<PAGE>
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UNITED STATES 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 March 31, 1999
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 33-72468
33-72468-01
THE HELICON GROUP, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 4841 22-3248703
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
HELICON CAPITAL CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 4841 22-3248702
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
630 PALISADE AVENUE
ENGLEWOOD CLIFFS, NEW JERSEY 07632
(201) 568-7720
(Address, including Zip Code and telephone number,
including area code, of registrants' principal executive offices)
INDICATE BY CHECK MARK WHETHER THE REGISTRANTS: (1) HAVE 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 REGISTRANTS WERE REQUIRED TO FILE
SUCH REPORTS), AND (2) HAVE BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES |X| NO |_|
THE NUMBER OF SHARES OUTSTANDING OF THE COMMON STOCK OF HELICON CAPITAL CORP.,
AS OF MAY 13, 1999: 100.
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<PAGE>
THE HELICON GROUP, L.P. AND WHOLLY OWNED
INCORPORATED ENTITY
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
CONDENSED CONSOLIDATED BALANCE SHEETS AS AT DECEMBER 31, 1998 AND MARCH 31, 1999
(UNAUDITED) 3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE-MONTH PERIODS
ENDED MARCH 31, 1998 AND 1999 4
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT FOR THE THREE
MONTH PERIOD ENDED MARCH 31, 1999 5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE-MONTH
PERIODS ENDED MARCH 31, 1998 AND 1999 6
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7-8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-12
PART II.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K 13
SIGNATURE PAGE 14
</TABLE>
2
<PAGE>
THE HELICON GROUP, L.P. AND WHOLLY OWNED
INCORPORATED ENTITY
Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
DECEMBER 31, 1998 (A) MARCH 31, 1999
--------------------- --------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 3,200,791 $ 10,833,037
Receivables from subscribers 1,078,647 1,006,505
Prepaid expenses and other assets 1,607,984 1,681,298
Property, plant and equipment, net 35,913,816 37,157,205
Intangible assets and deferred costs, net 27,705,114 30,078,349
Due from affiliates 250,174 245,077
------------- -------------
Total assets $ 69,756,526 $ 81,001,471
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Accounts payable $ 5,144,994 $ 3,353,774
Accrued expenses 870,870 484,942
Subscriptions received in advance 397,346 479,890
Accrued interest 2,163,208 5,443,427
Due to principal owner 5,000,000 5,000,000
Senior secured notes 115,000,000 115,000,000
Loans payable to banks 20,266,922 20,264,288
Senior subordinated loans payable to banks -- 12,000,000
Other notes payable 4,607,378 4,466,167
Due to affiliates 442,639 412,113
------------- -------------
Total liabilities 153,893,357 166,904,601
------------- -------------
Partners' deficit:
Accumulated partners' deficit (84,135,831) (85,902,130)
Less capital contribution receivable (1,000) (1,000)
------------- -------------
Total partners' deficit (84,136,831) (85,903,130)
------------- -------------
Total liabilities and partners' deficit $ 69,756,526 $ 81,001,471
============= =============
</TABLE>
(a) Balance Sheet at December 31, 1998 has been derived from Audited
Consolidated Financial Statements at that date.
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
THE HELICON GROUP, L.P. AND WHOLLY OWNED
INCORPORATED ENTITY
Unaudited Condensed Consolidated Statement of Operations
for the Three-Month Periods Ended March 31, 1998 and 1999
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
Revenues $ 11,811,381 $ 13,610,948
------------ ------------
Operating expenses:
Operating expenses 3,490,523 4,416,743
General and administrative expenses 1,948,651 2,107,725
Marketing expenses 389,977 739,709
Depreciation and amortization 2,830,270 3,276,806
Management fee charged by affiliate 590,568 680,550
Corporate and other expenses 45,001 78,477
------------ ------------
Total operating expenses 9,294,990 11,300,010
------------ ------------
Operating income 2,516,391 2,310,938
------------ ------------
Interest expense (3,839,805) (4,118,364)
Interest income 23,412 41,127
------------ ------------
(3,816,393) (4,077,237)
------------ ------------
Net loss ($ 1,300,002) ($ 1,766,299)
============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE>
THE HELICON GROUP, L.P. AND WHOLLY OWNED
INCORPORATED ENTITY
Unaudited Condensed Consolidated Statement of Changes in Partners' Deficit
for the Three-Month Period Ended March 31, 1999
<TABLE>
<CAPTION>
Partners' deficit
--------------------------------- Capital
General Limited Contribution
Partners Partners Receivable Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1998 ($ 474,830) (83,661,001) (1,000) ($84,136,831)
Net loss (17,663) (1,748,636) -- (1,766,299)
------------ ------------ ------------ ------------
Balance at March 31, 1999 ($ 492,493) (85,409,637) (1,000) ($85,903,130)
============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE>
THE HELICON GROUP, L.P. AND WHOLLY OWNED
INCORPORATED ENTITY
Unaudited Condensed Consolidated Statement of Cash Flows
for the Three-Month Periods Ended March 31, 1998 and 1999
<TABLE>
<CAPTION>
1998 1999
------------ ------------
<S> <C> <C>
Net loss ($ 1,300,002) ($ 1,766,299)
------------ ------------
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 2,830,270 3,276,806
Gain on sale of equipment (1,498) (6,000)
Amortization of debt discount and deferred financing costs 30,000 45,000
Change in operating assets and liabilities:
Decrease in receivables from subscribers 250,611 98,569
Increase in prepaid expenses and other assets (414,647) (69,959)
Increase in financing costs incurred -- (240,000)
Decrease in accounts payable and accrued expenses (577,052) (2,198,833)
Increase in subscriptions received in advance 37,869 82,545
Increase in accrued interest 3,156,835 3,280,219
------------ ------------
Total adjustments 5,312,388 4,268,347
------------ ------------
Net cash provided by operating activities 4,012,386 2,502,048
------------ ------------
Cash flows from investing activities:
Purchases of property, plant and equipment (965,924) (1,255,338)
Proceeds from sales of equipment 91,128 6,000
Cash paid for net assets of cable television systems acquired -- (5,228,097)
Increase in intangible assets and deferred costs -- (159,195)
------------ ------------
Net cash used in investing activities (874,796) (6,636,630)
------------ ------------
Cash flows from financing activities:
Proceeds from senior subordinated bank loans -- 12,000,000
Repayment of bank loans (2,511) (2,633)
Repayment of other notes payable (135,934) (205,110)
Advances to affiliates (482,097) (955,462)
Repayments of advances to affiliates 601,133 930,033
------------ ------------
Net cash (used) provided by financing activities (19,409) 11,766,828
------------ ------------
Net increase in cash and cash equivalents 3,118,181 7,632,246
Cash and cash equivalents at beginning of period 3,693,625 3,200,791
------------ ------------
Cash and cash equivalents at end of period $ 6,811,806 $ 10,833,037
============ ============
Supplemental cash flow information:
Interest paid $ 652,970 $ 793,146
============ ============
Other non-cash items:
Acquisition of property, plant and equipment through issuance
of other notes payable $ 17,686 $ 63,898
============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
6
<PAGE>
THE HELICON GROUP, L.P. AND WHOLLY OWNED
INCORPORATED ENTITY
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 1998 and 1999
(1) ORGANIZATION AND NATURE OF BUSINESS
The Helicon Group, L.P. (the "Partnership" or the "Company") was
organized as a limited partnership on August 10, 1993 under the laws of
the State of Delaware to consolidate the ownership interests of Helicon
Group Ltd. ("Helicon"); Terrebonne Cablevision, L.P., Roxboro Cablevision
Associates, L.P., and Vermont Cablevision Associates, L.P. (collectively,
the "Predecessor Companies") in connection with a roll-up plan completed
on November 3, 1993 (the "roll-up"). As a result of the roll-up, the
Partnership acquired substantially all of the operating assets and
agreements of all the cable television systems which were previously
owned by the Predecessor Companies and the stockholders and the partners
of the Predecessor Companies became limited partners of the Partnership.
The Company operates under the name of "Helicon Cable Communications".
The general partner of the Company is Baum Investments, Inc., a Delaware
Corporation, which is 100% owned by Mr. Baum. On April 8, 1996, the
Company became 99% owned by Helicon Partners I, L.P. ("HPI") and 1% owned
by Baum Investments, Inc., the general partner. The Company is managed by
Helicon Corp., an affiliated management company.
The Partnership operates in one business segment offering cable
television services in the states of Pennsylvania, West Virginia, North
Carolina, Louisiana, Vermont and New Hampshire. The Company also offers
to customers advanced services, such as paging, cable modems and private
data network systems under the name of "Helicon Network Solutions", as
well as, dial up internet service in Pennsylvania and Vermont under the
name of "Helicon OnLine".
The Partnership is in the process of applying for certification as a
competitive local exchange carrier ("CLEC") in several states. At this
time, the Partnership does not provide any common carrier services as a
CLEC.
On March 22, 1999, Helicon Partners I, L. P., Baum Investments, Inc. and
all the holders of partnership interests in HPI entered into a purchase
agreement by and among Charter Communications, Inc, Charter
Communications, LLC and Charter Helicon, LLC (collectively the "Charter
Entities") providing for the sale of all such partnership interests and
Helicon Corp.'s interest in the management agreements with THGLP and HPI
Acquisition Co, LLC to the Charter Entities. The sale price is $550
million which amount will be reduced by any outstanding indebtedness
assumed by the Charter Entities.
7
<PAGE>
(2) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of the Partnership and its wholly owned
incorporated entity, Helicon Capital Corp. ("HCC"), reflect all
adjustments, consisting of normal recurring accruals, necessary to
present fairly the Partnership's consolidated financial position as at
March 31, 1999, and their results of operations and cash flows for the
three-month periods ended March 31, 1998 and 1999. Information included
in the condensed consolidated balance sheet at December 31, 1998 has been
derived from the audited consolidated balance sheet in the Partnership's
and HCC's Annual Report on Form 10-K for the year ended December 31, 1998
(the "1998 Form 10-K") filed with the Securities and Exchange Commission.
The unaudited consolidated financial statements and these notes have been
condensed; therefore, they do not contain all of the disclosures required
by generally accepted accounting principles and should be read in
conjunction with the consolidated financial statements and the other
information in the 1998 Form 10-K.
HCC had nominal assets as of March 31, 1999 and had no operations from
the date of incorporation to March 31, 1999. All intercompany accounts
have been eliminated in consolidation. The results of operations for the
three-month periods ended March 31, 1998 and 1999 are not necessarily
indicative of the results for a full year.
Helicon OnLine operations are included in the Partnership's consolidated
financial statements effective on June 29,1998.
