period, plus other non-cash
charges, minus gains on sales of fixed assets during such period, minus
extraordinary gains for such period, and minus non-operating income for
such period, all determined in accordance with GAAP.
"ECC" means Enstar Communications Corporation, a Georgia
corporation.
"ECC Pledge Agreement" means the pledge agreement, entered into by
ECC in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit G hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"ECC Security Agreement" means the security agreement, entered into
by ECC in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit H hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Eligible Assignee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States; and (c) a Person
that is primarily engaged in the business of commercial banking and that
is (i) a Subsidiary of a Bank, (ii) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (iii) a Person of which a Bank is a Subsidiary.
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<PAGE> 14
"Enstar Partnership" means any one of Enstar VII, a Georgia limited
partnership, Enstar X Ltd., a Georgia limited partnership, Enstar XI,
Ltd., a Georgia limited partnership, Enstar Income Program 1984-1, L.P., a
Georgia limited partnership, Enstar Income Program II-1, L.P., a Georgia
limited partnership, Enstar Income Program IV-1, L.P., a Georgia limited
partnership, Enstar Income Program IV-2, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Five-A, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Five-B, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Six-A, L.P., a Georgia limited
partnership, Enstar Income/Growth Program Six-B, L.P., a Georgia limited
partnership and Enstar Cable of Cumberland Valley, a Georgia general
partnership.
"Enstar Partnership Loan" means any loan made by the Company to any
Enstar Partnership (other than Enstar Income/Growth Program Five-A, L.P.,
Enstar Income/Growth Program Five-B, L.P. and Enstar Income Program II-1,
L.P.) pursuant to an Enstar Partnership Loan Agreement.
"Enstar Partnership Loan Agreement" means a loan agreement between
the Company and an Enstar Partnership (other than Enstar Income/Growth
Program Five-A, L.P., Enstar Income/Growth Program Five-B, L.P. and Enstar
Income Program II-1, L.P.) (including the exhibits and schedules attached
thereto), substantially in the form of Exhibit I hereto, with such changes
as agreed to by the Majority Banks, all "Loan Agreements" (as defined in
such loan agreement) and all other documents delivered or entered into in
connection therewith and the transactions contemplated thereby, each as
they may be amended, supplemented, restated or otherwise modified from
time to time.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type
of relief, resulting from or based upon the presence, placement,
discharge, emission or release (including intentional and unintentional,
negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental, placement, spills, leaks, discharges, emissions or
releases) of any Hazardous Material at, in, or from Property, whether
8
<PAGE> 15
or not owned by the Company.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health,
safety and land use matters; including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Emergency Planning and Community
Right-to-Know Act, the California Hazardous Waste Control Law, the
California Solid Waste Management, Resource, Recovery and Recycling Act,
the California Water Code and the California Health and Safety Code.
"ERISA" means the Employee Retirement Income Security Act of 1974,
and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the
Company or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer Plan is in reorganization; (d) the filing of a notice
of intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings
by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an
event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
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<PAGE> 16
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
"Event of Loss" means, with respect to any property, any of the
following: (a) any loss, destruction or damage of such property; (b) any
pending or threatened institution of any proceedings for the condemnation
or seizure of such property or for the exercise of any right of eminent
domain; or (c) any actual condemnation, seizure or taking, by exercise of
the power of eminent domain or otherwise, of such property, or
confiscation of such property or the requisition of the use of such
property.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Falcon" means Falcon Cablevision, a California limited partnership.
"Falcon Pledge Agreement" means the pledge agreement entered into by
Falcon in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit J hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite
the caption "Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day, the rate for
such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior
to 9:00 a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
Agent.
"Fee Letter" has the meaning specified in subsection 2.10(a).
"FHGLP Pledge Agreement" means the pledge agreement, entered into by
Falcon Holding Group, L.P. in favor of the
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<PAGE> 17
Documentation Agent on behalf of the Banks, substantially in the form of
Exhibit K hereto, as it may be amended, supplemented or otherwise modified
from time to time.
"Fiscal Quarter" means a fiscal quarter of the fiscal year of the
Company ending on the last day of March, June, September and December of
each calendar year.
"Fixed Charges" means, for any period, the sum of (i) gross interest
expense payable in cash during such period, (ii) scheduled principal
payments during such period on Indebtedness described in clauses (a), (b),
(c), (d), (e), (f) and (g) of the definition of Indebtedness, (iii)
expense for taxes paid during such period, and (iv) the amount of capital
expenditures during such period for maintenance (as opposed to upgrade) of
cable systems and other fixed assets.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal
functions.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section
3.01.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are applicable
to the circumstances as of the Closing Date.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
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<PAGE> 18
"Hazardous Materials" means all those substances that are regulated
by, or which may form the basis of liability under, any Environmental Law,
including any substance identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables and accrued expenses entered into in the ordinary course of
business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the
acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to
property acquired by the Person (even though the rights and remedies of
the seller or bank under such agreement in the event of default are
limited to repossession or sale of such property); (f) all obligations
with respect to capital leases; (g) all indebtedness referred to in
clauses (a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including accounts and contracts rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (h) all Guaranty
Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above.
For all purposes of this Agreement, the Indebtedness of any Person shall
include all recourse Indebtedness of any partnership or joint venture or
limited liability company in which such Person is a general partner or a
joint venturer or a member.
"Indemnified Liabilities" has the meaning specified in Section
10.05.
"Indemnified Person" has the meaning specified in Section 10.05.
"Independent Auditor" has the meaning specified in
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<PAGE> 19
subsection 6.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief
of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign
law, including the Bankruptcy Code.
"Interest Payment Date" means, as to any Offshore Rate Loan, the
last day of each Interest Period applicable to such Loan and, as to any
Base Rate Loan, the last Business Day of each Fiscal Quarter and each date
such Loan is converted into another Type of Loan, provided, however, that
if any Interest Period for an Offshore Rate Loan exceeds three months, the
date that falls three months after the beginning of such Interest Period
and after each Interest Payment Date thereafter is also an Interest
Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two, three
or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan
that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest
Period; and
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<PAGE> 20
(iii) no Interest Period for any Loan shall extend beyond the
Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joint Venture" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal
arrangement (whether created by contract or conducted through a separate
legal entity) now or hereafter formed by the Company with another Person
in order to conduct a common venture or enterprise with such Person.
"Lending Office" means, as to any Bank, the office or offices of
such Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office", as the case may be, on Schedule 10.02, or such other
office or offices as the Bank may from time to time notify the Company and the
Agents.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preferential arrangement of any kind or
nature whatsoever in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of
the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the Uniform
Commercial Code or any comparable law) and any contingent or other
agreement to provide any of the foregoing, but not including the interest
of a lessor under an operating lease.
"Liquid Assets" means, as at any date of determination, (i) cash;
(ii) marketable securities, (a) issued or directly and unconditionally
guaranteed as to interest and principal by the United States Government or
(b) issued by any agency of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case
maturing within one year after such date; (iii) marketable direct
obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having,
at the time of the acquisition thereof, the highest rating obtainable from
either Standard & Poor's Ratings Group ("S&P") or Moody's Investors
Service, Inc. ("Moody's"); (iv) commercial paper maturing no more than one
year from the date of the creation
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<PAGE> 21
thereof and having, at the time of the acquisition thereof, a rating of at
least A-1 from S&P or at least P-1 from Moody's; (v) certificates of
deposit or bankers' acceptances maturing within one year after such date
and issued or accepted by any Bank or by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary federal banking regulator) and
(b) has Tier 1 capital (as defined in such regulations) of not less than
$100,000,000; and (vi) shares of any money market mutual fund that (a) has
at least 95% of its assets invested continuously in the types of
investments referred to in clauses (ii) and (iii) above, (b) has net
assets of not less than $500,000,000, and (c) has the highest rating
obtainable from either S&P or Moody's.
"Loan" means an extension of credit by a Bank to the Company under
Article II, and may be a Base Rate Loan or an Offshore Rate Loan (each, a
"Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the Collateral
Documents, the Fee Letters, any documents evidencing or relating to
Specified Swap Contracts, and all other documents delivered to any Agent
or any Bank in connection with the transactions contemplated by this
Agreement.
"Majority Banks" means, at any time, Banks then holding at least 51%
of the then aggregate unpaid principal amount of the Loans, or, if no such
principal amount is then outstanding, Banks then having at least 51% of
the Commitments, or, if the Commitments have been terminated and no Loans
are then outstanding, Banks then owed a Specified Swap Amount at least 51%
of the Aggregate Specified Swap Amount.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or
a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company; (b) a
material impairment of the ability of the Company, ECC or Falcon to
perform under any Loan Document and to avoid any Event of Default; or (c)
a material adverse effect upon (i) the legality, validity, binding effect
or enforceability against the Company, ECC or Falcon of any Loan Document,
or (ii) the perfection or priority of any Lien granted under any of the
Collateral Documents.
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<PAGE> 22
"Multiemployer Plan" means a "multiemployer plan", within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"Nathanson Family Trust" means any inter vivos or testamentary
created by Marc Nathanson or his spouse.
"Net Proceeds" means, as to any Disposition by a Person, proceeds in
cash, checks or other cash equivalent financial instruments as and when
received by such Person, net of: (a) the direct costs relating to such
Disposition excluding amounts payable to such Person or any Affiliate of
such Person, (b) sale, use or other transaction taxes paid or payable by
such Person as a direct result thereof, and (c) amounts required to be
applied to repay principal, interest and prepayment premiums and penalties
on Indebtedness secured by a Lien on the asset which is the subject of
such Disposition. "Net Proceeds" shall also include proceeds paid on
account of any Event of Loss, net of (i) all money actually applied to
repair or reconstruct the damaged property or property affected by the
condemnation or taking, (ii) all of the costs and expenses reasonably
incurred in connection with the collection of such proceeds, award or
other payments, and (iii) any amounts retained by or paid to parties
having superior rights to such proceeds, awards or other payments.
"Note" means a promissory note executed by the Company in favor of a
Bank pursuant to subsection 2.02(b), in substantially the form of Exhibit
F.
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in substantially
the form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company
to any Bank, any Agent, or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising.
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"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Administrative Agent as follows:
Offshore Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal,
rounded upward to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Bank) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the
Administrative Agent to be the arithmetic mean (rounded upward to
the next 1/16th of 1%) of the rates of interest per annum notified
to the Administrative Agent by each Reference Bank as the rate of
interest at which dollar deposits in the approximate amount of the
amount of the Loan to be made or continued as, or converted into, an
Offshore Rate Loan by such Reference Bank and having a maturity
comparable to such Interest Period would be offered to major banks
in the London interbank market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the commencement
of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation.
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"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection 10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains,
or to which it makes, is making, or is obligated to make contributions, or
in the case of a multiple employer plan (as described in Section 4064(a)
of ERISA) has made contributions at any time during the immediately
preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
"Pledge Agreement" means the pledge agreement entered into by the
Company in favor of the Administrative Agent on behalf of the Banks,
substantially in the form of Exhibit L hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Pledged Collateral" has the meaning specified in the Pledge
Agreement, the ECC Pledge Agreement, the Falcon Pledge Agreement and the
FHGLP Pledge Agreement.
"Pro Forma Annualized EBITDA" means, for any Fiscal Quarter, (i) the
sum of (a) the sum of EBITDA for each of the Borrowing Enstar Partnerships
for such fiscal quarter plus (b) EBTDA for the Company for such fiscal
quarter,
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multiplied by (ii) 4.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"Reference Banks" means BofA and Banque Paribas.
"Reportable Event" means, any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or
of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" means the chief executive officer, the
president or the chief operating officer of the Manager of the Company, or
any other officer having substantially the same authority and
responsibility; or, with respect to compliance with financial covenants,
the chief financial officer, vice president-finance/corporate development
or the corporate controller of the Manager of the Company, or any other
officer having substantially the same authority and responsibility.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Security Agreement" means the security agreement entered into by
the Company in favor of the Documentation Agent on behalf of the Banks,
substantially in the form of Exhibit M hereto, as it may be amended,
supplemented or otherwise modified from time to time.
"Senior Debt" means all Indebtedness of the Company that is not in
any manner subordinated in right of payment or security in any respect to
the Loans.
"Solvent" means, as to any Person at any time, that (a) the fair
value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes
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<PAGE> 26
of Section 101(31) of the Bankruptcy Code and, in the alternative, for
purposes of the California Uniform Fraudulent Transfer Act; (b) the
present fair saleable value of the property of such Person is not less
than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured; (c) such
Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities)
as they mature in the normal course of business; (d) such Person does not
intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature;
and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"Specified Swap Amount" means, at any time, in respect of Specified
Swap Contracts to which any Swap Provider is party, the Swap Termination
Value relating thereto.
"Specified Swap Contract" means any Swap Contract made or entered
into at any time, or in effect at any time (whether heretofore or
hereafter), whether directly or indirectly, and whether as a result of
assignment or transfer or otherwise, between the Company and any Swap
Provider which Swap Contract is entered into in accordance with Section
7.17, is or was intended by the Company to have been entered into, in part
or entirely, for purposes of mitigating interest rate risk relating to any
Offshore Loan (which intent shall conclusively be deemed to exist if the
Company so represents to the Swap Provider in writing), and as to which
the final scheduled payment by the Company is not later than the
Termination Date.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations),
is owned or controlled directly or indirectly by the Person, or one or
more of the Subsidiaries of the Person, or a combination thereof. Unless
the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of the Company.