(3) OTHER EVENTS
On January 5, 1999, the Company entered into a $12,000,000 Senior
Subordinated Loan Agreement with Paribas Capital Funding, LLC ("the 1999
Credit Facility"). The Facility is non-amortizing and is due January 5,
2003. Initial borrowings of $7,000,000 under this Facility financed the
acquisition of certain cable television assets in North Carolina (see
below). On February 19, 1999, the Company borrowed the remainder
$5,000,000 available under the 1999 Credit Facility. Interest on the
$12,000,000 is payable at 11.5% per annum.
On January 7, 1999, the Company acquired the cable television systems,
serving approximately 4,350 subscribers in the North Carolina counties of
Carter, Johnson and Unicol. The aggregate purchase price was
approximately $5,228,097 and was allocated to the net assets acquired,
which included property and equipment and intangible assets.
On March 22, 1999, Helicon Partners I, L. P., Baum Investments, Inc. and
all the holders of partnership interests in HPI entered into a purchase
agreement by and among Charter Communications, Inc, Charter
Communications, LLC and Charter Helicon, LLC (collectively the "Charter
Entities") providing for the sale of all such partnership interests and
Helicon Corp.'s interest in the management agreements with THGLP and HPI
Acquisition Co, LLC to the Charter Entities. The sale price is $550
million which amount will be reduced by any outstanding indebtedness
assumed by the Charter Entities.
8
<PAGE>
THE HELICON GROUP, L.P. AND WHOLLY OWNED
INCORPORATED ENTITY
MARCH 31, 1998 AND 1999
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
The Helicon Group, L.P. (the "Partnership") incurred a net loss for the
three months ended March 31, 1998 and 1999, respectively. The principal items
contributing to the Partnership's net losses are the high level of expenses
relating to depreciation, amortization and interest. These expenses are the
result of capital expenditures related to continued expansion and rebuilding of
the systems, the Partnership's acquisitions and its financing activities. The
Partnership believes that recurring net losses are common for cable television
companies and expects that such net losses will continue. The Partnership
believes that available working capital and cash flows generated from operations
will be sufficient to meet its operating needs and future commitments. See
"Liquidity and Capital Resources" below.
RECENT CABLE REGULATORY DEVELOPMENTS.
On March 29,1999, the Federal Communications Commission ("FCC") adopted
its report and order regarding its final rules regulating cable television
service and cable system operators to the Communications Act of 1934, as
amended, ("Communications Act"). The order provides that the commission's
authority to regulate Cable Programming Service Tier ("CPST") rates will sunset
for cable programming services provide after March 31, 1999, amongst other
provisions. The FCC continues to remain on a regulatory approach of strongly
encouraging and supporting competition to cable television. While the Company
anticipates additional legislative and regulatory developments and changes, the
precise nature of these changes and their impact on the cable industry and the
Company cannot be accurately predicted at this time.
The Partnership is in the process of applying for certification as a competitive
local exchange carrier ("CLEC") in several states. At this time, the Partnership
does not provide any common carrier services as a CLEC.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998.
REVENUES. Revenues increased $1,799,567 or 15.2% to $13,610,948.
Approximately 50% of the increase in revenues was attributed to the inclusion of
the dial-up internet access provider business ("ISP business") as of June 29,
1998 and approximately 15% was attributed to the January 7, 1999 acquisition of
a cable television system in North Carolina. The balance of the increase was
primarily due to higher basic service and new program service rates. Excluding
the effects of the ISP business, the average monthly cable revenue per basic
subscriber increased from $40.12 in the 1998 period to $41.18 in the 1999
period. The $1.06 increase reflected primarily i) an increase of $1.36 in basic
revenues; ii) an increase of $0.15 due to the new program services; iii) a
decrease of $0.29 in advertising revenue; iv) a decrease of $0.01 in premium
subscription revenue; and v) a decrease of $0.15 in other services, which
includes private data network systems and paging.
9
<PAGE>
OPERATING, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES. Operating,
marketing, general and administrative expenses increased $1,435,026 or 24.6% to
$7,264,177. Approximately 65% of the increase in expenses was attributed to the
ISP business and approximately 20% attributed to the North Carolina cable
television system acquisition, additional expenses for new and expanded
programming services and private data network services. The balance of the
increase in expenses was consistent with the growth in revenues, coupled with
general cost increases. As a percentage of revenues, operating, marketing,
general and administrative expenses increased from 49.4% in 1998 to 53.4% in
1999.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
increased $446,536 or 15.8% to $3,276,806, primarily as a result of $266,263
higher depreciation charges relating to the ISP business, the North Carolina
acquisition and ongoing capital expenditures in the other cable systems; and,
$180,273 higher amortization expense all attributed to the ISP business and the
North Carolina acquisition.
MANAGEMENT FEE CHARGED BY AFFILIATE. Management fee expenses increased
$89,982 or 15.2% to $680,550 consistent with the increase in revenues.
CORPORATE AND OTHER EXPENSES. Corporate and other expenses increased
$33,476 or 74.4% to $78,477.
OPERATING INCOME. Operating income for the three months ended March 31,
1999 decreased $205,453 or 8.2% to $2,310,938 from the $2,516,391 operating
income in the comparable 1998 period. The reduction in operating results was due
to higher non-cash expenses for depreciation and amortization offset in part by
the increase in revenues.
INTEREST EXPENSE. Interest expense increased $278,559 or 7.3% to
$4,118,364 primarily due to interest expense associated with the debt for the
North Carolina acquisition.
INTEREST INCOME. Interest income increased $17,715 or 75.7% to $41,127
primarily due to higher average cash balances.
LIQUIDITY AND CAPITAL RESOURCES
The cable television business requires substantial financing for
construction, expansion and maintenance of the cable plant as well as for
acquisitions. The Company has historically financed its capital needs and
acquisitions through long-term debt and, to a lesser extent, through cash
provided from operating activities. The general availability of bank financing
has been variable over recent years. On June 26, 1997, the Company entered into
a new credit facility ("the 1997 Credit Facility") with a new bank consisting of
$20,000,000 senior secured term loan facility due November 1, 2000, bearing
interest at LIBOR plus 2.75%, under which $20,000,000 was outstanding at March
31, 1999, secured by all the assets of the Company. The proceeds of the 1997
Credit Facility were used to acquire certain cable television assets in North
Carolina. On January 5, 1999, the 1997 Credit Facility was restated and amended.
On February 24, 1997, the Company entered into a $285,000 loan agreement with a
new bank, under which $264,288 was outstanding at March 31, 1999. The proceeds
of this new loan were used to construct the Company's new office building in
Vermont which secures the loan. On January 5, 1999, the Company entered into a
$12,000,000 Senior Subordinated Loan Agreement with Paribas Capital Funding, LLC
(the 1999 Credit Facility), all of which was outstanding at March 31, 1999, due
January 5, 2003, bearing interest at 11.5% and secured by all the assets of the
Company . (See Credit Agreements of the Partnership, below).
The Company operates at low and sometimes negative working capital levels. This
is primarily due to account payable balances, which often include significant
amount of capital expenditures. Such
10
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payables are paid when due from available cash balances, including cash
generated from operations up to the date of payment.
Cash flows provided by operating activities amounted to $4,012,386 and
$2,502,048 for the three-month periods ended March 31, 1998 and 1999,
respectively. The decrease in cash generated from operations in the 1999 period
compared to the 1998 period resulted primarily from changes in working capital
items and the $240,000 in financing costs incurred in 1999 associated with the
1999 Credit Facility.
Net cash used in investing activities amounted to $874,796 and
$6,636,630 for the three month periods ended March 31, 1998 and 1999,
respectively, and included the following:
o In the 1998 period, the Partnership incurred $965,924 in
capital expenditures related to the expansion and rebuilding
of the systems and received $91,128 in proceeds from sales of
equipment in the ordinary course of business.
o In the 1999 period, the Partnership incurred $1,255,338 in
capital expenditures related to the expansion and rebuilding
of the systems, paid $5,228,097 in connection with the
acquisition of a cable television system and incurred $159,195
in other deferred costs.
Net cash used in financing activities amounted to $19,409 in the three months
ended March 31, 1998 and net cash provided by financing activities amounted to
$11,766,828 for the three months ended March 31, 1999 which included the
following:
o In the 1998 and 1999 period, the Partnership made repayments
of notes payable in the amounts of $135,934 and $205,110
respectively, which represented principal repayments under the
Partnership's equipment credit facilities.
o In the 1999 period, the Partnership borrowed $12,000,000 from
a bank.
o Advances to other affiliates and repayments of such advances
result from management fees and other reimbursable expenses.
CREDIT AGREEMENTS OF THE PARTNERSHIP. On March 31, 1999, the
Partnership had cash and cash equivalents of $10,833,037 and the following
credit arrangements: (i) $115,000,000 aggregate principal amount of 11% Senior
Secured Notes due 2003; (ii) the 1997 Credit Facility with a bank which
consisted of a $20,000,000 senior secured term loan facility due November 1,
2000 all of which was outstanding, bearing interest at LIBOR plus 2.75% secured
by all the assets of the Company, as restated and amended on January 5, 1999;
(iii) the 1999 Credit Facility with a bank which consisted of a $12,000,000
senior subordinated loan facility due January 5, 2003 all of which was
outstanding, bearing interest at 11.5% secured by all the assets of the Company;
(iv) the 10% Note due August 20, 2000 to Simmons Communications Company, L.P. in
the amount of $2,036,765 (the original principal amount plus accrued interest
thereon through September 30, 1997); (v) $5,000,000 principal amount in favor of
Mr. Baum pursuant to a Prime Plus 2% Subordinated Note which has no due date and
may only be repaid, subject to the passage of certain limiting tests prior to
repayment of the Notes; (vi) $285,000 loan facility from a bank, of which
$264,288 was outstanding, bearing interest at Prime Plus 1.0%, due March 1,
2012, used to finance the Company's new office building in Vermont; (vii) $
933,346 non-interest bearing promissory notes issued in connection with the
acquisition of the internet business which was assumed by the Company on June
29,1998, and are reported net of imputed interest of $126,402; (viii) $1,496,056
of certain other equipment credit facilities with various due dates not
exceeding five years.
The Partnership believes that available working capital and cash flows
generated from operations will be sufficient to allow it to meet its planned
capital expenditures and meet its debt obligations and
11
<PAGE>
cover its short-term liquidity needs. Also, while the Partnership presently sees
no reason to do so, it could adjust scheduled capital expenditures if the
Partnership's liquidity position so warrants.
On March 22, 1999, Helicon Partners I, L. P., Baum Investments, Inc.
and all the holders of partnership interests in HPI entered into a purchase
agreement by and among Charter Communications, Inc, Charter Communications, LLC
and Charter Helicon, LLC (collectively the "Charter Entities") providing for the
sale of all such partnership interests and Helicon Corp.'s interest in the
management agreements with THGLP and HPI Acquisition Co, LLC to the Charter
Entities. The sale price is $550 million which amount will be reduced by any
outstanding indebtedness assumed by the Charter Entities.
INFLATION
Certain of the Partnership's expenses, such as those for wages and
benefits, for equipment repair and replacement, and for billing and marketing,
increase with general inflation. However, the Partnership does not believe that
its financial results have been, or will be, adversely affected by inflation,
provided that it is able to increase its service rates periodically.
12
<PAGE>
PART II.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
(a) Exhibits
Exhibit No. Description of Exhibit
- ----------- ----------------------
10.24 Amendment No. 1, dated as of January 5, 1999, to the Loan
Agreement dated as Of June 26, 1997 by and among the Company
and Banque Paribas (currently known as Paribas), and The
Lenders Thereto.
10.25 Senior Subordinated Loan Agreement dated as of January 5, 1999
by and among the Company and Various Lenders.
10.26 Purchase Agreement dated as of March 22, 1999, by and among
Charter Communications, Inc., a Delaware corporation, Charter
Communications LLC, a Delaware limited liability company,
Charter Helicon, LLC, a Delaware limited liability company,
Helicon Partners I, L. P. , a Delaware limited partnership,
Baum Investments, Inc., a Delaware corporation, and the
Limited Partners of Helicon Partners I, L. P.
(b) CURRENT REPORTS ON FORM 8 - K
NONE
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrants have duly caused this Report to be signed on their behalf by the
undersigned, thereunto duly authorized.
Dated: May 13, 1999 THE HELICON GROUP, L.P.
(Registrant)
By: /s/ HERBERT J. ROBERTS
---------------------------------
Name: Herbert J. Roberts
Title: Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
HELICON CAPITAL CORP.
Name: Herbert J. Roberts
Dated: May 13, 1999 By: /s/ HERBERT J. ROBERTS
---------------------------------
Name: Herbert J. Roberts
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
14
<PAGE>
EXHIBIT NO. 10.24
AMENDMENT NO. 1
AMENDMENT NO. 1 (this "AMENDMENT"), dated as of January 5, 1999, to (i)
the Credit Agreement, dated as of June 26, 1997, by and among The Helicon Group,
L.P. (the "BORROWER"), the Lenders party thereto and Paribas, as Agent (the
"CREDIT AGREEMENT"), and (ii) the Subsidiary Guaranty and Security Agreement,
dated as of June 26, 1997, by and among the Guarantors party thereto, the
Borrower and Paribas, as Agent (the "SUBSIDIARY GUARANTY AND SECURITY
AGREEMENT").
RECITALS
I. Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
II. The Borrower has requested that the Agent agree to amend the Credit
Agreement upon the terms and subject to the conditions contained herein, and the
Agent is willing so to agree.
Accordingly, in consideration of the Recitals and the terms and
conditions hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Section 1.1 of the Credit Agreement is amended by adding the
following definitions in the appropriate alphabetical order:
"FRONTIER ACQUISITION": the acquisition by the
Borrower of the Frontier Business pursuant to and in
accordance with the Frontier Acquisition Documents.
"FRONTIER ACQUISITION DOCUMENTS": collectively, (i)
the Asset Purchase Agreement, dated as of September 10, 1998,
by and between FrontierVision Operating Partners, L.P.
("FRONTIER") and Helicon Partners I, L.P., pursuant to which
the Borrower shall acquire the Frontier Assets and assume
certain liabilities in connection therewith, (ii) the bills of
sale and all other documents executed or delivered in
connection therewith and (iii) the Assignment and Assumption
Agreement, dated as of December 30, 1998, by and between
Helicon Partners I, L.P. and The Helicon Group, L.P., as each
may be amended, supplemented or otherwise modified in
accordance with Section 7.11.
"FRONTIER ASSETS": certain tangible and intangible
assets owned or held by Frontier and used by Frontier in
connection with the conduct of the business or operations of
(i) certain CATV Systems located in the State of North
Carolina known as the Meat Camp, Zionville, Creston and
<PAGE>
Roaring Fork systems, respectively, and (ii) certain CATV
Systems located in the State of Tennessee known as the Butler,
Crackers Neck, Erwin, Laurel Bloomery and Simerly Creek
systems, respectively, being acquired by the Borrower in the
Frontier Acquisition.
"FRONTIER BUSINESS": Frontier's business of operating
the Frontier Assets, which is to be transferred to the
Borrower on the date of the Frontier Acquisition pursuant to
the Frontier Acquisition Documents.
"HELICON NETWORK SOLUTIONS": Helicon Network
Solutions, L.P., a limited partnership organized and existing
under the laws of the State of Delaware.
"ISP ASSETS": the assets of the Borrower's ISP
business, consisting of telephone dial-up internet access and
other related internet services provided by the Borrower to
approximately 17,000 internet access subscribers under the
name "Helicon OnLine".
"PERMITTED 800 SUBSCRIBERS": cable assets of up to
800 cable subscribers of the Borrower and its Subsidiaries.
"PERMITTED 1,000 SUBSCRIBERS": cable assets of up to
1,000 cable subscribers of the Borrower and its Subsidiaries.
"SUBORDINATED INDEBTEDNESS DOCUMENTS": the Senior
Subordinated Loan Agreement, dated as of January 5, 1999,
among the Borrower and the Lenders party thereto and all
agreements and other documents executed or delivered in
connection therewith, as each may be amended, modified or
supplemented in accordance with Section 7.11.
"WHOLLYOWNED SUBSIDIARY": as to any Person, (i) any
corporation 99% of whose Capital Stock is at the time owned by
such Person and/or one or more WhollyOwned Subsidiaries of
such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or
more WhollyOwned Subsidiaries of such Person has a 99% equity
interest at such time.
2. Section 1.1 of the Credit Agreement is further amended by amending
and restating the following definitions as follows:
"MATERIAL AGREEMENTS": collectively, the Management
Agreement, the Booth Acquisition Documents, the Frontier
Acquisition Documents, the Affiliate Note, the Senior
Indenture Documents and the Subordinated Indebtedness
Documents, as each may be amended, supplemented or otherwise
modified from time to time in accordance with Section 7.11.
"TRANSACTION DOCUMENTS": collectively, the Loan
Documents, the Booth Acquisition Documents and the Frontier
Acquisition Documents.
2
<PAGE>
3. Section 2.4 (b) of the Credit Agreement is amended by deleting the
word "and" at the end of clause (i), replacing the period at the end of clause
(ii) with a semicolon and adding new clauses (iii) and (iv) as follows:
(iii) to the extent that the Borrower shall be
required to prepay or redeem the Senior Indenture Notes with
all or any part of the Net Cash Proceeds derived from the
Disposition of any of the Permitted 800 Subscribers, the pro
rata amount (based upon the relative outstanding principal
amounts of the Loans and the Senior Indenture Notes) of such
Net Cash Proceeds; and
(iv) (A) to the extent that the Borrower shall be
required to prepay or redeem the Senior Indenture Notes with
all or any part of the first $7,000,000 of Net Cash Proceeds
derived from the Disposition of the ISP Assets, the pro rata
amount (based upon the relative outstanding principal amounts
of the Loans and the Senior Indenture Notes) of such Net Cash
Proceeds and (B) the pro rata amount (based upon the relative
outstanding principal amounts of the Loans and the Senior
Indenture Notes) of the Net Cash Proceeds in excess of
$7,000,000 derived from the Disposition of the ISP Assets;
provided that to the extent that for any reason the Borrower
shall not be required to prepay or redeem the Senior Indenture
Notes with such excess Net Cash Proceeds, the Borrower shall
also prepay the Loans with such excess Net Cash Proceeds.
4. Section 4.5 of the Credit Agreement is amended by adding the text
"or the Frontier Acquisition" after the term "Booth Acquisition".
5. Section 4.6(b) of the Credit Agreement is amended by adding the text
"or the Frontier Acquisition Documents" after the term "Booth Acquisition
Documents".
6. Section 4.7 of the Credit Agreement is amended by adding the text
"and the Frontier Assets" after the term "Booth Assets".
7. Section 4.17 of the Credit Agreement is amended and restated in its
entirety as follows:
4.17 SOLVENCY
Immediately before and after giving effect to each of
the following: (a) the making of the Loans and the
consummation of the Booth Acquisition and (b) the consummation
of the Frontier Acquisition and the incurrence by the Borrower
of the Indebtedness under the Subordinated Indebtedness
Documents, the Borrower and each of its Subsidiaries is and
will be Solvent.
8. Section 6.1(d) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
3
<PAGE>
(d) Within 30 days after the end of each fiscal month,
statements of the Consolidated and consolidating monthly cash
flow, the number of homes passed and the number of subscribers
broken down by system for the period from the beginning of the
current fiscal year to the end of such month, all in form and
substance satisfactory to the Agent.
9. Sections 6.11(a) and 6.11(c) of the Credit Agreement are amended and
restated in their entirety as follows:
(a) INTEREST COVERAGE RATIO. Maintain as of the last
day of any fiscal quarter, an Interest Coverage Ratio of not
less than 1.50:1.00.
(b) LEVERAGE RATIO. Maintain at all times during each
period set forth below, a Leverage Ratio of not more than the
applicable ratio set forth below for such period:
Period Ratio
------ -----
Effective Date through 6:30:1.00
December 31, 1999
January 1, 2000 through 6:00:1.00
June 30, 2000
July 1, 2000 and thereafter 5.75:1.00.
10. Section 6.12 of the Credit Agreement is amended by deleting the
words "At any time after the Effective Date upon which a Person shall have
become a Subsidiary of the Borrower" and substituting the following in their
place: "With respect to Helicon Network Solutions, on or before February 5,
1999, and with respect to each other Subsidiary of the Borrower that is not a
party to the Subsidiary Guaranty, promptly upon the request of the Agent".
11. Section 7.1(ii) of the Credit Agreement is amended and restated in
its entirety as follows: "(ii) Indebtedness of the Borrower and Helicon Capital
Corp. under the Senior Indenture Notes and the Subordinated Indebtedness
Documents, provided that, with respect to such Indebtedness under the
Subordinated Indebtedness Documents, (a) such Indebtedness shall be unsecured
and shall be subordinated to the Indebtedness under the Loan Documents in a
manner in all respects satisfactory to the Agent and (b) the Agent shall have
received a certificate of an Authorized Signatory of the Borrower, in all
respects satisfactory to the Agent, attaching a true and complete copy of each
of the fully executed Subordinated Indebtedness Documents".