"Surety Instruments" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
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"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward
foreign exchange transaction, cap, collar or floor transaction, currency
swap, cross-currency rate swap, swaption, currency option or any other,
similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing
any or all of the foregoing.
"Swap Provider" means any Bank, or any Affiliate of any Bank, that
is at the time of determination party to a Swap Contract with the Company.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s),
and (b) for any date prior to the date referenced in clause (a) the
amount(s) determined as the mark-to-market value(s) for such Swap
Contracts, as determined by the Administrative Agent based upon one or
more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any Bank.)
"Tangible Net Worth" means, at any time, (i) the total assets of the
Company which would be shown as assets on the balance sheet of the Company
as of such time prepared in accordance with GAAP minus (ii) the total
liabilities of the Company which would be shown as liabilities on the
balance sheet of the Company as of such time prepared in accordance with
GAAP minus (iii) the net book amount of all assets of the Company (after
deducting any reserves applicable thereto) which would be shown as
intangible assets on the balance sheet of the Company as of such time
prepared in accordance with GAAP.
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Agent, respectively, taxes imposed on or measured by
its net income by the jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Agent, as the case may be, is
organized or maintains a lending office.
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"Termination Date" means the earlier to occur of:
(a) August 31, 2002; and
(b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement.
"Total Debt" means, as at any date of determination, the aggregate
stated balance sheet amount of all Indebtedness of the Company determined
in accordance with GAAP.
"Total Leverage" means, at any time, the ratio of (i) Total Debt of
the Company to (ii) Pro Forma Annualized EBITDA.
"Type" has the meaning specified in the definition of "Loan."
"UCC" means the Uniform Commercial Code as in effect in the State of
California.
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
1.02 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
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(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding", and
the word "through" means "to and including."
(iv) The term "property" includes any kind of property or
asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of an Agent or the Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Documentation Agent, the Company and the other parties, and are the
products of all parties. Accordingly, they shall not be construed against the
Banks, the Administrative Agent or the Documentation Agent merely because of the
Administrative Agent's, the Documentation Agent's or the Banks' involvement in
their preparation.
1.03 Accounting Principles. (a) Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Company.
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ARTICLE II
THE CREDIT
2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make loans to the Company from time to
time on any Business Day during the period from the Closing Date to the
Termination Date, in an aggregate amount not to exceed at any time outstanding
the amount set forth on Schedule 2.01 (such amount as the same may be reduced
under Section 2.05 or as a result of one or more assignments under Section
10.08, the Bank's "Commitment"); provided, however, that, after giving effect to
any Borrowing, the aggregate principal amount of all outstanding Loans shall not
at any time exceed the combined Commitments. Within the limits of each Bank's
Commitment, and subject to the other terms and conditions hereof, the Company
may borrow under this Section 2.01, prepay under Section 2.06 and reborrow under
this Section 2.01.
2.02 Loan Accounts. (a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank in the ordinary
course of business. The loan accounts or records maintained by the
Administrative Agent and each Bank shall be conclusive absent manifest error of
the amount of the Loans made by the Banks to the Company and the interest and
payments thereon. Any failure so to record or any error in doing so shall not,
however, limit or otherwise affect the obligation of the Company hereunder to
pay any amount owing with respect to the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of or in addition to loan accounts. Each such Bank shall endorse on the
schedules annexed to its Note(s) the date, amount and maturity of each Loan made
by it and the amount of each payment of principal made by the Company with
respect thereto. Each such Bank is irrevocably authorized by the Company to
endorse its Note(s) and each Bank's record shall be conclusive absent manifest
error; provided, however, that the failure of a Bank to make, or an error in
making, a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Company hereunder or under any such Note to such
Bank.
2.03 Procedure for Borrowing. (a) Each Borrowing shall be made upon the
Company's irrevocable written notice delivered to the Administrative Agent in
the form of a Notice of Borrowing (which notice must be received by the
Administrative Agent prior
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<PAGE> 31
to 11:00 a.m. (Los Angeles time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans and (ii) one Business Day
prior to the requested Borrowing Date, in the case of Base Rate Loans,
specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum amount of $500,000 or any multiple of $100,000 in
excess thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing fails to
specify the duration of the Interest Period for any Borrowing
comprised of Offshore Rate Loans, such Interest Period shall be
three months.
(b) The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the Company
at the Administrative Agent's Payment Office by 11:00 a.m. (Los Angeles time) on
the Borrowing Date requested by the Company in funds immediately available to
the Administrative Agent. The proceeds of all such Loans will then be made
available to the Company by the Administrative Agent by wire transfer in
accordance with written instructions provided to the Administrative Agent by the
Company of like funds as received by the Administrative Agent.
(d) After giving effect to any Borrowing, unless the
Administrative Agent shall otherwise consent, there may not be more than six
different Interest Periods in effect.
2.04 Conversion and Continuation Elections. (a) The Company may, upon
irrevocable written notice to the Administrative Agent in accordance with
subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans, or as of the last day of the applicable Interest Period, in the
case of Offshore Rate Loans, to convert any such Loans (or any part
thereof in an amount not less than $500,000, or that is in an integral
multiple of $100,000 in excess thereof) into Loans of any other Type; or
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(ii) elect, as of the last day of the applicable Interest
Period, to continue any Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $500,000, or that is in an
integral multiple of $100,000 in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Company to continue such Loans as, and convert such Loans into, Offshore
Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation
to be received by the Administrative Agent not later than 11:00 a.m. (Los
Angeles time) at least (i) four Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans and (ii) one Business Day in advance of the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion
or continuation; and
(D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans, or if any Default or Event
of Default then exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of the expiration
date of such Interest Period.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each Bank
of the details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts
of the Loans with respect to which
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the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, unless the Administrative Agent shall otherwise consent, there may not be
more than six different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The Company may,
upon not less than five Business Days' prior notice to the Agents, terminate the
Commitments, or permanently reduce the Commitments by an aggregate minimum
amount of $100,000 or any multiple of $50,000 in excess thereof; unless, after
giving effect thereto and to any prepayments of Loans made on the effective date
thereof, the then-outstanding principal amount of the Loans would exceed the
amount of the combined Commitments then in effect. Once reduced in accordance
with this Section, the Commitments may not be increased. Any reduction of the
Commitments shall be applied to each Bank according to its Pro Rata Share. All
accrued commitment fees to, but not including the effective date of any
reduction or termination of Commitments, shall be paid on the effective date of
such reduction or termination.
2.06 Optional Prepayments. Subject to Section 3.04, the Company may, at
any time or from time to time, upon not less than one Business Days' irrevocable
notice to the Administrative Agent, ratably prepay Loans in whole or in part, in
minimum amounts of $100,000 or any multiple of $50,000 in excess thereof. Such
notice of prepayment shall specify the date and amount of such prepayment and
the Type(s) of Loans to be prepaid. The Administrative Agent will promptly
notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata
Share of such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, and, in the case of Offshore
Rate Loans, together with accrued interest to each such date on the amount
prepaid and any amounts required pursuant to Section 3.04.
2.07 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. (a)
Asset Dispositions. If the Company or any Borrowing Enstar Partnership shall at
any time or from time to time make or agree to make a Disposition, or shall
suffer an Event of Loss, then (i) the Company shall promptly notify the Agents
of such proposed Disposition or Event of Loss (including the amount of the
estimated Net Proceeds to be received by the
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<PAGE> 34
Company or such Borrowing Enstar Partnership in respect thereof) and (ii)
promptly upon, and in no event later than three days after, receipt by the
Company or the Borrowing Enstar Partnership of the Net Proceeds of such
Disposition or Event of Loss, the Company shall prepay Loans in an aggregate
amount equal to the amount of such Net Proceeds, and the Commitments shall
thereupon be permanently reduced by the amount of such prepayment.
(b) Repayment of Partnership Loans. Promptly upon the payment
(whether by optional or mandatory redemptions or prepayments, scheduled
prepayments, acceleration or otherwise) of any Enstar Partnership Loan, and in
no event later than one day thereafter, the Company shall prepay Loans in an
amount equal to the amount of the Enstar Partnership Loan so paid, and in the
case of any such prepayment (other than in connection with an optional
prepayment of an Enstar Partnership Loan) the Commitments shall thereupon be
permanently reduced by the amount of such prepayment.
(c) Debt Issuance. If the Company or any Borrowing Enstar
Partnership enters into any transaction pursuant to which the Company or any
Borrowing Enstar Partnership incurs Indebtedness, the Company shall promptly
notify the Agents of the amount of such Indebtedness. Promptly upon, and in no
event later than one day after, receipt by the Company of any amounts in respect
of such Indebtedness, the Company shall prepay the Loans in an aggregate amount
equal to the amount of such Indebtedness, and the Commitments shall thereupon be
permanently reduced by the amount of such prepayment.
(d) Prepayment Due to Reduction of Commitments. The Company shall
from time to time prepay the Loans to the extent necessary so that the aggregate
outstanding amount of the Loans shall not at any time exceed the Commitments
then in effect.
(e) General. Any prepayments pursuant to this Section 2.07 shall
be applied first to any Base Rate Loans then outstanding and then to Offshore
Rate Loans with the shortest Interest Periods remaining. The Company shall pay,
together with each prepayment under this Section 2.07, accrued interest on the
amount prepaid and any amounts required pursuant to Section 3.04.
(f) Reduction of Commitment. Upon the making of any mandatory
prepayment under this Section 2.07 (other than in connection with an optional
prepayment of an Enstar Partnership Loan), the Commitment of each Bank shall
automatically be reduced by an amount equal to such Bank's ratable share of the
aggregate of principal repaid, effective as of the earlier of the date that such
prepayment is made or the date by which such
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<PAGE> 35
prepayment is due and payable hereunder. On January 31, 2002, the Commitment of
each Bank shall automatically be reduced by an amount equal to such Bank's
ratable share of $5,000,000. All accrued commitment fees to, but not including
the effective date of any reduction or termination of Commitments, shall be paid
on the effective date of such reduction or termination.
2.08 Repayment. The Company shall repay to the Banks on the Termination
Date the aggregate principal amount of Loans outstanding on such date together
with all other Obligations under the Loan Documents.
2.09 Interest. (a) Each Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Base Rate, as the case may be (and subject to
the Company's right to convert to other Types of Loans under Section 2.04), plus
the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date. Interest shall also be paid on the date of any prepayment
of Loans under Section 2.07 (or Section 2.06 in the case of Offshore Rate Loans)
for the portion of the Loans so prepaid and upon payment (including prepayment)
in full thereof and, during the existence of any Event of Default, interest
shall be paid on demand of the Administrative Agent at the request or with the
consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, while any
Event of Default exists or after acceleration, the Company shall pay interest
(after as well as before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Obligations, at a rate per annum
which is determined by adding 2% per annum to the Applicable Margin then in
effect for such Loans and, in the case of Obligations not subject to an
Applicable Margin, at a rate per annum equal to the Base Rate plus 2%; provided,
however, that, on and after the expiration of any Interest Period applicable to
any Offshore Rate Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Base Rate plus 2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank
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<PAGE> 36
limiting the highest rate of interest that may be lawfully contracted for,
charged or received by such Bank, and in such event the Company shall pay such
Bank interest at the highest rate permitted by applicable law.
2.10 Fees. (a) Arrangement, Agency Fees. The Company shall pay a facility
fee and an agency fee to the Administrative Agent for the Administrative Agent's
own account, and shall pay a facility fee and an agency fee to the Documentation
Agent for the Documentation Agent's own account, as required by the letter
agreement ("Fee Letter") between the Company, the Administrative Agent and the
Documentation Agent dated July 29, 1997 and accepted and agreed by Falcon
Holding Group, L.P. on August 4, 1997.
(b) Commitment Fees. The Company shall pay to the Administrative
Agent for the account of each Bank a commitment fee on the average daily unused
portion of such Bank's Commitment, computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon the daily utilization
for that quarter as calculated by the Administrative Agent, equal to 0.50
percent per annum. Such commitment fee shall accrue from the Closing Date to the
Termination Date and shall be due and payable quarterly in arrears on the last
Business Day of each March, June, September and December, commencing on
September 30, 1997, through the Termination Date, with the final payment to be
made on the Termination Date; provided that, in connection with any reduction or
termination of Commitments under Section 2.05 or Section 2.07, the accrued
commitment fee calculated for the period ending on such date shall also be paid
on the date of such reduction or termination, with the following quarterly
payment being calculated on the basis of the period from such reduction or
termination date to such quarterly payment date. The commitment fees provided in
this subsection shall accrue at all times after the above-mentioned commencement
date, including at any time during which one or more conditions in Article IV
are not met.
2.11 Computation of Fees and Interest. (a) All computations of interest
for Base Rate Loans when the Base Rate is determined by Banque Paribas' "base
rate" shall be made on the basis of a year of 365 or 366 days, as the case may
be, and actual days elapsed. All other computations of fees and interest shall
be made on the basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day year).
Interest and fees shall accrue during each period during which interest or such
fees are computed from the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the
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Administrative Agent shall be conclusive and binding on the Company and the
Banks in the absence of manifest error.