12. Section 7.3 of the Credit Agreement shall be amended by deleting
the word "and" at the end of subsection (a), replacing the period at the end of
subsection (b) with "; and" and adding a new subsection (c) as follows:
(c) the Frontier Acquisition, provided that:
4
<PAGE>
(i) the Agent shall have received prior written notice thereof
from the Borrower;
(ii) at the time of the Frontier Acquisition and immediately
after giving effect thereto, (A) there shall exist no Default
or Event of Default, (B) the representations and warranties
contained in the Loan Documents shall be true and correct with
the same effect as though such representations and warranties
had then been made and (C) each Credit Party shall be in
compliance with all of the terms, covenants and conditions of
the Loan Documents to which it is a party;
(iii) the Agent shall have received a certificate of an
Authorized Signatory of the Borrower, in all respects
satisfactory to the Agent, dated the date of the Frontier
Acquisition, attaching a true and complete copy of each of the
fully executed Frontier Acquisition Documents, and certifying
that (A) each thereof is in full force and effect, (B) the
Frontier Acquisition has been consummated in accordance with
the Frontier Acquisition Documents without any waiver or
modification of any of the conditions thereto (except for a
waiver or modification with respect to approvals and consents
which in the aggregate are not material to the consummation of
the Frontier Acquisition and will not adversely affect in any
material respect the Borrower's ability to conduct the
Frontier Business or the Operating Cash Flow derived
therefrom), (C) the total acquisition cost of the Frontier
Acquisition is not greater than $5,500,000, (D) all approvals
and consents of all Persons required to be obtained in
connection with the consummation of the transactions
contemplated by the Frontier Acquisition Documents shall have
been obtained and shall be in full force and effect (except
for those approvals and consents which in the aggregate are
not material to the consummation of the Frontier Acquisition
and will not adversely affect in any material respect the
Borrower's ability to conduct the Frontier Business or the
Operating Cash Flow derived therefrom), and all required
notices have been given and all required waiting periods shall
have expired, including, if applicable, under the HSR Act, (E)
no material adverse change in the business, assets,
liabilities, financial condition or results of operations of
the Frontier Business has occurred and (F) all filings and
registrations with, and all material approvals, orders,
authorizations, franchises, consents, licenses, certificates
and permits (including, without limitation, all CATV
Franchises and FCC Licenses) from, all Governmental
Authorities (including the FCC), and all other Persons which
are or may be required prerequisites to the validity,
enforceability or non-voidability of the Frontier Acquisition
Documents, the consummation of the Frontier Acquisition and
the grant of the security interests pursuant to the Collateral
Documents have been made or obtained;
(iv) the Agent shall have received a certificate of a
Financial Officer of the Borrower, in all respects
satisfactory to the Agent, dated the date of the Frontier
Acquisition, attaching a pro-forma Compliance Certificate
(after
5
<PAGE>
giving effect to the incurrence of the Indebtedness under the
Subordinated Indebtedness Documents and the consummation of
the Frontier Acquisition, and certifying that after giving
effect to the incurrence by the Borrower and Helicon Capital
Corp. of the Indebtedness under the Subordinated Indebtedness
Documents and the consummation of the Frontier Acquisition,
the Borrower and each of its Subsidiaries is Solvent;
(v) the Agent shall have received such financial information
as it shall have requested with respect to the Frontier
Acquisition; and
(vi) each Credit Party shall have, at its own expense,
promptly executed and delivered all certificates, documents,
instruments, financing and continuation statements and
amendments thereto, notices and other agreements, and shall
have taken all further action, that the Agent shall have
reasonably requested, in order to perfect and protect the
Security Interest (as defined in the applicable Collateral
Documents) granted thereby or to enable the Agent to exercise
and enforce its rights and remedies thereunder with respect to
the Collateral (as defined therein and including, without
limitation, with respect to the Collateral Account).
13. Section 7.4 of the Credit Agreement is amended by deleting the word
"and" at the end of subsection (b), replacing the period at the end of
subsection (c) with a semicolon and adding new subsections (d), (e) and (f) as
follows:
(d) Dispositions of the Permitted 800 Subscribers, through a sale, on
or before December 31, 1999, provided that (i) the Borrower receives fair market
value payable wholly in cash of at least $1,200 per subscriber, (ii) such
Disposition is an armslength transaction with a Person other than an Affiliate,
(iii) immediately before and after giving effect to such Disposition, no Default
or Event of Default shall exist and (iv) the Borrower shall make any prepayment
of the Loans required pursuant to Section 2.4(b);
(e) Disposition of the ISP Assets at any time, provided that (i) the
Borrower receives fair market value payable wholly in cash equal to at least
$1,200,000, (ii) such Disposition is an armslength transaction with a Person
other than an Affiliate, (iii) immediately before and after giving effect to
such Disposition, no Default or Event of Default shall exist and (iv) the
Borrower shall prepay in full any Indebtedness paid as consideration in
connection with the purchase of the ISP Assets and make any prepayment of the
Loans required pursuant to Section 2.4(b); and
(f) Dispositions of the Permitted 1,000 Subscribers, through an asset
swap, provided that (i) the Borrower receives fair market value in comparable
cable subscribers, (ii) such Disposition is an armslength transaction with a
Person other than an Affiliate and (iii) immediately before and after giving
effect to such Disposition, no Default or Event of Default shall exist.
14. Section 7.5 of the Credit Agreement is amended by deleting the word
"and" at the end of subsection (c), replacing the period at the end of
subsection (d) with "; and" and adding a new subsection (e) as follows:
6
<PAGE>
(e) Investments consisting of capital contributions
in or the purchase of equity of Wholly-Owned Subsidiaries to
the extent the aggregate amount of such capital contributions
in and equity purchases of (without giving effect to any
writedowns or writeoffs with respect thereto) all such
WhollyOwned Subsidiaries does not exceed $100,000, provided,
however, in the case of Helicon Network Solutions the
aggregate amount of such capital contributions and equity
purchases (without giving effect to any writedowns or
writeoffs with respect thereto) shall not exceed $7,000,000.
15. Section 7.7 of the Credit Agreement is amended and restated in its
entirety as follows:
7.7 CAPITAL EXPENDITURES
Make any Capital Expenditures, or incur any obligation to make
Capital Expenditures, or permit any of its Subsidiaries so to
do, except (a) Capital Expenditures consisting of the
reinvestment, by the Borrower and its Subsidiaries, of Net
Cash Proceeds from the Disposition of the ISP Assets and the
Disposition of any of the Permitted 800 Subscribers and (b)
other Capital Expenditures in an aggregate Consolidated
amount, under this clause (b), in excess of: (i) $8,500,000 in
fiscal year 1998, (ii) $11,300,000 in fiscal year 1999 and
(iii) $9,000,000 in fiscal year 2000. Capital Expenditures
shall be calculated on a noncumulative basis so that amounts
not expended in a fiscal year may not be carried over and
expended in any subsequent fiscal year.
16. The parenthetical in Section 7.11 of the Credit Agreement is
amended and restated in its entirety as follows: "(except for modifications and
waivers of the Booth Acquisition Documents to the extent contemplated by Section
5.15(b) and modifications and waivers of the Frontier Acquisition Documents to
the extent contemplated by Section 7.3(c)(iii)".
17. Section 7.15 of the Credit Agreement is amended by deleting the
text "(i) this Agreement and (ii) the Senior Indenture Documents" and inserting
in its place the text "(i) this Agreement, (ii) the Senior Indenture Documents
and (iii) the Subordinated Indebtedness Documents".
18. Section 7.16 of the Credit Agreement is hereby amended by replacing
the words "the Effective Date" with "January 5, 1999".
19. Section 1(b) of the Subsidiary Guaranty and Security Agreement is
amended by deleting the defined terms "Consideration" and "Net Worth".
20. Section 2(b) of the Subsidiary Guaranty and Security Agreement is
hereby amended and restated in its entirety as follows:
(b) It is the desire and intent of each Guarantor and the Agent and the
Lenders that this Guaranty shall be enforced against such Guarantor to the
fullest extent
7
<PAGE>
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. If, however, and to the extent, that the
obligations of any Guarantor under this Guaranty shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation, because
of any applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guarantor Obligations of such Guarantor (but
not the Guarantor Obligations of any other Guarantor unless such other Guarantor
or Guarantors are individually subject to the circumstances covered by this
Section 2(b)) shall be deemed to be reduced ab initio and such Guarantor shall
pay the maximum amount of the Guarantor Obligations of such Guarantor which
would be permissible under applicable law without causing such Guarantor's
obligations hereunder to be so invalidated.
21. Paragraphs 1 through 20 of this Amendment shall not be effective
until such time as (a) the Required Lenders shall have consented hereto in
writing and (b) the Agent shall have received a fee from the Borrower for the
account of each Lender equal to 0.25% of the principal amount of each Lender's
Loan.
22. Each Credit Party hereby (a) reaffirms and admits the validity and
enforceability of each Loan Document to which it is a party and all of its
obligations thereunder, (b) agrees and admits that it has no defense to or
offset against any such obligation and (c) certifies that, both as of the date
hereof and immediately after giving effect to paragraphs 1 through 20 of this
Amendment, (i) there exists and there shall exist no Default or Event of
Default, (ii) its representations and warranties contained in the Loan Documents
are and shall be true and correct with the same effect as though such
representations and warranties had then been made and (iii) it is and shall be
in compliance with all of the terms, covenants and conditions of the Loan
Documents to which it is a party.
23. In all other respects, the Loan Documents shall remain in full
force and effect, and no amendment in respect of any term or condition of any
Loan Document shall be deemed to be an amendment in respect of any other term or
condition contained in any Loan Document.
24. This Amendment may be executed in any number of counterparts all of
which, taken together, shall constitute one agreement. In making proof of this
Amendment, it shall only be necessary to produce the counterpart executed and
delivered by the party to be charged.
25. THIS AMENDMENT IS BEING EXECUTED AND DELIVERED IN, AND IS INTENDED
TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCEABLE
IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
8
<PAGE>
AS EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused this Amendment to be
executed on its behalf.
THE HELICON GROUP, L.P.
By: Baum Investments, Inc., its General Partner
By: /s/ HERBERT J. ROBERTS
--------------------------------
Name: (Herbert J. Roberts)
Senior Vice President
(Principal Accounting Officer)
HELICON CAPITAL CORP.