(c) If any Reference Bank's Commitment terminates (other than on
termination of all the Commitments), or for any reason whatsoever the Reference
Bank ceases to be a Bank hereunder, that Reference Bank shall thereupon cease to
be a Reference Bank, and the Offshore Rate shall be determined on the basis of
the rates as notified by the remaining Reference Banks.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Administrative Agent as contemplated hereby. If any
of the Reference Banks fails to supply such rates to the Administrative Agent
upon its request, the rate of interest shall be determined on the basis of the
quotations of the remaining Reference Bank(s).
2.12 Payments by the Company. (a) All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Banks at the Administrative Agent's
Payment Office, and shall be made in dollars and in immediately available funds,
no later than the close of business (Los Angeles time) on the date specified
herein; provided that the Company shall at all times provide the Administrative
Agent at least one Business Day's prior written notice of any such payment. The
Administrative Agent will promptly distribute to each Bank its Pro Rata Share
(or other applicable share as expressly provided herein) of such payment in like
funds as received. Any payment received by the Administrative Agent later than
10:00 a.m. (Los Angeles time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the
Company prior to the date on which any payment is due to the Banks that the
Company will not make such payment in full as and when required, the
Administrative Agent may assume that the Company has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If
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and to the extent the Company has not made such payment in full to the
Administrative Agent, each Bank shall repay to the Administrative Agent on
demand such amount distributed to such Bank, together with interest thereon at
the Federal Funds Rate for each day from the date such amount is distributed to
such Bank until the date repaid.
2.13 Payments by the Banks to the Administrative Agent. (a) Unless the
Administrative Agent receives notice from a Bank on or prior to the Closing Date
or, with respect to any Borrowing after the Closing Date, at least one Business
Day prior to the date of such Borrowing, that such Bank will not make available
as and when required hereunder to the Administrative Agent for the account of
the Company the amount of that Bank's Pro Rata Share of the Borrowing, the
Administrative Agent may assume that each Bank has made such amount available to
the Administrative Agent in immediately available funds on the Borrowing Date
and the Administrative Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to the Company
such amount, that Bank shall on the Business Day following such Borrowing Date
make such amount available to the Administrative Agent, together with interest
at the Federal Funds Rate for each day during such period. A notice of the
Administrative Agent submitted to any Bank with respect to amounts owing under
this subsection (a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Administrative Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Administrative Agent on the Business
Day following the Borrowing Date, the Administrative Agent will notify the
Company of such failure to fund and, upon demand by the Administrative Agent,
the Company shall pay such amount to the Administrative Agent for the
Administrative Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum equal to the
interest rate applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly
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provided elsewhere herein, any Bank or Swap Provider shall obtain on account of
the Obligations in its favor any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) in excess of its
ratable share (or other share contemplated hereunder), such Bank shall, and each
Bank that is an Affiliate of such Swap Provider shall cause such Swap Provider
to, immediately (a) notify the Agents of such fact, and (b) purchase from the
other Banks and Swap Providers such participations in the Loans made by them and
the Specified Swap Amounts owing to them as shall be necessary to cause such
purchasing Bank and Swap Provider to share the excess payment pro rata with each
of them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank and Swap Provider shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount equal
to such paying Bank's and Swap Provider's ratable share (according to the
proportion of (i) the amount of such paying Bank's and Swap Provider's required
repayment to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank or Swap Provider may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.10) with respect to such participation as
fully as if such Bank were the direct creditor of the Company in the amount of
such participation. The Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
2.15 Security. All obligations of the Company under this Agreement, the
Notes and all other Loan Documents shall be secured in accordance with the
Collateral Documents.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Any and all payments by the Company to each Bank or
either of the Agents under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct
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or withhold any Taxes, Other Taxes or Further Taxes from or in respect of any
sum payable hereunder to any Bank or either of the Agents, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Bank or such Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained had
no such deductions or withholdings been made;
(ii) the Company shall make such deductions and withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Company shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest is
paid, Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless each Bank
and each of the Agents for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Bank or such Agent makes written demand
therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or
the Agents the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to such Bank or the Agents.
(e) If the Company is required to pay any amount to any Bank or
any Agent pursuant to subsection (b) or (c) of this Section, then such Bank
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
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additional payment by the Company which may thereafter accrue, if such change in
the sole judgment of such Bank is not otherwise disadvantageous to such Bank.
(f) Nothing contained in this Section 3.01 shall override any term
or provision of any Specified Swap Contract regarding withholding taxes relating
to Swap Contracts.
3.02 Illegality. (a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Company through
the Administrative Agent, any obligation of that Bank to make Offshore Rate
Loans shall be suspended until the Bank notifies the Agents and the Company that
the circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Agents), prepay in full such
Offshore Rate Loans of that Bank then outstanding, together with interest
accrued thereon and amounts required under Section 3.04, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Loan, then concurrently with such
prepayment, the Company shall borrow from the affected Bank, in the amount of
such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by giving
notice to the Bank through the Administrative Agent that all Loans which would
otherwise be made by the Bank as Offshore Rate Loans shall be instead Base Rate
Loans.
3.03 Increased Costs and Reduction of Return. (a) If any Bank determines
that, due to either (i) the introduction of or any change (other than any change
by way of imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate) in or in the interpretation of any law or
regulation or (ii) the compliance by that Bank with any guideline or request
from any central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to such Bank of agreeing
to make or making, funding or maintaining any Offshore Rate Loans, then the
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Company shall be liable for, and shall from time to time, upon demand (with a
copy of such demand to be sent to the Agents), pay to the Administrative Agent
for the account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, upon demand of such Bank to the Company through the
Administrative Agent, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate the Bank for
such increase.
3.04 Funding Losses. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) subject to Section 3.05, the failure of the Company to borrow,
continue or convert a Loan after the Company has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.07) or other
payment (including after acceleration thereof) of an Offshore Rate Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.04 of any Offshore
Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant
Interest Period;
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including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under subsection 3.03(a), each Offshore Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
3.05 Inability to Determine Rates. If any Reference Bank determines that
for any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.09(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to such Bank of
funding such Loan, the Administrative Agent will promptly so notify the Company
and each Bank. Thereafter, the obligation of the Banks to make or maintain
Offshore Rate Loans hereunder shall be suspended until the Administrative Agent
upon the instruction of the Majority Banks revokes such notice in writing. Upon
receipt of such notice, the Company may revoke any Notice of Borrowing or Notice
of Conversion/Continuation then submitted by it. If the Company does not revoke
such Notice, the Banks shall make, convert or continue the Loans, as proposed by
the Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Offshore Rate Loans.
3.06 Survival. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.
3.07 Substitution of Banks. Upon the receipt by the Company from any Bank
(an "Affected Bank") of a claim for compensation under Section 3.01, Section
3.02 or Section 3.03, the Company may: (i) request the Affected Bank to use its
best efforts to obtain a replacement bank or financial institution satisfactory
to the Company and to the Agents (or the other Agent of the Affected Bank is
also an Agent) (a "Replacement Bank") to acquire and assume all or a ratable
part of all of such Affected Bank's Loans and Commitment, and if such Affected
Bank or any Affiliate thereof is a Swap Provider, all Specified Swap Contracts
of such Affected Bank and Affiliate; (ii) request one more of the other Banks to
acquire and assume all or part of
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such Affected Bank's Loans and Commitment; or (iii) designate a Replacement
Bank. Any such designation of a Replacement Bank under clause (i) or (iii) shall
be subject to the prior written consent of the Agents (or the other Agent if the
Affected Bank is also an Agent), which consent shall not be unreasonably
withheld.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 Conditions of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the following conditions:
(a) the Agents shall have received on or before the Closing Date
all of the following, in form and substance satisfactory to each Agent and each
Bank, and in sufficient copies for each Bank:
(i) Credit Agreement and Notes. This Agreement and the Notes
executed by each party thereto;
(ii) Resolutions; Incumbency. (1) Copies of the resolutions
of the Members of Company, the board of directors of ECC and the partners
of Falcon authorizing the transactions contemplated hereby and by the Loan
Documents, certified as of the Closing Date by the Secretary or an
Assistant Secretary of such Person; and
(2) A certificate of the Secretary or Assistant
Secretary of each of the Company, ECC and Falcon certifying the names and
true signatures of the officers of the Company, ECC or Falcon authorized
to execute, deliver and perform, as applicable, this Agreement, and all
other Loan Documents to be delivered by it hereunder;
(iii) Organization Documents; Good Standing. Each of the
following documents:
(1) the certificate of formation, certificate of
limited partnership, limited liability company agreement, partnership
agreement, articles or certificate of incorporation and the bylaws, as
applicable, of each of the Company, ECC and Falcon as in effect on the
Closing Date, certified by the Authorized Officer of the Company, ECC or
Falcon as of the Closing Date; and
(2) a good standing and tax good standing (or similar)
certificate (to the extent such types of
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certificates are available from the applicable jurisdiction) for the
Company, ECC and Falcon from the Secretary of State (or similar,
applicable Governmental Authority) of its state of incorporation and each
state where the Company or ECC is qualified to do business as a foreign
corporation as of a recent date, together with a bring-down certificate by
facsimile, dated the Closing Date;
(iv) Legal Opinions. An opinion of Weinstein, Boldt, Racine,
Halfhide & Camel, counsel to the Company and addressed to each Agent and
the Banks, substantially in the form of Exhibit D;
(v) Payment of Fees. Evidence of payment by the Company of
all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with Attorney Costs of the Agents to
the extent invoiced prior to or on the Closing Date; including any such
costs, fees and expenses arising under or referenced in Sections 2.10 and
10.04;
(vi) Collateral Documents. The Security Agreement, the Pledge
Agreement, the ECC Security Agreement, the ECC Pledge Agreement, the
Falcon Pledge Agreement and the FHGLP Pledge Agreement, each executed by
the Company, ECC, Falcon and/or Falcon Holding Group, L.P., as the case
may be, in appropriate form for recording, where necessary, together with:
(1) acknowledgment copies of all UCC-l financing
statements filed, registered or recorded to perfect the security interests
of the Documentation Agent for the benefit of the Banks, or other evidence
satisfactory to the Agents that there has been filed, registered or
recorded all financing statements and other filings, registrations and
recordings necessary and advisable to perfect the Liens of the
Documentation Agent for the benefit of the Banks in accordance with
applicable law;
(2) written advice relating to such Lien and judgment
searches as either of the Agents shall have requested, and such
termination statements or other documents as may be necessary to confirm
that the Collateral is subject to no other Liens in favor of any Persons
(other than Permitted Liens);
(3) all certificates and instruments representing the
Pledged Collateral, transfer powers executed in blank with signatures
guaranteed as either of the Agents or the Banks may specify;
(4) evidence that all other actions necessary or, in
the opinion of either of the Agents or the Banks,
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desirable to perfect and protect the first priority security interest
created by the Collateral Documents have been taken;
(5) funds sufficient to pay any filing or recording
tax or fee in connection with any and all UCC-1 financing statements;
(6) evidence that all other actions necessary or, in
the opinion of either of the Agents or the Banks, desirable to perfect and
protect the first priority Lien created by the Collateral Documents, and
to enhance the Documentation Agent's ability to preserve and protect its
interests in and access to the Collateral, have been taken;
(vii) Insurance Policies. Standard lenders' payable
endorsements with respect to the insurance policies or other instruments
or documents evidencing insurance coverage on the properties of the
Company in accordance with Section 6.06;
(viii) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating that:
(1) the representations and warranties contained in
Article V are true and correct on and as of such date, as though made on
and as of such date;
(2) no Default or Event of Default exists or would
result from the initial Borrowing; and
(3) there has occurred since June 30, 1997, no event
or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and
(ix) Other Documents. Such other approvals, opinions,
documents or materials as either of the Agents or any Bank may request.
(b) On or before the Closing Date Falcon Holding Group, L.P. shall
have made a capital contribution to the Company in cash in an amount not less
than $250,000.
(c) On or before the Closing Date ECC shall have assigned to the
Company deferred management fees owed to ECC by the Enstar Partnerships in an
amount at least equal to $1,000,000 and such Enstar Partnerships shall have
agreed to pay such amount to the Company on terms satisfactory to the Agents.
(d) Each of the Agents shall have completed their due diligence
review of the Company, its Subsidiaries, Falcon Holding Group, L.P., ECC, Falcon
and the Enstar Partnerships to
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such Agent's satisfaction, and such review shall have provided each of the
Agents with results and information which, in their sole opinion, are
satisfactory to making the Loans and entering into this Agreement and
consummating the transaction contemplated herein.
(e) On or before the Closing Date, the partnership agreement for
Enstar Income/Growth Program Five-A shall have been amended, in form and
substance satisfactory to the Agents, to clarify the definition of "Permanent
Financing" set forth therein, and the Agents shall have received a legal opinion
from Weinstein, Boldt, Racine, Halfhide & Camel, in form and substance
satisfactory to the Agents, as to the validity and effectiveness of such
amendment.
4.02 Conditions to All Borrowings. The obligation of each Bank to make
any Loan to be made by it (including its initial Loan) or to continue or convert
any Loan under Section 2.04 is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Conversion/ Continuation
Date:
(a) Notice of Borrowing or Conversion/Continuation. The
Administrative Agent shall have received (with, in the case of the initial Loan
only, a copy for each Bank) a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/ Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date);
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Borrowing or continuation or conversion; and
(d) No Future Advance Notice. None of the Agents or the Banks
shall have received from the Company any notice that any Collateral Document
will no longer secure on a first priority basis future advances or future Loans
to be made or extended under this Agreement.
(e) Enstar Partnership Loan. Prior to or at the time of the making
of such Loan (i) the Company shall have entered into an Enstar Partnership Loan
Agreement with an Enstar
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Partnership (other than Enstar Income/Growth Program Five-A, L.P. and Enstar
Income/Growth Program Five-B, L.P. which are general partners of Enstar Cable of
Cumberland Valley, which shall be the borrower under the applicable Enstar
Partnership Loan Agreement), (ii) all of the conditions precedent set forth in
such Enstar Partnership Loan Agreement shall have been satisfied and such Enstar
Partnership Loan Agreement shall be in full force and effect, (iii) the Company
shall immediately loan the proceeds of such Loan to one or more Enstar
Partnerships pursuant to such Enstar Partnership Loan Agreement(s), and (iv)
each of the Agents and their counsel shall have reviewed such Enstar Partnership
Loan Agreement(s) and all related documents (including, without limitation, each
security agreement and similar agreement) and all UCC or comparable filings, and
shall have been satisfied with such documents and filings and that all actions
necessary or desirable to perfect and protect the security interests purported
to be created thereby have been taken. The Partnership Loan Agreement for Enstar
II-I shall provide that no loans shall be made thereunder until June 1, 1998 and
that all loans made thereunder shall be due and payable within one year (and
shall not be refinanced with other loans made thereunder).
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Company hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice and as of each Borrowing Date or
Conversion/Continuation Date, as applicable, that the conditions in this Section
4.02 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Agent and each Bank that:
5.01 Corporate Existence and Power.
(a) (i) The Company is a limited liability company duly formed and
validly existing and in good standing under the laws of Delaware, (ii) ECC is a
corporation duly organized, validly existing and in good standing under the laws
of Georgia and (iii) Falcon is a limited partnership duly organized, validly
existing and in good standing under the laws of California;
(b) Each of the Company, ECC and Falcon has the power and
authority and all governmental licenses, authorizations, consents and approvals
to own its assets, carry on its business
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and to execute, deliver, and perform its obligations under the Loan Documents;
(c) Each of the Company, ECC and Falcon is duly qualified as a
foreign limited liability company, corporation or limited partnership, as the
case may be, and is licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification or license; and
(d) is in compliance with all Requirements of Law.
5.02 Corporate Authorization; No Contravention. The execution, delivery
and performance by the Company, ECC and Falcon, as the case may be, of this
Agreement and each other Loan Document to which such Person is party, have been
duly authorized by all necessary corporate, limited liability company or
partnership action, as applicable, and do not and will not:
(a) contravene the terms of any of such Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its property is
subject; or
(c) violate any Requirement of Law.
5.03 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings or filings in connection with the
Liens granted to the Documentation Agent under the Collateral Documents) is
necessary or required in connection with the execution, delivery or performance
by, or enforcement against, the Company, ECC or Falcon of the Agreement or any
other Loan Document.
5.04 Binding Effect. This Agreement and each other Loan Document to which
the Company, ECC or Falcon is a party constitute the legal, valid and binding
obligations of such Person, enforceable against such Person in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
5.05 Litigation. There are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the
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Company, threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against the Company, ECC or Falcon or any of such
Person's properties which:
(a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to the Company, ECC or Falcon, as the
case may be, would reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.06 No Default. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company or from the grant or
perfection of the Liens of the Agents and the Banks on the Collateral. As of the
Closing Date, the Company is not in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect,
or that would, if such default had occurred after the Closing Date, create an
Event of Default under subsection 8.01(e).
5.07 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of the
Company, nothing has occurred which would cause the loss of such qualification.
The Company and each ERISA Affiliate has made all required contributions to any
Plan subject to Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably be expected to
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result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Company nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
5.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are
to be used solely for the purposes set forth in and permitted by Section 6.12
and Section 7.07. The Company is not generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
5.09 Title to Properties. The Company has good record and marketable
title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of their respective businesses, except
for such defects in title as could not, individually or in the aggregate, have a
Material Adverse Effect. As of the Closing Date, the property of the Company is
subject to no Liens, other than Permitted Liens.
5.10 Taxes. The Company has filed all Federal and other material tax
returns and reports required to be filed, and have paid all Federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon it or its properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Company that would, if made,
have a Material Adverse Effect.
5.11 Financial Condition. (a) The audited and unaudited financial
statements of each of ECC and each Enstar Partnership dated December 31, 1996
and June 30, 1997, respectively, and the related statements of income or
operations, shareholders' equity and cash flows for the fiscal year and quarter
ended on such respective dates:
(i) were prepared in accordance with GAAP
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consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, subject in the case of unaudited
statements to the absence of footnotes and to ordinary, good faith year
end audit adjustments;
(ii) fairly present the financial condition of ECC and each
Enstar Partnership, as the case may be, as of the date thereof and results
of operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11, show
all material indebtedness and other liabilities, direct or contingent, of
ECC and each Enstar Partnership, as the case may be, as of the date
thereof, including liabilities for taxes, material commitments and
Contingent Obligations.
(b) Since June 30, 1997, there has been no Material Adverse
Effect.
5.12 Collateral Documents. (a) The provisions of each of the Collateral
Documents are effective to create in favor of the Documentation Agent for the
benefit of the Banks, a legal, valid and enforceable first priority security
interest in all right, title and interest of the Company and ECC in the
collateral described therein; and financing statements have been filed in the
offices in all of the jurisdictions listed in the Security Agreement and the
Pledge Agreement.
(b) All representations and warranties of the Company and ECC
contained in the Collateral Documents are true and correct.
5.13 Regulated Entities. Neither the Company nor any Person controlling
the Company, or any Subsidiary, is an "Investment Company" within the meaning of
the Investment Company Act of 1940. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.14 No Burdensome Restrictions. The Company is not a party to or bound
by any Contractual Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be expected to have
a Material Adverse Effect.
5.15 Copyrights, Patents, Trademarks and Licenses, etc. The Company owns
or is licensed or otherwise have the right to use all of the patents,
trademarks, service marks, trade names,
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copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the best knowledge of the
Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company infringes upon any rights held by any other Person. No
claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
5.16 Subsidiaries. The Company has no Subsidiaries and has no equity
investments in any other corporation or entity.
5.17 Insurance. Except as specifically disclosed in Schedule 5.18, the
properties of the Company are insured with financially sound and reputable
insurance companies not Affiliates of the Company, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where
the Company operates.
5.18 Solvency. The Company is Solvent.
5.19 Swap Obligations. (a) The Company has not incurred any outstanding
obligations under any Swap Contracts, other than Specified Swap Contracts. The
Company has undertaken its own independent assessment of its consolidated
assets, liabilities and commitments and has considered appropriate means of
mitigating and managing risks associated with such matters and has not relied on
any Swap Provider or any Affiliate of any Swap Provider in determining whether
to enter into any Swap Contract.
(b) The Company has not entered into any master agreement relating
to Swap Contracts and under which termination values resulting from Swap
Contracts that are Specified Swap Contracts are nettable against termination
values resulting from Swap Contracts that are not Specified Swap Contracts,
unless only Specified Swap Contracts are outstanding under such master
agreement.
5.20 Full Disclosure. None of the representations or warranties made by
the Company, ECC or Falcon in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company, ECC or Falcon in connection with the Loan
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Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
6.01 Financial Statements. The Company shall deliver to each Agent, in
form and detail satisfactory to each Agent and the Majority Banks, with
sufficient copies for each Bank:
(a) as soon as available, but not later than 120 days after the
end of each fiscal year (commencing with the fiscal year ended December 31,
1997), a copy of the audited balance sheet of the Company as at the end of such
year and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, and accompanied by
the opinion of Ernst & Young LLP or another nationally-recognized independent
public accounting firm ("Independent Auditor") which report shall state that
such consolidated financial statements present fairly the financial position for
the periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of the Company's records; and
(b) as soon as available, but not later than 45 days after the end
of each of the first three fiscal quarters of each fiscal year (commencing with
the fiscal quarter ended September 30, 1997), a copy of the unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarter and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day and ending on
the last day of such quarter, and certified by a Responsible Officer as fairly
presenting, in accordance with GAAP (subject to ordinary, good faith year-end
audit adjustments), the financial position and the results of operations of the
Company and the Subsidiaries;
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(c) As soon as available, but no later than one hundred five (105)
days after the end of each fiscal year, the balance sheet of each Borrowing
Enstar Partnership as of the end of such year, and the statements of income,
cash flows and of Partners' capital of such Borrowing Enstar Partnership for
such year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and (with the exception of Enstar
VII, a Georgia limited partnership whose financial statements may be prepared
internally) accompanied by a report and opinion on financial statements of Ernst
& Young LLP or other independent certified public accountants of recognized
national standing selected by such Borrowing Enstar Partnership and satisfactory
to the Agents, together with (a) computations by such Borrowing Enstar
Partnership demonstrating, as of the close of such fiscal year, compliance with
Sections 7.5.2, 7.5.4, 7.10.1, 7.10.2, 7.10.3, 7.11.2 and 7.15 of the Enstar
Partnership Loan Agreement relating to such Borrowing Enstar Partnership, (b)
either a supplemental schedule or an appropriate footnote disclosure, together
with such annual audited financial statements, which provides in reasonable
detail, a statement setting forth the amount of direct reimbursable expenses of
the Borrowing Enstar Partnerships on a consolidated basis pursuant to the
respective management agreements to which such Borrowing Enstar Partnerships are
a party, (c) a certificate signed by the president, vice president, treasurer or
controller of the Corporate General Partner of such Borrowing Enstar Partnership
(i) stating that such person has reviewed the Enstar Partnership Loan Agreement
relating to such Borrowing Enstar Partnership and has made, or caused to be made
under its supervision, a review of the transactions and conditions of such
Borrowing Enstar Partnership during such year, and (ii) stating that such review
has not disclosed the existence during such year (and that such signer does not
have knowledge of the existence, as of the date of such certificate) of any
Default (as defined in such Enstar Partnership Loan Agreement), or, if any such
Default existed or exists, specifying the nature and period of existence thereof
and what action such Borrowing Enstar Partnership has taken, is taking or
proposes to take with respect thereto, and (d) a certificate by such accountants
(i) stating that such financial statements were prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
fairly present the financial condition of such Borrowing Enstar Partnership at
the dates thereof and the results of its operations for the periods covered
thereby, and (ii) stating whether or not in the course of the examination upon
which their opinion on such financial statements was based (which shall include
a review of the relevant provisions of the Enstar Partnership Loan Agreement
relating to such Borrowing Enstar Partnership but need not include any special
or additional audit procedures) they became aware of the existence, at the end
of
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the fiscal year covered by such financial statements, of any Default (as
defined in such Enstar Partnership Loan Agreement) under Sections 7.5 through
7.12 of the Enstar Partnership Loan Agreement relating to such Borrowing Enstar
Partnership, and, if their examination has disclosed such a Default, specifying
the nature and period of the existence thereof.
(d) as soon as available, but not later than forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year,
the balance sheet of each Borrowing Enstar Partnership as of the end of such
period and statements of income and cash flows of such Borrowing Enstar
Partnership (other than Enstar VII, Enstar X Ltd. and Enstar XI Ltd.) for the
period from the beginning of the current fiscal year to the end of such period
and internally prepared quarterly operating statements of such Borrowing Enstar
Partnership by operating regions for the portion of the fiscal year of such
Borrowing Enstar Partnership then ended, setting forth in each case in
comparative form the figures for the corresponding period of the previous fiscal
year, all in reasonable detail and accompanied by (i) a partner's certificate
signed by the president, vice president, treasurer or controller of the
Corporate General Partner of such Borrowing Enstar Partnership stating that such
statements are complete and correct, subject only to normal changes resulting
from year-end audit adjustments, have been prepared in accordance with GAAP
applied on a consistent basis and fairly present the financial condition of such
Borrowing Enstar Partnership at the dates thereof and the results of its
operations for the periods covered thereby, (ii) computations by such Borrowing
Enstar Partnership hereto demonstrating, as of the close of such fiscal quarter,
compliance with Sections 7.5.2, 7.5.4, 7.10.1, 7.10.2, 7.10.3, 7.11.2 and 7.15
of the Borrowing Enstar Partnership Loan Agreement relating to such Borrowing
Enstar Partnership, (iii) a partner's certificate signed by the president, vice
president, treasurer or controller of the Corporate General Partner of such
Borrowing Enstar Partnership (a) stating that each signer has reviewed the
Enstar Partnership Loan Agreement relating to such Borrowing Enstar Partnership
and has made, or caused to be made under its supervision, a review of the
transactions and conditions of such Borrowing Enstar Partnership during the
accounting period covered by such financial statements, and (b) stating that
such review has not disclosed the existence during such accounting period (and
that such signer does not have knowledge of the existence, as of the date of
such certificate) of any Default (as defined in the Enstar Partnership Loan
Agreement relating to such Borrowing Enstar Partnership, or, if any such Default
exists, specifying the nature and period of existence thereof and what action
such Borrowing Enstar Partnership has taken, is taking or proposes to take with
respect thereto.
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6.02 Certificates; Other Information. The Company shall furnish to each
Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 6.01(a), a certificate of the Independent Auditor
stating that in making the examination necessary therefor no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 6.01(a) and (b), a Compliance Certificate executed by
a Responsible Officer;
(c) promptly, such additional information regarding the business,
financial or corporate affairs of the Company as any Agent, at the request of
any Bank, may from time to time request.