By: /s/ HERBERT J. ROBERTS
--------------------------------
Name: (Herbert J. Roberts)
Senior Vice President
(Principal Accounting Officer)
PARIBAS, as Agent (formerly known as Banque
Paribas)
By: /s/ Lynn S. Randall
Name: Lynn S. Randall
Title: Director
9
<PAGE>
Consented to and agreed:
PARIBAS (formerly known as Banque Paribas)
By: (Signed Original On File)
Name:
------------------------------
Title:
-----------------------------
CITY NATIONAL BANK
By: (Signed Original On File)
Name:
------------------------------
Title:
-----------------------------
10
<PAGE>
EXECUTION COPY
================================================================================
EXHIBIT NO. 10.25
$12,000,000
SENIOR SUBORDINATED LOAN AGREEMENT
among
THE HELICON GROUP, L.P.,
and
VARIOUS LENDERS
---------------------------------
Dated as of January 5, 1999
---------------------------------
================================================================================
<PAGE>
SENIOR SUBORDINATED LOAN AGREEMENT, dated as of January 5,
1999, among THE HELICON GROUP, L.P., a limited partnership organized and
existing under the laws of the State of Delaware (the "Borrower") and the
financial institutions party hereto from time to time (each a "Lender" and,
collectively, the "Lenders"). Unless otherwise defined herein, all capitalized
terms used herein and defined in Section 8 are used herein as therein defined.
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders lend to
the Borrower $12,000,000 for the purposes specified herein; and
WHEREAS, subject to and upon the terms and conditions herein
set forth, the Lenders are willing to make loans to the Borrower in an aggregate
amount of $12,000,000;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF LOANS.
1.01 THE LOANS. Subject to and upon the terms and conditions
set forth herein, each Lender severally agrees to make, on the Initial Funding
Date and on the Subsequent Funding Date, a loan in Dollars (each a "Loan" and,
collectively, the "Loans") to the Borrower in a principal amount not to exceed
such Lender's Commitment immediately prior to the incurrence of such Loans. Any
amount of any Loan prepaid or repaid may not be reborrowed.
1.02 NOTICE OF BORROWING. The Borrower shall give each Lender
at the address specified opposite its signature below, prior to 12:00 Noon (New
York time) on the Business Day preceding the applicable Funding Date, a written
notice (or telephonic notice promptly confirmed in writing) of the proposed
Borrowing of Loans. Such notice (the "Notice of Borrowing") shall be irrevocable
and shall be given by the Borrower in the form of EXHIBIT A, appropriately
completed to specify (i) the aggregate principal amount of the Loan to be made
pursuant to the proposed Borrowing, and (ii) the applicable Funding Date (which
shall be a Business Day).
1.03 DISBURSEMENT OF FUNDS. No later than 12:00 Noon (New York
time) on the applicable Funding Date, each Lender will make to the Borrower an
amount equal to such Lender's pro rata portion of the applicable Borrowing, by
wire transfer to an account to be designated by the Borrower, in Dollars and
immediately available funds.
1.04 NOTES. (a) The Borrower's obligation to pay the principal
of, and interest on, the Loans made to it by each Lender, shall be evidenced by
a promissory note substantially in the form of EXHIBIT B, with blanks
appropriately completed in conformity herewith (each, a "Note" and,
collectively, the "Notes").
(b) The Note issued to each Lender shall (i) be executed by
the Borrower, (ii) be payable to the order of such Lender or its registered
assigns and be dated the Initial Funding Date, (iii) be in the stated principal
amount equal to the Commitment of such Lender and be payable in the principal
amount of the Loan evidenced thereby, (iv) mature on the Maturity Date,
<PAGE>
(v) bear interest as provided in Section 1.05 and (vi) be subject to voluntary
repayment and mandatory repayment as provided in Section 2.02 and (vii) be
entitled to the benefits of this Agreement and the Subordinated Guaranty.
(c) Each Lender will note on its internal records the amount
of each Loan made or acquired by it and each payment in respect thereof and
will, prior to any transfer of any Note, endorse on the reverse side thereof the
outstanding principal amount of the Loan evidenced thereby. Failure to make any
such notation shall not affect the Borrower's obligations in respect of the
Loans.
1.05 INTEREST. (a) The Borrower agrees to pay interest in
respect of the unpaid principal amount of each Loan from the date such Loan is
made until the maturity thereof (whether by acceleration or otherwise), at a
rate which shall at all times be equal to 11.5% per annum.
(b) Overdue principal and, to the extent permitted by law,
overdue interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to 17.5%
with such interest to be payable on demand.
(c) Accrued and unpaid interest shall be payable quarterly in
arrears on each Quarterly Payment Date, on any repayment (on the amount repaid),
at maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(d) All computations of interest hereunder shall be made in
accordance with Section 10.07(b).
1.06 INCREASED COSTS, ETC. If any Lender shall have determined
that after the date hereof, the adoption or effectiveness of any applicable law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender or any corporation
controlling such Lender with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on such Lender's or such other corporation's capital or assets as a consequence
of such Lender's Commitment or Commitments hereunder or its obligations
hereunder to a level below that which such Lender or such other corporation
could have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's or such other corporation's policies
with respect to capital adequacy), then from time to time, upon written demand
by such Lender, accompanied by the notice referred to in the second to last
sentence of this Section 1.06, the Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such other
corporation for such reduction. In determining such additional amounts, each
Lender will act reasonably and in good faith and will use reasonable averaging
and attribution methods. Each Lender, upon determining that any additional
amounts will be payable pursuant to this Section 1.06, will give prompt written
notice thereof to the Borrower, which notice shall set forth in reasonable
detail the basis of the calculation of such additional amounts, although the
failure to give any such notice shall not release or diminish the Borrower's
obligations to pay additional amounts pursuant to this
-2-
<PAGE>
Section 1.06 upon the subsequent receipt of such notice. A Lender's reasonable
good faith determination of compensation owing under this Section 1.06 shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto.
1.07 FEES. The Borrower agrees to pay to each Lender, (a)
quarterly in arrears on each Quarterly Payment Date and on the date of each
reduction or termination of the Subsequent Commitment, a fee computed at a rate
for each day equal to 1.50% per annum of the Subsequent Commitment of such
Lender and (b) such other fees as may be agreed to in writing between the
Borrower and any Lender.
SECTION 2. COMMITMENTS; REPAYMENT; PREPAYMENTS; PAYMENTS;
TAXES.
2.01 TERMINATION OF COMMITMENTS; PAYMENT OF LOANS . (a) The
Total Commitment (and the Commitment of each Lender hereunder) shall terminate
(i) on the Expiration Date unless the Initial Funding Date has occurred on or
before such date or (ii) on March 1, 1999.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 2.01, the Total Commitment (and the Commitment of each
Lender) shall be reduced on each of the Initial Funding Date and the Subsequent
Funding Date by an amount equal to the amount of Loans made on such date.
(c) The unpaid principal amount of the Loans plus all accrued
and unpaid interest thereon and all other amounts owed hereunder with respect
thereto shall be paid in full in cash on the Maturity Date.
2.02 MANDATORY AND VOLUNTARY PREPAYMENTS. (a) The Borrower
may, upon not less than three Business Days' and not more than five Business
Days' prior written notice to the Lenders (which notice shall be irrevocable),
at any time and from time to time, prepay the Loans in whole or in part,
PROVIDED, HOWEVER, that (i) each partial prepayment pursuant to this Section
2.02(a) shall be in an aggregate principal amount of at least $1,000,000 and, if
greater, in integral multiples thereof, and (ii) no such prepayment shall be
made unless (x) there is no Senior Debt outstanding and all commitments under
the Senior Debt Documents have been terminated or (y) the Senior Debt Documents
do not prohibit such payments or the Required Banks thereunder or requisite
holders thereunder (in the case of the Senior Indenture) have consented to such
payment. In connection with any voluntary prepayment or mandatory prepayment,
the Borrower shall prepay the Loan at the prepayment price set forth below (the
"Redemption Price") (plus all accrued interest):
<TABLE>
<CAPTION>
% of Principal
Prepayment Date During the Period Being Paid
--------------------------------- ----------
<S> <C>
From the Initial Funding Date to but not including 106%
November 30, 1999
From November 30, 1999 to but not including November 103%
30, 2000
-3-
<PAGE>
From November 30, 2000 and at any time thereafter 100%
</TABLE>
(b) All prepayments (whether voluntary or mandatory) shall
include payment of accrued interest on the principal amount of the Loans so
prepaid and shall be applied to payment of accrued interest before application
to principal. Any payment of the Loans as a result of an Event of Default (or
the acceleration of the Loans resulting therefrom) (including a Change in
Control) and all mandatory prepayments (including, without limitation, payments
pursuant to Section 2.02(c)) shall be deemed a voluntary prepayment for the
purposes of this Section 2 and shall be paid at the Redemption Price specified
in Section 2.02(a) as if such payment had been voluntary. All prepayments which
are applied to principal will be applied on a PRO RATA basis to all Loans.
(c) The Borrower will apply, or cause its applicable
Subsidiaries to apply, the following amounts FIRST to the permanent reduction of
the then outstanding Senior Debt and any commitments thereunder to make loans,
or issue letters of credit (in each such case, only if required under the terms
of the Senior Debt Documents) and NEXT, to the extent not required by the terms
of the Senior Debt Documents to be used to prepay the Senior Debt in permanent
reduction thereof, to the Obligations in the manner set forth in Section
2.02(b):
(i) on the date of the receipt thereof by the Borrower or any
Subsidiary of the Borrower, the Borrower shall repay, in accordance
with Section 2.02(b), an amount equal to 100% of the cash proceeds (net
of underwriting discounts and commissions and all other reasonable
costs associated with such transaction) from any sale or issuance after
the Effective Date of equity of the Borrower or any Subsidiary of the
Borrower or the incurrence of any Indebtedness by the Borrower or any
Subsidiary of the Borrower other than Indebtedness permitted to be
incurred pursuant to Section 6.04 as said Section is in effect on the
Effective Date;
(ii) on each date after the Effective Date on which the Borrower
or any Subsidiary of the Borrower receives Net Sale Proceeds from any
sale or other disposition of assets (including capital stock and
securities other than capital stock or securities the proceeds from the
sale of which are recaptured pursuant to Section 2.02(c)(i)), an amount
equal to 100% of such Net Sale Proceeds excluding Net Sale Proceeds of
(A) sales of inventory in the ordinary course of business, (B) up to
$7,000,000 from the sale of ISP Assets so long as the proceeds from
such sale are first applied to repay all Indebtedness secured by the
ISP Assets and any excess thereof is used to purchase within 180 days
of the receipt thereof assets used in the Borrower's cable systems
business and/or Helicon Network Solutions, (C) sales of cable assets
for cash, of up to 800 subscribers, to be effected during the period
beginning on the Initial Borrowing Date and ending on December 31, 1999
and (D) other sales of assets permitted pursuant to Section 6.02 hereof
as said Section is in effect on the Effective Date.
2.03 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to each Lender not later than 12:00 Noon (New York time) on the
date when due and shall be made in Dollars and in
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immediately available funds at the address specified opposite such Lender's
signature below. Whenever any payment to be made hereunder or under any Note
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable at the applicable rate
during such extension.
2.04 NET PAYMENTS. (a) All payments made by the Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 2.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income of a Lender pursuant to the laws of the
jurisdiction or any political subdivision or taxing authority thereof or therein
in which the principal office or applicable lending office of such Lender is
located) and all interest, penalties or similar liabilities with respect thereto
(collectively, "Taxes"). If any Taxes are so levied or imposed, the Borrower
agrees to pay the full amount of such Taxes, and such additional amounts as may
be necessary so that every payment of all amounts due hereunder or under any
Note, after withholding or deduction for or on account of any Taxes, will not be
less than the amount provided for herein or in such Note. If any amounts are
payable in respect of Taxes pursuant to the preceding sentence, then the
Borrower shall be obligated to reimburse each Lender, upon the written request
of such Lender, for taxes imposed on or measured by the net income of such
Lender pursuant to the laws of the jurisdiction or any political subdivision or
taxing authority thereof or therein in which the principal office or applicable
lending office of such Lender is located as such Lender shall determine are
payable by such Lender in respect of such amounts so paid to or on behalf of
such Lender pursuant to the preceding sentence and in respect of any amounts
paid to or on behalf of such Lender pursuant to this sentence. The Borrower will
furnish to each Lender within 45 days after the date of the payment of any Taxes
due pursuant to applicable law certified copies of tax receipts evidencing such
payment by the Borrower. The Borrower agrees to indemnify and hold harmless each
Lender, and reimburse such Lender upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to deliver to the
Borrower on or prior to the Effective Date, or in the case of a Lender that is
an assignee or transferee of an interest under this Agreement pursuant to
Section 10.04 (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Lender, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Lender is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 4224 or 1001 pursuant to clause (i) above, (x) a certificate
substantially in the form of EXHIBIT C (any such certificate, a "Section
2.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such
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Lender's entitlement to a complete exemption from United States withholding tax
with respect to payments of interest to be made under this Agreement and under
any Note. In addition, each Lender agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver to the Borrower two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section
2.04(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower of its inability to deliver any such Form or Certificate, in
which case such Lender shall not be required to deliver any such Form or
Certificate pursuant to this Section 2.04(b). Notwithstanding anything to the
contrary contained in Section 2.04(a), but subject to the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to do
so by law, to deduct or withhold income or similar taxes imposed by the United
States (or any political subdivision or taxing authority thereof or therein)
from interest, fees or other amounts payable hereunder for the account of any
Lender that is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Lender has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 2.04(a) hereof to
gross-up payments to be made to a Lender in respect of income or similar taxes
imposed by the United States if (I) such Lender has not provided to the Borrower
the Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 2.04(b) or (II) in the case of a payment, other than
interest, to a Bank described in clause (ii) above, to the extent that such
forms do not establish a complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the preceding sentence or
elsewhere in this Section 2.04, the Borrower agrees to pay additional amounts
and to indemnify each Lender in the manner set forth in Section 2.04(a) (without
regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
SECTION 3. CONDITIONS PRECEDENT TO LOANS.
3.01 CONDITIONS PRECEDENT TO LOANS ON THE INITIAL FUNDING
DATE. The obligation of each Lender to make its Loan on the Initial Funding Date
is subject to (a) the condition precedent that the Effective Date shall have
occurred and (b) the satisfaction of the following additional conditions
precedent:
(a) OFFICER'S CERTIFICATE. On the Initial Funding Date, each
Lender shall have received a certificate, dated the Initial Funding Date, signed
by the Chief Executive Officer, Chief Financial Officer, President or any Vice
President of the Borrower stating that all of the conditions specified in
clauses (g), (l) and (o) of this Section 3.01 and clauses (a), (c) and (d) of
Section 3.02 have been satisfied on such date; PROVIDED such certificate shall
not be required to include a certification as to acceptability of any matters to
the Lenders described in said Sections.
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Each such certificate shall be in the form of EXHIBIT D with appropriate
insertions, together with all exhibits referred to in such certificate, and the
foregoing shall be acceptable to the Lenders.
(b) OPINIONS OF COUNSEL. On the Initial Funding Date, each
Lender shall have received (i) from Richard A. Hainbach, counsel to the Borrower
and its Subsidiaries, an opinion addressed to the Lenders and dated the Initial
Funding Date covering the matters set forth in EXHIBIT E and (ii) from counsel
rendering such opinions, reliance letters addressed to each Lender and dated the
Initial Funding Date with respect to all legal opinions delivered in connection
with the Transaction, with such legal opinions to be in form and substance
satisfactory to each Lender.
(c) CORPORATE DOCUMENTS; PROCEEDINGS. (i) On the Initial
Funding Date, each Lender shall have received a certificate, dated the Initial
Funding Date, signed by the Chief Executive Officer, Chief Financial Officer,
President or any Vice President of each Loan Party, and attested to by the
Secretary or any Assistant Secretary of such Loan Party, in the form of EXHIBIT
F with appropriate insertions, together with copies of the Certificate of
Incorporation and By-Laws or partnership agreement (or equivalent organizational
documents) of such Loan Party and the resolutions of such Loan Party referred to
in such certificate, and the foregoing shall be acceptable to the Required
Lenders in their sole discretion.
(ii) All corporate and legal proceedings and all instruments
and agreements relating to the transactions contemplated by this Agreement, the
other Loan Documents and the other Documents shall be satisfactory in form and
substance to the Lenders, and each Lender shall have received all information
and copies of all material documents and papers, including records of corporate
proceedings, governmental approvals, good standing certificates and bring-down
telegrams, if any, which such Lender may have requested in connection therewith,
such documents and papers where appropriate to be certified by proper corporate
or governmental authorities.
(d) CAPITALIZATION. On the Initial Funding Date, after giving
effect to the Transaction, the ownership and capital structure (including,
without limitation, the terms of the capital stock, options, warrants or other
securities issued or to be issued by the Borrower and the Subsidiaries of the
Borrower) shall be in form and substance satisfactory to the Lenders.
(e) SENIOR DEBT DOCUMENTS. On or prior to the Initial Funding
Date, there shall have been delivered to the Lenders true and complete copies of
the Senior Debt Documents and all schedules, annexes and exhibits thereto
(certified as such by an appropriate officer of the Borrower), and all of the
foregoing shall be in form and substance satisfactory to the Lenders. The Credit
Agreement shall, to the extent necessary, have been amended in accordance with
its terms to permit the transactions contemplated hereby. Each Lender shall have
received from Richard A. Hainbach, counsel to the Borrower and its Subsidiaries,
an opinion addressed to each such Lender, dated the Initial Funding Date,
stating that the consummation of the Transaction does not conflict with or
result in any breach of any of the terms, covenants, conditions or provisions
of, constitute a default under, result in creation or imposition of, any Lien on
the property or assets of the Borrower or any of its Subsidiaries pursuant to
any of the Senior Debt Documents. On the Initial Funding Date, there shall have
been delivered to the Lenders a certificate, dated the Initial Funding Date,
signed by the Chief Financial Officer of the Borrower certifying that the
incurrence of the Indebtedness hereunder does not breach any of the terms or
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conditions of any of the Senior Debt Documents and, in particular, certifying,
and providing the detailed computations with respect thereto, that the Pro Forma
Debt Coverage Ratio (as defined in the Senior Indenture) for the Issuers (as
defined in the Senior Indenture) and their Restricted Subsidiaries (as defined
in the Senior Indenture) would be less than 7.50 to 1.00.
(f) FEES, ETC. On the Initial Funding Date, the Borrower shall
have paid in full to each Lender all costs, fees and expenses (including,
without limitation, all legal fees and expenses) payable to such Lender to the
extent then due pursuant hereto or as otherwise agreed between the Borrower and
such Lender.
(g) APPROVALS. All necessary governmental and third party
approvals in connection with the Transaction (other than the Acquisition) and
the transactions contemplated by the Loan Documents and otherwise referred to
herein or therein and all necessary and material governmental and third party
approvals in connection with the Acquisition and the transactions contemplated
by the Acquisition Documents shall have been obtained and remain in effect, and
all applicable waiting periods shall have expired without any action being taken
by any competent authority which restrains, prevents or imposes, in the sole
judgment of the Lenders, adverse conditions upon the consummation of the
Transaction or the other transactions contemplated by the Documents and
otherwise referred to herein or therein. There shall not exist any judgment,
order, injunction or other restraint issued or filed or a hearing seeking
injunction relief or other restraint pending or notified prohibiting or imposing
materially adverse conditions upon the consummation of the Transaction, the
transactions contemplated by the Documents, or the making of the Loans.
(h) FINANCIAL STATEMENTS; PROJECTIONS; MANAGEMENT LETTER
REPORTS. (A) On or prior to the Initial Funding Date, the Lenders shall have
received the consolidated balance sheets of the Borrower at December 31, 1995,
December 31, 1996, December 31, 1997 and September 30, 1998 and the related
statements of income and cash flows and changes in shareholders' equity of the
Borrower for the fiscal years or nine-month period, as the case may be, ended as
of said dates, all of which financial statements shall be prepared in accordance
with generally accepted accounting principles consistently applied, subject, in
the case of the nine-month statements, to normal year-end audit adjustments and
the absence of footnotes, and shall (x) be in form and substance satisfactory to
the Required Lenders and (y) not disclose any material adverse differences in
the business, properties, assets, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole from that previously disclosed to the Lenders.
(B) On the Initial Funding Date, the Lenders shall have
received detailed consolidated financial projections, certified by the Chief
Financial Officer of the Borrower, for the Borrower and its Subsidiaries, which
include the projected results of the Borrower, after giving effect to the
Transaction and the other transactions contemplated herein, for the period
commencing on January 1, 1999 and ending after the Maturity Date (the
"Projections"), which Projections, and the supporting assumptions and
explanations thereto, and the accounting practices and procedures to be utilized
by the Borrower following the Initial Funding Date, shall be satisfactory in
form and substance to the Required Lenders.
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(C) On or prior to the Initial Funding Date, the Lenders shall
have received a copy of any "management letter" received by the Borrower or any
of its Subsidiaries from its certified public accountants.
(D) On or prior to the Initial Funding Date, the Lenders shall
have received a detailed budget for the $4,000,000 of capital expenditures
proposed to be used in connection with the Acquisition.