6.03 Notices. The Company shall promptly notify each Agent and each Bank:
(a) of the occurrence of any Default or Event of Default or
"Default" or "Event of Default" under any Enstar Partnership Loan Agreement, and
of the occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default or "Default" or "Event of Default"
under any Enstar Partnership Loan Agreement;
(b) of (i) any breach or non-performance of, or any default under,
any Contractual Obligation of the Company which could result in a Material
Adverse Effect; and (ii) any dispute, litigation, investigation, proceeding or
suspension which may exist at any time between the Company and any Governmental
Authority;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company (i) in which the amount of
damages claimed is $100,000 (or its equivalent in another currency or
currencies) or more, (ii) in which injunctive or similar relief is sought and
which, if adversely determined, would reasonably be expected to have a Material
Adverse Effect, or (iii) in which the relief sought is an injunction or other
stay of the performance of this Agreement or any Loan Document;
(d) upon, but in no event later than 10 days after, becoming aware
of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted,
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completed or threatened against the Company or any of its properties pursuant to
any applicable Environmental Laws, (ii) all other Environmental Claims, and
(iii) any environmental or similar condition on any real property adjoining or
in the vicinity of the property of the Company that could reasonably be
anticipated to cause such property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such
property under any Environmental Laws;
(e) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to each Agent and each Bank a copy of any notice with
respect to such event that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to the Company or any ERISA Affiliate with
respect to such event:
(i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan;
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by the Company or any
ERISA Affiliate; or
(iv) the adoption of any amendment to a Plan subject to
Section 412 of the Code, if such amendment results in a material increase
in contributions or Unfunded Pension Liability.
(f) of any material change in accounting policies or financial
reporting practices by the Company;
(g) of the entry by the Company into any Specified Swap Contract,
together with the details thereof;
(h) of the occurrence of any default, event of default,
termination event or other event under any Specified Swap Contract that after
the giving of notice, passage of time or both, would permit either counterparty
to such Specified Swap Contract to terminate early any or all trades relating to
such contract; and
(i) upon the request from time to time of the Agent, the Swap
Termination Values, together with a description of the method by which such
amounts were determined, relating to any then-outstanding Specified Swap
Contracts to which the Company is party.
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Each notice under this Section shall be accompanied by a written statement
by a Responsible Officer setting forth details of the occurrence referred to
therein, and stating what action the Company proposes to take with respect
thereto and at what time. Each notice under subsection 6.03(a) shall describe
with particularity any and all clauses or provisions of this Agreement or other
Loan Document that have been (or foreseeably will be) breached or violated.
6.04 Preservation of Corporate Existence, Etc. The Company shall:
(a) preserve and maintain in full force and effect its limited
liability company existence and good standing under the laws of its state or
jurisdiction of organization;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.05 Maintenance of Property. The Company shall maintain and preserve all
its property which is used or useful in its business in good working order and
condition, ordinary wear and tear excepted.
6.06 Insurance. In addition to insurance requirements set forth in the
Collateral Documents, the Company shall maintain with financially sound and
reputable independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons; including workers' compensation insurance, public liability and
property and casualty insurance which amount shall not be reduced by the Company
in the absence of 30 days' prior notice to each Agent. All such insurance shall
name the Documentation Agent as loss payee/mortgagee and as additional insured,
for the benefit of the Banks, as their interests may appear. All casualty and
key man insurance maintained by the Company shall name the Documentation Agent
as loss payee and all liability insurance
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shall name the Documentation Agent as additional insured for the benefit of the
Banks, as their interests may appear. Upon request of either Agent or any Bank,
the Company shall furnish the Documentation Agent, with sufficient copies for
each Bank, at reasonable intervals (but not more than once per calendar year) a
certificate of a Responsible Officer of the Company (and, if requested by the
Agent, any insurance broker of the Company) setting forth the nature and extent
of all insurance maintained by the Company in accordance with this Section or
any Collateral Documents (and which, in the case of a certificate of a broker,
were placed through such broker).
6.07 Payment of Obligations. The Company shall pay and discharge as the
same shall become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
6.08 Compliance with Laws. The Company shall comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
6.09 Compliance with ERISA. The Company shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; and (c) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. The Company shall
maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company. The Company shall permit representatives and independent
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contractors of each Agent or any Bank to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the expense of the Company and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Company; provided, however, when an Event of Default
exists the Agent or any Bank may do any of the foregoing at the expense of the
Company at any time during normal business hours and without advance notice.
6.11 Environmental Laws. (a) The Company shall conduct its operations and
keep and maintain its property in compliance with all Environmental Laws.
(b) Upon the written request of either of the Agents or any Bank,
the Company shall submit to the Documentation Agent with sufficient copies for
each Bank, at the Company's sole cost and expense, at reasonable intervals, a
report providing an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified in any notice or report
required pursuant to subsection 6.03(d), that could, individually or in the
aggregate, result in liability in excess of $100,000.
6.12 Use of Proceeds. The Company shall use the proceeds of the Loans to
finance the Enstar Partnership Loans in accordance with Section 7.07 and not in
contravention of any Requirement of Law.
6.13 Enforcement of Enstar Partnership Loan Agreements. The Company shall
enforce each Enstar Partnership Loan Agreement in accordance with its terms.
6.14 Further Assurances. (a) The Company shall ensure that all written
information, exhibits and reports furnished to either of the Agents or any Bank
do not and will not contain any untrue statement of a material fact and do not
and will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made, and will promptly disclose to each of the Agents and the Banks and
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgement or recordation thereof.
(b) Promptly upon request by either of the Agents or the Majority
Banks, the Company shall do, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register, any and all such further acts, deeds,
conveyances,
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security agreements, mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments such Agent
or such Banks, as the case may be, may reasonably require from time to time in
order (i) to carry out more effectively the purposes of this Agreement or any
other Loan Document, (ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or interests covered by any
of the Collateral Documents, (iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the Liens
intended to be created thereby, and (iv) to better assure, convey, grant,
assign, transfer, preserve, protect and confirm to the Agents and Banks the
rights granted or now or hereafter intended to be granted to the Banks under any
Loan Document or under any other document executed in connection therewith.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.01 Limitation on Liens. The Company shall not, and shall not permit ECC
to, directly or indirectly, make, create, incur, assume or suffer to exist any
Lien upon or with respect to any part of its property, whether now owned or
hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien (other than a Lien on the Collateral) existing on
property of the Company on the Closing Date and set forth in Schedule 7.01
securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.07, provided that no
notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary course
of business which are not delinquent or remain payable without penalty;
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(e) Liens (other than any Lien imposed by ERISA and other than on
the Collateral) consisting of pledges or deposits required in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(f) Liens (other than Liens on the Collateral) consisting of
judgment or judicial attachment liens, provided that the enforcement of such
Liens is effectively stayed and all such liens in the aggregate at any time
outstanding for the Company do not exceed $500,000;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company;
(h) Liens securing obligations in respect of capital leases on
assets subject to such leases, provided that such capital leases are otherwise
permitted hereunder; and
(i) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company to provide
collateral to the depository institution.
7.02 Disposition of Assets. The Company shall not, and shall not permit
any Borrowing Enstar Partnership to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing, except
(i) sales, assignments, leases, conveyances, transfers or dispositions by the
Company or any Borrowing Enstar Partnership of its property in the ordinary
course of business the aggregate Net Proceeds of which received on or after the
date hereof do not exceed $50,000 for the Company and each Borrowing Enstar
Partnership on an individual basis and (ii) sales, assignments, leases,
conveyances, transfers or dispositions the Net Proceeds of which are applied to
the prepayment of the Loans and the reduction of the Commitments in accordance
with Section 2.07.
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7.03 Consolidations and Mergers. The Company shall not merge, consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person.
7.04 Loans and Investments. The Company shall not purchase or acquire, or
make any commitment therefor, any capital stock, equity interest, or any
obligations or other securities of, or any interest in, any Person, or make or
commit to make any Acquisitions, or make or commit to make any advance, loan,
extension of credit or capital contribution to or any other investment in, any
Person including any Affiliate of the Company (together, "Investments"), except
for:
(a) Investments held by the Company in the form of Liquid Assets;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business;
(c) Investments constituting Specified Swap Contracts or payments
or advances under Specified Swap Contracts;
(d) Enstar Partnership Loans; and
(e) Receivables due from the Enstar Partnerships in the amount of
$1,000,000 in existence on the Closing Date.
7.05 Limitation on Indebtedness. The Company shall not create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except Indebtedness incurred pursuant
to this Agreement.
7.06 Transactions with Affiliates. The Company shall not enter into any
transaction with any Affiliate of the Company, except upon fair and reasonable
terms no less favorable to the Company than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company.
7.07 Use of Proceeds. The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, for any purpose other than to finance the Enstar Partnership Loans
on the terms and conditions set forth in the Enstar Partnership Loan Agreements.
7.08 Contingent Obligations. The Company shall not create, incur, assume
or suffer to exist any Contingent Obligations except:
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(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Permitted Swap Obligations;
7.09 Joint Ventures. The Company shall not enter into any Joint Venture.
7.10 Lease Obligations. The Company shall not create or suffer to exist
any obligations for the payment of rent for any property under lease or
agreement to lease.
7.11 Restricted Payments. The Company shall not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its
membership interests or purchase, redeem or otherwise acquire for value any
membership interests or any warrants, rights or options to acquire such
membership interests, now or hereafter outstanding.
7.12 ERISA. The Company shall not, and shall not suffer or permit any of
its ERISA Affiliates to: (a) engage in a prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted
or could reasonably expected to result in liability of the Company in an
aggregate amount in excess of $100,000; or (b) engage in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
7.13 Change in Business. The Company shall not engage in any material
line of business substantially different from those lines of business carried on
by the Company on the date hereof.
7.14 Accounting Changes. The Company shall not make any significant
change in accounting treatment or reporting practices, except as required by
GAAP, or change the fiscal year of the Company.
7.15 Subsidiaries. The Company shall not form, acquire, own, make an
Investment in or permit to exist any Subsidiary.
7.16 Financial Covenants.
(a) Minimum Tangible Net Worth. The Company shall not permit
Tangible Net Worth to be less than $1,000,000 at any time.
(b) Minimum Liquid Assets. The Company shall not permit Liquid
Assets of the Company to be less than $150,000 at any time.
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(c) Maximum Leverage Ratio. The Company shall not at any time
permit the ratio of (i) Total Debt of the Company (as of the date of
calculation) to (ii) Pro Forma Annualized EBITDA as of the last day of any
Fiscal Quarter on or preceding such date of calculation to exceed the
correlative ratio indicated:
<TABLE>
<CAPTION>
Period Maximum Leverage Ratio
<S> <C>
Closing Date - Dec. 31, 1998 3.50:1.00
Jan. 1, 1999 - Dec. 31, 1999 3.00:1.00
Jan. 1, 2000 - Dec. 31, 2000 2.50:1.00
Jan. 1, 2001 and thereafter 2.00:1.00
</TABLE>
(d) Minimum Interest Coverage Ratio. The Company shall not permit
the ratio of (i) the sum of EBITDA for each of the Borrowing Enstar Partnerships
to (ii) Cash Interest Expense of the Company, for any four Fiscal Quarter period
to be less than 2.00:1.00.
(e) Minimum Fixed Charge Coverage Ratio. The Company shall not
permit the ratio of (i) the sum of EBITDA for each of the Borrowing Enstar
Partnerships to (ii) Fixed Charges of the Company, for any four Fiscal Quarter
period to be less than 1.20:1.00.
7.17 Hedging Requirements. The Company shall not permit the aggregate
outstanding amount of the Loans to exceed $20,000,000 unless:
(i) the Company shall have entered into one or more
Specified Swap Contracts with respect to at least 50% of the outstanding
Offshore Rate Loans;
(ii) such Specified Swap Contracts have a minimum weighted
average term of 24 months (the "Hedge Period"); and
(iii) if such Specified Swap Contracts are interest rate caps,
such Specified Swap Contracts do not have a strike price more than 2%
higher than the rate per annum for U.S. Treasury notes with a maturity
equal to the applicable Hedge Period.
7.18. Amendment of Enstar Partnership Loan Agreements. The Company shall
not, without the consent of the Majority Banks, amend, supplement, restate or
otherwise modify, or waive or consent to any departure from, any Enstar
Partnership Loan Agreement or any provision thereof.
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ARTICLE VIII
EVENTS OF DEFAULT
8.01 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Company fails to make, (i) when and as
required to be made herein, payments of any amount of principal of any Loan, or
(ii) when and as required to be paid under any Specified Swap Contract, any
payment or transfer under such Specified Swap Contract, or (iii) within three
days after the same becomes due, payment of any interest, fee or any other
amount payable hereunder or under any other Loan Document (other than a
Specified Swap Contract); or
(b) Representation or Warranty. Any representation or warranty by
the Company or ECC made or deemed made herein, in any other Loan Document other
than a Specified Swap Contract, or which is contained in any certificate,
document or financial or other statement by the Company, ECC, or any Responsible
Officer, furnished at any time under this Agreement, or in or under any other
Loan Document other than a Specified Swap Contract, is incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any
term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03 or
6.09(c) or in Article VII; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document
other than a Specified Swap Contract, and such default shall continue unremedied
for a period of 30 days after the earlier of (i) the date upon which a
Responsible Officer knew or reasonably should have known of such failure or (ii)
the date upon which written notice thereof is given to the Company by the Agent
or any Bank; or
(e) Cross-Default. (i) The Company (A) fails to make any payment
in respect of any Indebtedness or Contingent Obligation (other than in respect
of Swap Contracts), when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (B) fails to perform or
observe any other condition or covenant, or any other event shall occur or
condition exist, under any agreement or instrument relating to any such
Indebtedness or Contingent Obligation, if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such
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Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash collateral in
respect thereof to be demanded; or (ii) there occurs under any Specified Swap
Contract having a Swap Termination Value of greater than $50,000 an Early
Termination Date (as defined in such Specified Swap Contract) resulting from (1)
any event of default under such Specified Swap Contract as to which the Company
or any Subsidiary is the Defaulting Party (as defined in such Specified Swap
Contract) or (2) any Termination Event (as so defined) as to which the Company
or any Subsidiary is an Affected Party (as so defined).