(i) SUBORDINATED GUARANTY. On the Initial Funding Date, HCC
shall have duly authorized, executed and delivered a Subordinated Guaranty in
the form of EXHIBIT G (as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof, the "Subordinated Guaranty"), and
the Subordinated Guaranty shall be in full force and effect.
(j) PLANS; SHAREHOLDERS' AGREEMENTS; MANAGEMENT AGREEMENTS;
EMPLOYMENT AGREEMENTS; COLLECTIVE BARGAINING AGREEMENTS; DEBT AGREEMENTS;
AFFILIATE CONTRACTS; TAX SHARING AGREEMENTS AND MATERIAL CONTRACTS. On or prior
to the Initial Funding Date, there shall have been delivered to any Lender who
requests same in writing true and correct copies, certified as true and complete
by an appropriate officer of the Borrower of:
(i) all Plans (and for each Plan that is required to file an
annual report on Internal Revenue Service Form 5500-series, a copy of
the most recent such report (including, to the extent required, the
related financial statements and opinions and other supporting
statements, certifications, schedules and information) and any other
"employee benefit plans," as defined in Section 3(3) of ERISA, and any
other material agreements, plans or arrangements, with or for the
benefit of current or former employees of the Borrower or any of its
Subsidiaries or any ERISA Affiliate (collectively, the "Employee
Benefit Plans");
(ii) all agreements entered into by the Borrower or any
Subsidiary of the Borrower governing the terms and relative rights of
its capital stock or stock equivalents and any agreements entered into
by shareholders relating to any such entity with respect to their
capital stock (collectively, the "Shareholders' Agreements");
(iii) all agreements with members of, or with respect to the,
management of the Borrower or any Subsidiary of the Borrower other than
Employment Agreements (collectively, the "Management Agreements");
(iv) all collective bargaining agreements applying or relating
to any employee of the Borrower or any Subsidiary of the Borrower
(collectively, the "Collective Bargaining Agreements");
(v) all agreements evidencing or relating to Indebtedness of
the Borrower or any Subsidiary of the Borrower whether or not such
agreement is to remain outstanding after giving effect to the
incurrence of Loans on the Initial Funding Date (collectively, the
"Debt Agreements");
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(vi) all tax sharing, tax allocation and other similar
agreements entered into by the Borrower or any Subsidiary of the
Borrower (collectively, the "Tax Sharing Agreements");
(vii) all contracts, agreements or understandings entered into
between the Borrower or any of its Subsidiaries on the one hand, and
any of its Affiliates, on the other hand (collectively, the "Affiliate
Contracts"); and
(viii) all material contracts and licenses of the Borrower or any
of its Subsidiaries that are to remain in effect after giving effect to
the consummation of the Transaction, as set forth on SCHEDULE 4.24
hereto (collectively, the "Material Contracts");
all of which Employee Benefit Plans, Shareholders' Agreements, Management
Agreements, Collective Bargaining Agreements, Debt Agreements, Tax Sharing
Agreements, Affiliate Contracts and Material Contracts shall be in form and
substance satisfactory to the Required Lenders and shall be in full force and
effect on the Initial Funding Date.
(k) INSURANCE ANALYSES. On the Initial Funding Date, the
Borrower shall cause to be delivered to the Lenders, evidence (including,
without limitation, certificates with respect to each insurance policy listed on
SCHEDULE 5.03) of insurance, complying with the requirements of Section 5.03,
with respect to the business and properties of the Borrower and its
Subsidiaries, in scope, form and substance satisfactory to the Required Lenders
and stating that such insurance shall not be canceled or reissued without 30
days' prior written notice by the insurer to the Lenders.
(l) CONSUMMATION OF THE ACQUISITION. On or prior to the
Initial Funding Date, there shall have been delivered to the Lenders true and
complete copies of all Acquisition Documents, and all terms and provisions of
such Acquisition Documents shall be in form and substance satisfactory to the
Required Lenders and shall not have been amended without the consent of the
Required Lenders. The Acquisition, including all of the terms and conditions
thereof, shall have been duly approved by the board of directors and (if
required by applicable law) the shareholders and/or any other organizational
bodies of the parties thereto, and all Acquisition Documents shall have been
duly executed and delivered by the parties thereto and shall be in full force
and effect. The representations and warranties set forth in the Acquisition
Documents shall be true and complete in all material respects as if made on and
as of the Initial Funding Date. Each of the conditions precedent to the
Borrower's obligations to consummate the Acquisition as set forth in the
Acquisition Documents shall have been satisfied to the satisfaction of the
Required Lenders or waived with the consent of the Required Lenders, and the
Acquisition shall have been consummated in accordance with all applicable law
and the Acquisition Documents (without giving effect to any amendment or
modification thereof or waiver with respect thereto unless consented to by the
Required Lenders).
(n) NOTES. On the Initial Funding Date, there shall have been
delivered to each Lender the appropriate Note, in each case executed by the
Borrower and in the amount, maturity and as otherwise provided herein.
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(o) OPERATING CASH FLOW. The Lenders shall be satisfied that
the pro forma annualized revenue and Operating Cash Flow of the Borrower for the
fiscal quarter ended on September 30, 1998 exceeds $49,500,000 and $25,100,000,
respectively.
(p) SUBORDINATION AGREEMENT. On the Initial Funding Date, the
Borrower shall and shall cause Helicon Corp. to have duly authorized, executed
and delivered a Subordination Agreement in the form of EXHIBIT I (as amended,
modified or supplemented from time to time in accordance with the terms hereof
and thereof, the "Subordination Agreement"), and the Subordination Agreement
shall be in full force and effect.
3.02 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of each
Lender to make its Loan (including Loans made on the Initial Funding Date) is
subject, at the time to the satisfaction of the following conditions:
(a) NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time of
the incurrence of the Loans and also after giving effect thereto (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Loan Documents shall be true and complete in
all material respects with the same effect as though such representations and
warranties had been made on such Funding Date, unless stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and complete in all material respects as of such earlier date.
(b) NOTICE OF BORROWING. Prior to the making of the Loans,
each Lender shall have received a Notice of Borrowing from the Borrower pursuant
to Section 1.02.
(c) LITIGATION. On such Funding Date, no litigation by any
entity (private or governmental) shall be pending or threatened with respect to
this Agreement, any other Document or any documentation executed in connection
herewith or with respect to the Transaction, or which any Lender shall determine
could reasonably be expected to have a materially adverse effect on the
Transaction or on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and the Subsidiaries of the Borrower taken as a whole
(after giving effect to the Transaction).
(d) MATERIAL ADVERSE CHANGE, ETC. Since December 31, 1997,
nothing shall have occurred (and the Lenders shall have become aware of no facts
or conditions not previously known) which the Lenders shall determine (i) could
reasonably be expected to have a material adverse effect on the rights or
remedies of the Lenders, or on the ability of any Loan Party to perform its
obligations to the Lenders under this Agreement or any other Loan Document, (ii)
could reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of any Loan Party
and any of its Subsidiaries taken as a whole (after giving effect to the
Transaction), (iii) reasonably indicates the inaccuracy in any material respect
of the information previously provided to any Lender in connection with its
analysis of the transactions contemplated hereby or reasonably indicates that
the information previously provided omitted to disclose any material
information.
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(e) SENIOR DEBT DOCUMENTS. On the Subsequent Funding Date,
each Lender shall have received from Richard A. Hainbach, counsel to the
Borrower and its Subsidiaries, an opinion addressed to each such Lender, dated
the Subsequent Funding Date, stating that the consummation of the Transaction
does not conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, constitute a default under, result in creation or
imposition of, any Lien on the property or assets of the Borrower or any of its
Subsidiaries pursuant to any of the Senior Debt Documents and, there shall have
been delivered to the Lenders a certificate, dated the Subsequent Funding Date,
signed by the Chief Financial Officer of the Borrower certifying that the
incurrence of the Indebtedness hereunder does not breach any of the terms or
conditions of any of the Senior Debt Documents and, in particular, certifying,
and providing the detailed computations with respect thereto, that the Pro Forma
Debt Coverage Ratio (as defined in the Senior Indenture) for the Issuers (as
defined in the Senior Indenture) and their Restricted Subsidiaries (as defined
in the Senior Indenture) would be less than 7.50 to 1.00.
SECTION 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In
order to induce the Lenders to enter into this Agreement and to make the Loans,
the Borrower makes the following representations, warranties and agreements as
to itself and its Subsidiaries on and as of the Initial Funding Date and on and
as of the Subsequent Funding Date, all of which representations, warranties and
agreements shall survive the execution and delivery of this Agreement and the
other Loan Documents and the Subsequent Funding Date, with the occurrence of the
Subsequent Funding Date being deemed to constitute a representation and warranty
that the matters specified in this Section 4 are true and correct on and as of
such date.
4.01 STATUS. Each of the Borrower and its Subsidiaries (i) is
a duly organized and validly existing corporation (or a limited liability
company or partnership, as applicable) in good standing under the laws of the
jurisdiction of its organization, (ii) has the power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized to do
business and is in good standing in each jurisdiction where the ownership,
leasing or operation of property or the conduct of its business requires such
qualifications except for failures to be so qualified which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
4.02 POWER AND AUTHORITY. Each Loan Party has the corporate or
other power to execute, deliver and perform the terms and provisions of each of
the Documents to which it is party and has taken all necessary corporate or
other action to authorize the execution, delivery and performance by it of each
of such Documents. Each Loan Party has duly executed and delivered each of the
Documents to which it is party, and each of such Document constitutes its legal,
valid and binding obligation enforceable in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
4.03 NO VIOLATION. Neither the execution, delivery or
performance by any Loan Party of the Documents to which it is a party, nor
compliance by it with the terms and provisions thereof, (i) will contravene any
provision of any applicable law, statute, rule or regulation or any
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order, writ, injunction or decree of any court or governmental instrumentality
applicable to it, (ii) will conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any Lien (except pursuant to the Senior Debt Documents) upon any of the property
or assets of any Loan Party or any of its Subsidiaries pursuant to the terms of
any indenture, mortgage, deed of trust, credit agreement or loan agreement, or
any other agreement, contract or instrument to which any of them are a party or
by which any of their property or assets is bound or to which any of them may be
subject or (iii) will violate any provision of the Certificate of Incorporation,
By-Laws or partnership agreement (or similar organizational documents) of any
Loan Party or any of its Subsidiaries.