(f) Insolvency; Voluntary Proceedings. The Company, ECC, Falcon or
any Borrowing Enstar Partnership (i) generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, ECC, Falcon or any
Borrowing Enstar Partnership, or any writ, judgment, warrant of attachment,
execution or similar process, is issued or levied against a substantial part of
the Company's, ECC's, Falcon's or any Borrowing Enstar Partnership's properties,
and any such proceeding or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Company, ECC, Falcon or any Borrowing Enstar Partnership admits
the material allegations of a petition against it in any Insolvency Proceeding,
or an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company, ECC, Falcon or any Borrowing Enstar
Partnership acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business;
or
(h) ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$100,000; or (ii) the aggregate amount of Unfunded Pension
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Liability among all Pension Plans at any time exceeds $100,000; or (iii) the
Company or any ERISA Affiliate shall fail to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $100,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of $100,000 or more, and the same shall remain unvacated and
unstayed pending appeal for a period of 10 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against the Company which does or would reasonably be expected
to have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(k) Change of Control. There occurs any Change of Control; or
(l) Loss of Licenses. Any Governmental Authority revokes or fails
to renew any material license, permit or franchise of the Company, or the
Company for any reason loses any material license, permit or franchise, or the
Company suffers the imposition of any restraining order, escrow, suspension or
impound of funds in connection with any proceeding (judicial or administrative)
with respect to any material license, permit or franchise; or
(m) Adverse Change. There occurs a Material Adverse Effect; or
(n) Defaults Under Loan Documents. ECC or Falcon fails in any
material respect to perform or observe any term, covenant or agreement in the
Loan Documents to which it is a party;
(p) Collateral.
(i) any material provision of any Collateral Document shall
for any reason cease to be valid and binding on or enforceable against the
Company or any Person party thereto or the Company or any such Person
shall so state in
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writing or bring an action to limit its obligations or liabilities
thereunder; or
(ii) any Collateral Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid security interest
in the Collateral purported to be covered thereby or such security
interest shall for any reason cease to be a perfected and first priority
security interest subject only to Permitted Liens.
(q) Default Under Enstar Partnership Loans. Any Default or Event
of Default shall have occurred under and as defined in any Enstar Partnership
Loan Agreement.
8.02 Remedies. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.01 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent or any
Bank.
8.03 Specified Swap Contract Remedies. Notwithstanding any other
provision of this Article VIII, each Swap Provider shall have the right, with
prior notice to the Agent, but without the approval or consent of the Agent or
the other Banks, with respect to any Specified Swap Contract of such Swap
Provider, (a) to declare an event of default, termination event or other similar
event thereunder and to create an Early Termination Date, (b) to determine net
termination amounts in accordance with the terms of such Specified Swap
Contracts and to set-off
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amounts between Specified Swap Contracts, and (c) to prosecute any legal action
against the Company to enforce net amounts owing to such Swap Provider.
8.04 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENTS
9.01 Appointment and Authorization; "Agent". Each Bank hereby irrevocably
(subject to Section 9.09) appoints, designates and authorizes the Administrative
Agent and the Documentation Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, no Agent
shall have any duties or responsibilities, except those expressly set forth
herein, nor shall either Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Administrative Agent or the
Documentation Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.
9.02 Delegation of Duties. Either of the Agents may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Agent shall be responsible
for the negligence or misconduct of any agent or attorney-in-fact that it
selects with reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons
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shall (i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the Banks for any
recital, statement, representation or warranty made by the Company or Affiliate
of the Company, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by any Agent under or in connection
with, this Agreement or any other Loan Document, or for the value of or title to
any Collateral, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
the Company or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Company or any of the Company's Affiliates.
9.04 Reliance by Agent. (a) The Agents shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agents. The Agents shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems appropriate
and, if it so requests, it shall first be indemnified to its satisfaction by the
Banks against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agents shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Majority Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.01, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by any Agent to such Bank for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to
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the Bank.
9.05 Notice of Default. Neither Agent shall be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default (except, in the
case of the Administrative Agent, with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent for
the account of the Banks), unless such Agent shall have received written notice
from a Bank or the Company referring to this Agreement, describing such Default
or Event of Default and stating that such notice is a "notice of default". Such
Agent will notify the Banks of its receipt of any such notice. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Banks in accordance with
Article VIII; provided, however, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
9.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by any Agent hereinafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company, the
value of and title to any Collateral, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Company hereunder. Each
Bank also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be furnished to the
Banks by any Agent, no Agent shall have any duty or responsibility to provide
any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
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creditworthiness of the Company which may come into the possession of any of the
Agent-Related Persons.
9.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that no
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's gross
negligence or willful misconduct. Without limitation of the foregoing, each Bank
shall reimburse each Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by such Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that such Agent is not
reimbursed for such expenses by or on behalf of the Company. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
9.08 Agent in Individual Capacity. BofA and its Affiliates and Banque
Paribas and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Affiliates as though BofA and Banque Paribas
were not an Agent hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, BofA or its Affiliates and
Banque Paribas and its Affiliates may receive information regarding the Company
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company) and acknowledge that no Agent shall be
under any obligation to provide such information to them. With respect to its
Loans, BofA and Banque Paribas shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not an
Agent, and the terms "Bank" and "Banks" include BofA and Banque Paribas in its
individual capacity.
9.09 Successor Agent. Either Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If such
Agent resigns under this Agreement, the Majority Banks shall appoint from among
the Banks a successor agent for the Banks. If no successor agent is appointed
prior to the effective date of the resignation of such
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Agent, such Agent may appoint, after consulting with the Banks and the Company,
a successor agent from among the Banks. Upon the acceptance of its appointment
as successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Administrative
Agent" or "Documentation Agent," as the case may be, shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor agent has accepted appointment as Agent by
the date which is 30 days following a retiring Agent's notice of resignation,
the retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above.
9.10 Withholding Tax. (a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or
1442 of the Code, such Bank agrees with and in favor of the Administrative
Agent, to deliver to the Administrative Agent:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form 1001 before the payment of any
interest in the first calendar year and before the payment of any interest
in each third succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Bank,
two properly completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of such Bank and
in each succeeding taxable year of such Bank during which interest may be
paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
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(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Administrative Agent, then the Agent may withhold from any interest payment to
such Bank not providing such forms or other documentation an amount equivalent
to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code,
without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Administrative Agent fully
for all amounts paid, directly or indirectly, by the Administrative Agent as tax
or otherwise, including penalties and interest, and including any taxes imposed
by any jurisdiction on the amounts payable to the Administrative Agent under
this Section, together with all costs and expenses (including Attorney Costs).
The obligation of the Banks under this subsection shall survive the payment of
all Obligations and the resignation or replacement of the Administrative Agent.
9.11 Collateral Matters. (a) The Documentation Agent is authorized on
behalf of all the Banks, without the necessity of
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any notice to or further consent from the Banks, from time to time to take any
action with respect to any Collateral or the Collateral Documents which may be
necessary to perfect and maintain perfected the security interest in and Liens
upon the Collateral granted pursuant to the Collateral Documents.
(b) The Banks irrevocably authorize the Documentation Agent, at
its option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and payment in
full of all Loans and all other Obligations known to the Documentation Agent and
payable under this Agreement or any other Loan Document; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company owned no interest at the time the Lien was granted or at any time
thereafter; (iv) constituting property leased to the Company under a lease which
has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by the Company
to be, renewed or extended; (v) consisting of an instrument evidencing
Indebtedness or other debt instrument, if the indebtedness evidenced thereby has
been paid in full; or (vi) if approved, authorized or ratified in writing by the
Majority Banks or all the Banks, as the case may be, as provided in subsection
10.01(f). Upon request by the Documentation Agent at any time, the Banks will
confirm in writing the Documentation Agent's authority to release particular
types or items of Collateral pursuant to this subsection 9.11(b), provided that
the absence of any such confirmation for whatever reason shall not affect the
Documentation Agent's rights under this Section 9.11.
(c) Each Bank agrees with and in favor of each other (which
agreement shall not be for the benefit of the Company) that the Company's
obligation to such Bank under this Agreement and the other Loan Documents is not
and shall not be secured by any real property collateral now or hereafter
acquired by such Bank.
ARTICLE X
MISCELLANEOUS
10.01 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Company or ECC therefrom, shall be effective unless the same
shall be in writing and signed by the Majority Banks (or by the Documentation
Agent at the written request of the Majority
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Banks) and the Company and acknowledged by the Agents, and then any such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks and the Company and
acknowledged by the Agents, do any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate
any Commitment terminated pursuant to Section 8.02);
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document or reduce the calculation of the amount of, or postpone or delay the
timing of any mandatory prepayment or reduction of Commitment hereunder or under
any other Loan Documents;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder; or
(e) amend this Section, or Section 2.14, or any provision herein
providing for consent or other action by all Banks; or
(f) release all or any substantial portion of the Collateral
except as otherwise may be provided in the Collateral Document or except where
the consent of the Majority Banks only is specifically provided for;
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the applicable Agent in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of such Agent
under this Agreement or any other Loan Document, and (ii) the Fee Letters and
documents evidencing Specified Swap Contracts may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto.
10.02 Notices. (a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
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Schedule 10.02, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 10.02; or, as directed to the Company
or any Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at such
other address as shall be designated by such party in a written notice to the
Company and such Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX to the Agent shall not be effective until
actually received by the Agent.
(c) Any agreement of the Agents and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agents and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Agents and the Banks shall not have any
liability to the Company or other Person on account of any action taken or not
taken by the Agents or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans shall not be affected
in any way or to any extent by any failure by the Agents and the Banks to
receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agents and the Banks of a confirmation which is at variance with
the terms understood by the Agents and the Banks to be contained in the
telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of any Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
10.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse the Agents within ten Business Days after demand
(subject to subsection 4.01(e)) for all out-of-pocket costs and expenses
incurred by each of them in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement,
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<PAGE> 80
waiver or modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable Attorney Costs incurred by the Agents
with respect thereto; and
(b) pay or reimburse the Agents and each Bank within ten Business
Days after demand (subject to subsection 4.01(e)) for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding); and
(c) pay or reimburse the Agents within ten Business Days after
demand (subject to subsection 4.01(e)) for all appraisal, audit, environmental
inspection and review, search and filing costs, fees and expenses, incurred or
sustained by them in connection with the matters referred to under subsections
(a) and (b) of this Section.
10.05 Company Indemnification. (a) Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Agent-Related Persons, and each Bank and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and termination of all Specified Swap Contracts and the
termination, resignation or replacement of the Agent or replacement of any Bank)
be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or arising out of
this Agreement or the Specified Swap Contracts or the Loans or the use of the
proceeds thereof, whether or not any Indemnified Person is a party thereto (all
the foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely
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<PAGE> 81
from the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
(b) (i) The Company shall indemnify, defend and hold harmless
each Indemnified Person, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Attorney Costs and the
allocated cost of internal environmental audit or review services), which
may be incurred by or asserted against such Indemnified Person in
connection with or arising out of any pending or threatened investigation,
litigation or proceeding. No action taken by legal counsel chosen by the
Agent or any Bank in defending against any such investigation, litigation
or proceeding or requested remedial, removal or response action shall
vitiate or any way impair the Company's obligation and duty hereunder to
indemnify and hold harmless the Agents and each Bank.
(ii) In no event shall any site visit, observation, or
testing by any Agent or any Bank (or any contractee of the Agent or any
Bank) be deemed a representation or warranty that Hazardous Materials are
or are not present in, on, or under, the site, or that there has been or
shall be compliance with any Environmental Law. Neither the Company nor
any other Person is entitled to rely on any site visit, observation, or
testing by any Agent or any Bank. None of the Administrative Agent, the
Documentation Agent or any Bank owes any duty of care to protect the
Company or any other Person against, or to inform the Company or any other
party of, any Hazardous Materials or any other adverse condition affecting
any site or property. None of the Administrative Agent, the Documentation
Agent or any Bank shall be obligated to disclose to the Company or any
other Person any report or findings made as a result of, or in connection
with, any site visit, observation, or testing by the Agent or any Bank.
(c) Survival; Defense. The obligations in this Section shall
survive payment of all other Obligations. At the election of any Indemnified
Person, the Company shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole discretion, at the
sole cost and expense of the Company. All amounts owing under this Section shall
be paid within 30 days after demand.
10.06 Marshalling; Payments Set Aside. None of the Administrative Agent,
the Documentation Agent or any Bank shall be under any obligation to marshall
any assets in favor of the
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<PAGE> 82
Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment to an Agent or the
Banks, or an Agent or the Banks exercise their right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by such Agent or such Bank in
its discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon demand its pro rata
share of any amount so recovered from or repaid by the Administrative Agent.
10.07 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Administrative Agent, the Documentation Agent and each Bank.
10.08 Assignments, Participations, etc. (a) Any Agent may, and with the
written consent of the Agents, which consents shall not be unreasonably
withheld, any other Bank, may at any time assign and delegate to one or more
Eligible Assignees (provided that no written consent of either Agent shall be
required in connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all,
or any ratable part of all, of the Loans, the Commitments and the other rights
and obligations of such Bank hereunder, in a minimum amount of $5,000,000;
provided, however, that (i) the Company and the Agents may continue to deal
solely and directly with such Bank in connection with the interest so assigned
to an Assignee until (A) written notice of such assignment, together with
payment instructions, addresses and related information with respect to the
Assignee, shall have been given to the Company and the Administrative Agent by
such Bank and the Assignee; (B) such Bank and its Assignee shall have delivered
to the Company and the Administrative Agent an Assignment and Acceptance in the
form of Exhibit E ("Assignment and Acceptance") together with any Note or Notes
subject to such assignment and (C) the assignor Bank or Assignee has paid to
each the Administrative Agent a processing fee in the amount of its
$[______________]; and (ii) if the assignor Bank or any of its Affiliates is a
Swap Provider with respect to any Specified Swap Contract, such Bank shall not
assign all of its interest in the
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Loans and the Commitments to an Assignee unless such Assignee, or an Affiliate
of such Assignee, shall also assume all obligations of such assignor Bank or
Affiliate with respect to such Specified Swap Contracts, with the consent of the
Company.
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent and obtained
the consent of the Documentation Agent) with respect to) an executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and payment of the processing fee, the Company shall execute and deliver to the
Administrative Agent, new Notes evidencing such Assignee's assigned Loans and
Commitment and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "originating Bank") hereunder and under the other Loan Documents;
provided, however, that (i) the originating Bank's obligations under this
Agreement shall remain unchanged, (ii) the originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Company and the
Agents shall continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under this
Agreement and the other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has rights to
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<PAGE> 84
approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would require unanimous consent of the Banks as described in
the first proviso to Section 10.01. In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the other
Loan Documents, and all amounts payable by the Company hereunder shall be
determined as if such Bank had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held by
it in favor of any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR Section203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in any manner permitted under
applicable law.
10.09 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Company and provided to it by the Company, or by an Agent on the
Company's behalf, under this Agreement or any other Loan Document, and neither
it nor any of its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the other Loan Documents
or in connection with other business now or hereafter existing or contemplated
with the Company; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Bank, or (ii) was or becomes available on a non-confidential basis from a source
other than the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank; provided, however,
that any Bank may disclose such information (A) at the request or pursuant to
any requirement of any Governmental Authority to which the Bank is subject or in
connection with an examination of such Bank by any such authority; (B) pursuant
to subpoena or other court process; (C) when required to do so in accordance
with the provisions of any applicable Requirement of Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which any
Agent, any Bank or their respective Affiliates may be
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<PAGE> 85
party; (E) to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (F) to such Bank's
independent auditors and other professional advisors; (G) to any Participant or
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Banks
hereunder; (H) as to any Bank or its Affiliate, as expressly permitted under the
terms of any other document or agreement regarding confidentiality to which the
Company is party or is deemed party with such Bank or such Affiliate; and (I) to
its Affiliates.
10.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not any Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agents after any such set-off and application made by
such Bank; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agents in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as either Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.13 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made
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and entered into for the sole protection and legal benefit of the Company, the
Banks, the Agents and the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection with,
this Agreement or any of the other Loan Documents.
10.15 Governing Law and Jurisdiction. (a) THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND
THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
(c) Nothing contained in this Section shall override any contrary
provision contained in any Specified Swap Contract.
10.16 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY
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SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
10.17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.
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<PAGE> 88
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Los Angeles, California by their proper and duly
authorized officers as of the day and year first above written.
ENSTAR FINANCE COMPANY, LLC
By: /s/ Michael K. Menerey
-------------------------------
Title: Chief Financial Officer
----------------------------
By: ______________________________
Title: ___________________________
BANQUE PARIBAS,
as Administrative Agent
By: /s/ Darlynn Ernst / SP Berkman
-------------------------------
Title: Assistant / Managing
Vice President / Director
-------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Documentation Agent
By: /s/ Shannon T. Ward
-------------------------------
Title: Vice President
----------------------------
BANQUE PARIBAS,
as a Bank
By: /s/ Darlynn Ernst / SP Berkman
------------------------------
Title: Assistant / Managing
Vice President / Director
-------------------------------
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<PAGE> 89
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/ Shannon T. Ward
-------------------------------
Title: Vice President
----------------------------
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<PAGE> 90
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
<TABLE>
<CAPTION>
Pro Rata
Bank Commitment Share
<S> <C> <C>
Banque Paribas $17,500,000 50%
Bank of America National
Trust and Savings
Association $17,500,000 50%
TOTAL $35,000,000 100%
</TABLE>
84
<PAGE> 91
SCHEDULE 5.18
INSURANCE MATTERS
[None]
85
<PAGE> 92
SCHEDULE 7.01
PERMITTED LIENS
[None]
86
<PAGE> 93
SCHEDULE 10.02
OFFSHORE AND DOMESTIC LENDING OFFICES
ADDRESSES FOR NOTICES
BANQUE PARIBAS,
as Agent
Banque Paribas
2029 Century Park East, Suite 3900
Los Angeles, CA 90067
Attention: Darlynn Ernst
Telecopy: (310) 556-3762
BANQUE PARIBAS,
as a Bank
For drawdowns or repayments:
Banque Paribas
2029 Century Park East, Suite 3900
Los Angeles, CA 90067
Attention: Shirley Williams
Telecopy: (310) 553-1504
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Bank of America National Trust
and Savings Association
Department of Entertainment #3283
555 South Flower Street, 10th Floor
Los Angeles, California 90071
Attention: Shannon Ward
Facsimile: (213) 228-2641
Telephone: (213) 228-6126
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Offshore Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
333 South Beaudry Avenue, 19th Floor
Los Angeles, California 90017
Attention: Linda Nisley
Telephone: (213) 345-6342
Facsimile: (213) 345-6550
88
<PAGE> 1
EXHIBIT 10.57
Execution Copy
FALCON RESTRICTED COMPANIES
AMENDED AND RESTATED CREDIT AGREEMENT
CONSENT NO. 1
This Consent, dated as of July 11, 1997, is among the affiliates of
Falcon Holding Group, L.P., a Delaware limited partnership, set forth on the
signature pages hereto, BankBoston, N.A., f/k/a The First National Bank of
Boston, as Managing Agent for itself and the other Lenders, Toronto-Dominion
(Texas) Inc., as Administrative Agent and NationsBank of Texas, N.A., as
Syndication Agent. The parties agree as follows:
1. Reference to Credit Agreement; Definitions. Reference is made to the
Amended and Restated Credit Agreement, dated as of July 12, 1996, among the
parties hereto (as amended, modified and in effect prior to giving effect to
this Consent, the "Credit Agreement"). Terms defined in the Credit Agreement as
amended hereby (the "Amended Credit Agreement") and not otherwise defined herein
are used herein with the meanings so defined.
2. Amendments to Credit Agreement. In reliance upon the representations
and warranties set forth in Section 3, the Credit Agreement is amended as
follows, effective upon the date hereof:
2.1. Amendment of Section 1.14. The definition of "Bank of Boston" in
Section 1.14 of the Credit Agreement is amended to read in its entirety as
follows:
"1.14. "Bank of Boston" means BankBoston, N.A."
2.2. Addition of Section 7.9.12. Section 7.9 of the Credit Agreement is
amended by adding a new Section 7.9.12 immediately following Section 7.9.11 to
read in its entirety as follows:
"7.9.12. So long as immediately before and after giving effect thereto
no Default exists, Falcon Community Cable, L.P., Falcon Cable Media, a
California limited partnership and Falcon Cable Systems Company II, L.P.
may acquire the assets of Falcon Classic Cable Income Properties, L.P.,
a California limited partnership, pursuant to an Asset Purchase
Agreement substantially in the form as has been previously furnished to
the Agents for an aggregate purchase price not exceeding $82,000,000."
2.3. Amendment of Exhibits 8.6.1. Exhibit 8.6.1 to the Credit Agreement
is amended by adding thereto the respective information set forth in Exhibit
8.6.1 hereto.
<PAGE> 2
3. Representation and Warranty. In order to induce the Lenders to enter
into this Consent, each of the Restricted Companies jointly and severally
represents and warrants to each of the Lenders that immediately before and after
giving effect to each of the amendments set forth in Section 2, no Default will
exist.
4. Further Assurances. Each of the Restricted Companies will, promptly upon
request of the Managing Agent from time to time, execute, acknowledge and
deliver, and file and record, all such UCC-1 financing statements, instruments
and notices, and take all such action, as the Managing Agent deems necessary or
advisable to carry out the intent and purposes of this Consent.
5. General. The Amended Credit Agreement and all of the other Credit
Documents are each confirmed as being in full force and effect. This Consent,
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, with respect to such
subject matter. The invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any other term or provision hereof,
and any invalid or unenforceable provision shall be enforced to the maximum
extent of its validity or enforceability. The headings in this Consent are for
convenience of reference only and shall not alter, limit or otherwise affect the
meaning hereof. Each of this Consent and the Amended Credit Agreement is a
Credit Document and this Consent 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 CONSENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS (OTHER THAN THE CONFLICT
OF LAWS RULES) OF THE COMMONWEALTH OF MASSACHUSETTS.
-2-
<PAGE> 3
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 CABLE SYSTEMS COMPANY II, L.P.
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 /s/ Michael K. Menerey
--------------------------------
Title: Chief Financial Officer
Falcon Holding Group, L.P.
10900 Wilshire Boulevard, 15th Floor
Los Angeles, CA 90024
Telecopy: (310) 824-4824
FALCON FIRST, INC.
By /s/ Michael K. Menerey
--------------------------------
Title: Chief Financial Officer
-3-
<PAGE> 4
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 /s/ Michael K. Menerey
--------------------------------
As an authorized officer of each of
the foregoing corporations
BANKBOSTON, N.A., as Managing Agent
By /s/ David B. Herter
--------------------------------
Title: Managing Director
BankBoston, N.A.
Media and Communications Department
100 Federal Street
Boston, Massachusetts 02110
Telecopy: (617) 434-3401
Telex: 940581
-4-
<PAGE> 5
TORONTO-DOMINION (TEXAS) INC.,
as Administrative Agent
By /s/ Jano Mott
---------------------------------
Title: VP
Toronto-Dominion (Texas) Inc.
909 Fannin, Suite 1700
Houston, TX 77010
Telecopy: (713) 951-9921
NATIONSBANK OF TEXAS, N.A., as Syndications
Agent
By /s/ Douglas S. Stuart
---------------------------------------
Title: SVP
NationsBank of Texas, N.A.
901 Main Street
64th Floor
Dallas, Texas 75202
Telecopy: (214) 508-9390
-5-
<PAGE> 6
The foregoing Consent is consented to by the following Lenders:
ABN AMRO BANK
By: ----------------------------------
Title:
ABN-AMRO Bank
500 Park Avenue, 2nd Floor
New York, NY 10022
ABN-AMRO BANK N.V., LOS ANGELES
INTERNATIONAL BRANCH
By: ABN-Amro North America, Inc., as agent
By /s/ Matthew S. Thomson
-----------------------------------
Title: Group Vice President/Director
By /s/ Paul K. Stimpfl
-----------------------------------
Title: Vice President
ABN-AMRO Bank, Los Angeles
300 South Grand Avenue, Suite 1115
Los Angeles, CA 90071
Telecopy: (213) 687-2061
-6-
<PAGE> 7
BANK OF AMERICA N.T. & S.A.
By /s/ Shannon T. Ward
-----------------------------------
Title: Vice President
Bank of America N.T. & S.A.
Entertainment & Media Industry Group
Dept. 3282
555 South Flower Street
Los Angeles, California 90071
Telecopy: (213) 623-7923
BANK OF MONTREAL
By /s/ Yvonne Bos
------------------------------------
Title: Senior Vice President
Bank of Montreal
Media & Communications
430 Park Avenue
New York, New York 10022
Telecopy: (212) 605-1648
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By /s/ Ron Kraus
-------------------------------------
Title: Associate
By /s/ Kevin Dooley
-------------------------------------
Title: Vice President
Banque Francaise du Commerce Exterieur
645 Fifth Avenue, 20th Floor
New York, NY 10022
Telecopy: (212) 872-5045
-7-
<PAGE> 8
BANQUE NATIONALE DE PARIS
By /s/ J.L. Tourne
-------------------------------------
Title: V.P. & Deputy Manager
By /s/ Janice Ho
-------------------------------------
Title: V.P.
Banque Nationale de Paris
725 South Figueroa Street, Suite 2090
Los Angeles, CA 90017
Telecopy: (213) 488-9602
BANQUE PARIBAS
By /s/ John Acker / Darlynn Ernst
--------------------------------------
Title: Group Vice /Assist. Vice
President President
Banque Paribas
2029 Century Park East
Suite 3800
Los Angeles, California 90067
Telecopy: (310) 556-8759
BARCLAYS BANK PLC
By /s/ James K. Downey
--------------------------------------
Title: Associate Director
Barclays Bank Plc
388 Market Street, Suite 1700
San Francisco, CA 94111
Telecopy: (415) 765-4760
-8-
<PAGE> 9
THE CHASE MANHATTAN BANK
By /s/ Mitch Geruis
--------------------------------------
Title: Vice President
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza, 4th Floor
New York, NY 10081
Telecopy: (212) 622-0136
CITY NATIONAL BANK
By /s/ David Burdge
--------------------------------------
Title: SVP
City National Bank
400 N. Roxbury Drive
Beverly Hills, CA 90210
Telecopy: (310) 888-6149
CIBC, INC.
By /s/ D. Strek
--------------------------------------
Title:
CIBC, Inc.
425 Lexington Avenue
New York, New York 10017
Telecopy: (212) 856-3558
-9-
<PAGE> 10
CREDIT LYONNAIS, NEW YORK BRANCH
By /s/ Mark D. Thorsheim
--------------------------------------
Title: Vice President
Credit Lyonnaise, New York Branch
1301 Avenue of the Americas
New York, New York 10017
Telecopy: (212) 261-3318
-10-
<PAGE> 11
FLEET BANK, N.A.
By /s/ Garret Komjathy
--------------------------------------
Title: Vice President
Fleet Bank, N.A.
60 East 42nd Street, 3rd Floor
New York, NY 10017
Telecopy: (212) 907-5627
THE FUJI BANK, LIMITED LOS ANGELES AGENCY
By /s/ Nobuhiro Umemura
--------------------------------------
Title: Joint General Manager
The Fuji Bank,
Limited Los Angeles Agency
333 South Hope Street
Los Angeles, CA 90071
Telecopy: (213) 253-4198
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
LOS ANGELES AGENCY
By /s/ T. Morgan Edwards II
---------------------------------------
Title: Deputy General Manager
The Long-Term Credit Bank of Japan, Ltd
Los Angeles Agency
350 South Grand Avenue, Suite 3000
Los Angeles, CA 90071
Telecopy: (213) 622-6908
-11-
<PAGE> 12
MEESPIERSON, CAPITAL CORP.
By /s/ Claudia J. Chifos / John Conners
---------------------------------------
Title: Authorized/Exec. V.P.
Signatory
MeesPierson, Capital Corp.
445 Park Avenue, 5th Floor
New York, NY 10022
Telecopy: (212) 801-0420
OCTAGIT INVESTORS
By /s/ Andrew D. Gordon
---------------------------------------
Title: Managing Director
Octagon Credit Investors
380 Madison Avenue, 12th Floor
New York, NY 10017
Telecopy: (212) 622-3797
-12-
<PAGE> 13
RABOBANK NEDERLAND, NEW YORK BRANCH
By /s/ W. Pieter C. Kodde
---------------------------------------
Title: Vice President
By /s/ Ellen A. Polansky
---------------------------------------
Title: Vice President
Rabobank Nederland
245 Park Avenue
New York, NY 10167
Telecopy: (212) 916-7930
RIGGS BANK N.A.
By /s/ Jeffrey P. White
---------------------------------------
Title: Vice President
Riggs Bank N.A.
Corporate General Banking
808 17th Street, N.W.
Washington, DC 20074-0649
Telecopy: (202) 835-5977
SENIOR DEBT PORTFOLIO
By: BOSTON MANAGEMENT AND
RESEARCH, as investment advisor
By /s/ Scott H. Page
---------------------------------------
Title: Vice President
Senior Debt Portfolio
24 Federal Street, 6th Floor
Boston, MA 02110
Telecopy: (617) 695-9594
-13-
<PAGE> 14
SOCIETE GENERALE
By: /s/ Mark Vigil
------------------------------------
Title: Vice President
Societe Generale
Media and Communications Group
1221 Avenue of the Americas, 11th Floor
New York, NY 10020
Telecopy: (212) 278-6240
THE SUMITOMO BANK, LIMITED
By /s/ Yvonne K. Tso
------------------------------------
Title: Vice President
By /s/ Simon Baker
------------------------------------
Title: Vice President
The Sumitomo Bank, Limited
800 West 6th Street, Suite 950
Los Angeles, CA 90017
Telecopy: (213) 623-4629
SUMMIT BANK
By /s C.J. Annas
------------------------------------
Title: Regional Vice President
Summit Bank
Three Valley Square
512 Township Line Road, Suite 280
Blue Bell, PA 19422
-14-
<PAGE> 15
SUNTRUST BANK, CENTRAL FLORIDA N.A.
By /s/ Janet P. Sammons
------------------------------------
Title: V.P.
SunTrust Bank, Central Florida, N.A.
200 South Orange Avenue
Orlando, FL 32801
Telecopy: (407) 237-4253
UNION BANK OF CALIFORNIA, N.A.
By /s/ J. Kevin Sampson
-------------------------------------
Title: VP
Union Bank of California, N.A.
Communications/Media Division
445 South Figueroa Street
Los Angeles, CA 90071
Telecopy: (415) 765-3146
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
------------------------------------
Title:
Van Kampen American Capital
Prime Rate Income Trust
One Parkview Plaza, 6th Floor
Oakbrook Terrace, IL 60181
Telecopy: (708) 684-6740
-15-
<PAGE> 1
EXHIBIT 10.58
Execution Copy
FALCON RESTRICTED COMPANIES
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDMENT NO. 2
This Agreement, dated as of September 3, 1997, is among the affiliates
of Falcon Holding Group, L.P., a Delaware limited partnership, set forth on the
signature pages hereto, BankBoston, N.A., as Managing Agent for itself and the
other Lenders, Toronto-Dominion (Texas) Inc., as Administrative Agent and
NationsBank of Texas, N.A., as Syndication Agent. The parties agree as follows:
1. Reference to Credit Agreement; Definitions. Reference is made to the Amended
and Restated Credit Agreement, dated as of July 12, 1996, among the parties
hereto (as amended, modified and in effect prior to giving effect to this
Consent, the "Credit Agreement"). Terms defined in the Credit Agreement as
amended hereby (the "Amended Credit Agreement") and not otherwise defined herein
are used herein with the meanings so defined.
2. Amendments to Credit Agreement. In reliance upon the representations and
warranties set forth in Section 3, the Credit Agreement is amended as follows,
effective upon the date hereof:
2.1. Amendment of Section 7.3.1. Section 7.3.1 of the Credit Agreement
is amended to read in its entirety as follows:
"7.3.1. Business Interruption Insurance. Each of the Restricted
Companies will maintain with financially sound and reputable insurers
insurance related to interruption of business, either for loss of
revenues or for extra expense, in the manner customary for businesses of
similar size engaged in similar activities and consistent with past
practice of the Restricted Companies; provided, however, that in no
event will this Section 7.3.1 require business interruption insurance
with respect to overhead and buried cable or amplifiers, tap-off
devices, cables, housedrops and other components of its cable television
distribution systems which are actually affixed to overhead or buried
cable."
2.2. Addition of Section 7.8.14. Section 7.8 of the Credit Agreement is
amended by adding a new Section 7.8.14 immediately following Section 7.8.13 to
read in its entirety as follows:
"7.8.14. Liens on the stock of Enstar to secure loans from banks
and other institutional lenders to Enstar Finance Company, a Delaware
limited liability company that is a Subsidiary of Enstar."
<PAGE> 2
3. Representation and Warranty. In order to induce the Lenders to enter into
this Agreement, each of the Restricted Companies jointly and severally
represents and warrants to the Lenders that immediately before and after giving
effect to the amendments set forth in Section 2, no Default will exist.
4. General. The Amended Credit Agreement and all of the other 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, with respect to such
subject matter. The invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any other term or provision hereof,
and any invalid or unenforceable provision shall be enforced to the maximum
extent of its validity or enforceability. The headings in this Agreement are for
convenience of reference only and shall not alter, limit or otherwise affect the
meaning hereof. Each of this Agreement and the Amended Credit Agreement is a
Credit Document and this Agreement 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 laws rules) of The Commonwealth of Massachusetts.
-2-
<PAGE> 3
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 CABLE SYSTEMS COMPANY II, L.P.
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 /s/ Michael K. Menerey
------------------------------------
Title: Chief Financial Officer
Falcon Holding Group, L.P.
10900 Wilshire Boulevard, 15th Floor
Los Angeles, CA 90024
Telecopy: (310) 824-4824
FALCON FIRST, INC.
By /s/ Michael K. Menerey
------------------------------------
Title: Chief Financial Officer
-3-
<PAGE> 4
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 /s/ Michael K. Menerey
------------------------------------
As an authorized officer of each of
the foregoing corporations
BANKBOSTON, N.A., as Managing Agent
By /s/ David B. Herter
------------------------------------
Title: Managing Director
TORONTO-DOMINION (TEXAS) INC., as
Administrative Agent
By /s/ Jano Mott
------------------------------------
Title: Vice President
-4-
<PAGE> 5
NATIONSBANK OF TEXAS, N.A., as
Syndications Agent
By /s/ Thomas E. Carter
------------------------------------
Title: SVP
The foregoing Agreement is consented to
by the following Lenders:
ABN AMRO BANK
By:
------------------------------------
Title:
ABN-AMRO BANK N.V., LOS ANGELES
INTERNATIONAL BRANCH
By: ABN Amro North America, Inc.,
as agent
By /s/ Matthew S. Thomson
------------------------------------
Title: Group Vice President/Director
By /s/ Paul K. Stimpfl
------------------------------------
Title: Vice President
BANK OF AMERICA N.T. & S.A.
By /s/ Shannon T. Ward
------------------------------------
Title: Vice President
-5-
<PAGE> 6
BANK OF MONTREAL
By /s/ W.T. Calder
------------------------------------
Title: Director
NATEXIS BANQUE BFCE, FORMALLY
BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By /s/ Kevin Dooley
------------------------------------
Title: Vice President
By /s/ Ron Kraus
------------------------------------
Title: Associate
BANQUE NATIONALE DE PARIS
By /s/ Janice Ho
------------------------------------
Title: V.P.
By /s/ Mylene A Dao
------------------------------------
Title: AVP
BANQUE PARIBAS
By /s/ Darlynn Ernst/Stanley Berkman
------------------------------------
Title: Vice President/Managing Director
BARCLAYS BANK PLC
By /s/ James K. Downey
------------------------------------
Title: Associate Director
-6-
<PAGE> 7
THE CHASE MANHATTAN BANK
By /s/ Mitch Geruis
------------------------------------
Title: Vice President
CITY NATIONAL BANK
By /s/ David Burdge
------------------------------------
Title: Senior Vice President
CIBC, INC.
By /s/ D. Strek
------------------------------------
Title: Managing Director, CIBC Wood
Gundy Securities Corp.,
as Agent
CREDIT LYONNAIS, NEW YORK BRANCH
By /s Mark D. Thorsheim
------------------------------------
Title: Vice President
FLEET BANK, N.A.
By /s/ Garret Komjathy
------------------------------------
Title: Vice President
THE FUJI BANK, LIMITED LOS ANGELES
AGENCY
By /s/ Masahito Fukuda
------------------------------------
Title: Joint General Manager
-7-
<PAGE> 8
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
LOS ANGELES AGENCY
By /s/ T. Morgan Edwards II
------------------------------------
Title: Deputy General Manager
MEESPIERSON CAPITAL CORP.
By /s/ Claudia J. Chifos /
John V. Del Col
------------------------------------
Title: Authorized / Authorized
Signatory / Signatory
OCTAGON CREDIT INVESTORS
By /s/ Richard W. Stewart
------------------------------------
Title: Managing Director
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
By /S/ Dana W. Hemenway
------------------------------------
Title: Vice President
RIGGS BANK N.A.
By /s/ Jeffrey P. White
------------------------------------
Title: Vice President
SENIOR DEBT PORTFOLIO
By: BOSTON MANAGEMENT AND
RESEARCH, as investment advisor
By /s/ Payson F. Swaffield
------------------------------------
Title: Vice President
-8-
<PAGE> 9
SOCIETE GENERALE
By: /s/ Mark Vigil
------------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED
By /s/ Judith M. Bresnen
------------------------------------
Title: Vice President
By /s/ Frantz Osse
------------------------------------
Title: Vice President & Manager
SUMMIT BANK
By /s/ C.J. Annas
------------------------------------
Title: Vice President
SUNTRUST BANK, CENTRAL FLORIDA N.A.
By /s/ Janet P. Sammons
------------------------------------
Title: V.P.
UNION BANK OF CALIFORNIA, N.A.
By /s/ Bryan G. Petermann
------------------------------------
Title: Vice President
-9-
<PAGE> 10
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By /s/ Jeffrey W. Maillet
------------------------------------
Title: Senior Vice President & Director
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1997, AND THE STATEMENTS OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 13,776
<SECURITIES> 0
<RECEIVABLES> 24,396
<ALLOWANCES> 1,318
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 580,517
<DEPRECIATION> 268,012
<TOTAL-ASSETS> 739,060
<CURRENT-LIABILITIES> 61,852
<BONDS> 905,905
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 739,060
<SALES> 0
<TOTAL-REVENUES> 192,482
<CGS> 0
<TOTAL-COSTS> 177,644
<OTHER-EXPENSES> (111)
<LOSS-PROVISION> 4,621
<INTEREST-EXPENSE> 58,979
<INCOME-PRETAX> (44,252)
<INCOME-TAX> 0
<INCOME-CONTINUING> (44,252)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (44,252)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