4.04 GOVERNMENTAL APPROVALS. (a) No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made on or prior to the Initial Funding
Date and are in full force and effect), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to authorize,
or is required in connection with, (i) the execution, delivery and performance
of any Loan Document, (ii) the legality, validity, binding effect or
enforceability of any such Loan Document or (iii) the Transaction (other than
the Acquisition) and (b) no material order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made on or prior to the Initial Funding Date
and are in full force and effect), or exemption by, any governmental or public
body or authority, or any subdivision thereof, is required to authorize, or is
required in connection with, (i) the execution, delivery and performance of any
Acquisition Document, (ii) the legality, validity, binding effect or
enforceability of any Acquisition Document or (iii) the Acquisition.
4.05 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES; PROJECTIONS; ETC. (a)(i) The financial statements of the Borrower
and its Subsidiaries delivered pursuant to Section 3.01(h), have been examined
or reviewed by the accountants referred to therein, who delivered unqualified
opinions in respect thereto and (ii) the PRO FORMA (after giving effect to the
Transaction and the related financing thereof) consolidated balance sheet of the
Borrower as at the Initial Funding Date, copies of all of which financial
statements referred to in the preceding clauses (i) and (ii) have heretofore
been furnished to each Lender, present fairly the financial position of the
respective entities at the dates of said statements and the results of
operations for the period covered thereby (or, in the case of the PRO FORMA
balance sheet, present a good faith estimate of the pro FORMA financial
condition of the Borrower and its Subsidiaries (after giving effect to the
Transaction) on a consolidated basis at the date thereof), subject, in the case
of the unaudited financial statements, to normal year-end audit adjustments and
the absence of footnotes. All such financial statements have been prepared in
accordance with generally accepted accounting principles and practices
consistently applied except to the extent provided in the notes to said
financial statements and, in the case of the unaudited interim financial
statements, subject to normal year end adjustments (none of which, individually
or in the aggregate, would be material) and the absence of footnotes. Since
December 31, 1997, there has been no material adverse change in the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
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(b) On and as of the Initial Funding Date, on a PRO FORMA
basis after giving effect to the Transaction and all other transactions
contemplated by the Documents and to all Indebtedness (including, without
limitation, the Loans) being incurred in connection with the Transaction, and
Liens created, and to be created, by the Borrower or the Subordinated Guarantor
in connection therewith: (a) the sum of the assets (including all contribution
and subrogation rights and other intangible assets), at a fair valuation, of the
Borrower or the Subordinated Guarantor will exceed its debts; (b) the Borrower
or the Subordinated Guarantor has not incurred or does not intend to, or does
not believe that it will, incur debts beyond its ability to pay such debts as
such debts mature; and (c) the Borrower or the Subordinated Guarantor will have
sufficient capital with which to conduct its business. For purposes of this
Section 4.05(b) "debt" means any liability on a claim, and "claim" means (i)
right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, subordinated, disputed,
undisputed, secured or unsecured.
(c) Except as fully reflected in the financial statements and
the notes related thereto described in Section 4.05(a) or as disclosed on
SCHEDULE 4.21, there were as of the Initial Funding Date (and after giving
effect to the Transaction and the other transactions contemplated hereby and by
the Documents) no liabilities or obligations with respect to the Borrower or any
of its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate, could reasonably be expected to be material to the Borrower and its
Subsidiaries taken as a whole. As of the Initial Funding Date, neither the
Borrower nor any of its Subsidiaries knows of any basis for the assertion
against the Borrower or any of its Subsidiaries of any liability or obligation
of any nature whatsoever that is not fully reflected in the financial statements
and the notes related thereto described in Section 4.05(a) which, either
individually or in the aggregate, could reasonably be expected to be material to
the Borrower and its Subsidiaries taken as a whole. As of the Initial Funding
Date (and after giving effect to the Transaction) neither the Borrower nor any
of its Subsidiaries will have any outstanding Indebtedness or preferred stock
other than (i) the Loans, (ii) the Senior Debt and (iii) the Existing
Indebtedness.
(d) On and as of the Initial Funding Date, the Projections
have been prepared in good faith by the Borrower and there are no statements or
conclusions in any of the Projections which are based upon or include
information known to the Borrower to be misleading or which fail to take into
account material information regarding the matters reported therein. On the
Initial Funding Date, the Borrower believes that the Projections were reasonable
and attainable (although actual results may differ from the Projections and no
representation is made that the Projections will in fact be attained).
4.06 LITIGATION. There are no actions, suits or proceedings
pending or, to the best knowledge of the Borrower and its Subsidiaries,
threatened (i) with respect to any Document or the transactions contemplated
thereby, or (ii) that are reasonably likely to materially and adversely affect
the performance, business, assets, nature of assets, liabilities, operations,
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properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
4.07 TRUE AND COMPLETE DISCLOSURE. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
the Borrower or any of its Subsidiaries in writing to any Lender (including,
without limitation, all information contained in the Documents) for purposes of
or in connection with this Agreement, the other Loan Documents or any
transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of the
Borrower and any of its Subsidiaries in writing to any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any material fact
necessary to make such information (taken as a whole) not misleading at such
time in light of the circumstances under which such information was provided.
There is no fact known to the Borrower which is reasonably likely to have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole, which has not
been disclosed herein or in such other documents, certificates and statements
furnished to the Lenders for use in connection with the transactions
contemplated hereby.
4.08 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds of
the Loans shall be used by the Borrower to (i) finance the Acquisition, (ii)
fund the development of Helicon Network Solutions and (iii) pay the Transaction
Fees and Expenses.
(b) No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the proceeds thereof will violate or be inconsistent with the provisions
of Regulation T, U or X of the Board of Governors of the Federal Reserve System.
4.09 TAX RETURNS AND PAYMENTS. The Borrower and each of its
Subsidiaries has timely filed or caused to be timely filed (including pursuant
to any valid extensions of time for filing) with the appropriate taxing
authority, all material returns, statements, forms and reports for taxes (the
"Returns") required to be filed by or with respect to the income, properties or
operations of the Borrower or such Subsidiary of the Borrower. The Returns
accurately reflect in all material respects all liability for taxes of the
Borrower or such Subsidiary of the Borrower as a whole for the periods covered
thereby. Each of the Borrower and its Subsidiaries has paid all material taxes
payable by it which have become due other than those contested in good faith and
for which adequate reserves have been established in accordance with generally
accepted accounting principles. There is no material action, suit, proceeding,
investigation, audit, or claim now pending or, to the best knowledge of the
Borrower and any of its Subsidiaries, threatened by any authority regarding any
taxes relating to the Borrower or any of its Subsidiaries. As of the Initial
Funding Date, neither the Borrower nor any of its Subsidiaries has entered into
an agreement or waiver or has been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of taxes of the Borrower or any of its Subsidiaries, or is aware of
any circumstances that would cause the taxable years or other taxable periods of
the Borrower or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations. Neither the Borrower nor any of its
Subsidiaries has provided, with respect
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to itself or property held by it, any consent under Section 341 of the Code.
Neither the Borrower nor any of its Subsidiaries has incurred, or will incur,
any material tax liability in connection with the Transaction or any other
transactions contemplated hereby (it being understood that the representation
contained in this sentence does not cover any future tax liabilities of the
Borrower or any of its Subsidiaries arising as a result of the operation of
their businesses in the ordinary course of business).
4.10 COMPLIANCE WITH ERISA. SCHEDULE 4.10 sets forth each
Plan; each Plan (and each related trust, insurance contract or fund) is in
substantial compliance with its terms and with all applicable laws, including,
without limitation, ERISA and the Code; each Plan (and each related trust, if
any) which is intended to be qualified under Section 401(a) of the Code has
received a determination letter from the Internal Revenue Service to the effect
that it meets the requirements of Sections 401(a) and 501(a) of the Code;
neither the Borrower nor any Subsidiary of the Borrower nor any ERISA Affiliate
has ever maintained or contributed to (or had an obligation to contribute to)
any Plan subject to Section 302 or Title IV of ERISA or Section 412 of the Code;
all contributions required to be made with respect to a Plan have been timely
made; neither the Borrower nor any Subsidiary of the Borrower nor any ERISA
Affiliate has incurred any material liability (including any indirect,
contingent or secondary liability) to or on account of a Plan pursuant to
Section 409, or 502(i) or 502(l), of ERISA or Section 4975 of the Code or
expects to incur any such liability under any of the foregoing sections with
respect to any Plan; no condition exists which presents a material risk to the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; no action, suit, proceeding, hearing, audit or investigation
with respect to the administration, operation or the investment of assets of any
Plan (other than routine claims for benefits) is pending, expected or
threatened; each group health plan (as defined in Section 607(1) of ERISA or
Section 4980B(g)(2) of the Code) which covers or has covered employees or former
employees of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
has at all times been operated in compliance with the provisions of Part 6 of
subtitle B of Title I of ERISA and Section 4980B of the Code; and the Borrower
and its Subsidiaries may cease contributions to or terminate any employee
benefit plan maintained by any of them without incurring any material liability.
4.11 REPRESENTATIONS AND WARRANTIES IN DOCUMENTS. All
representations and warranties set forth in the Documents and their
corresponding annexes, exhibits and schedules are true in all material respects
at the time as of which such representations and warranties were made and on the
Initial Funding Date.
4.12 PROPERTIES. All Real Property owned by the Borrower or
any of its Subsidiaries and all material Leasehold Properties leased by the
Borrower or its Subsidiaries, in each case as of the Initial Funding Date, and
the nature of the interest therein, is correctly set forth in SCHEDULE 4.12.
Each of the Borrower and its Subsidiaries has good and merchantable title to all
properties owned by it, (including all Real Property reflected in SCHEDULE 4.12
and in the financial statements (including the consolidated PRO FORMA balance
sheet referred to in Section 4.05(a)) (except as sold or otherwise disposed of
since the dates of such financial statements in the ordinary course of business
or as permitted by Section 6.02), free and clear of all Liens, other than (i) as
referred to in such financial statements (including said consolidated PRO FORMA
balance
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sheet) or in the notes thereto, (ii) as otherwise permitted by Section 6.01 or
(iii) the mortgage on the Borrower's office building in Danville, Vermont
securing the Borrower's obligations to Passumpsic Savings Bank. Substantially
all of the assets of the Borrower and its Subsidiaries on a consolidated basis
are owned by the Borrower.
4.13 CAPITALIZATION. On the Initial Funding Date, after giving
effect to the Transaction, the partnership interests of the Borrower shall be as
set forth on SCHEDULE 4.13. No partner of the Borrower is in default of any of
its obligations under the Borrower's partnership agreement. All of such
outstanding interests have been duly and validly issued, are fully paid and
nonassessable and are free of preemptive rights.
4.14 SUBSIDIARIES. On the Initial Funding Date, the
corporations, limited liability companies and partnerships listed on SCHEDULE
4.14 are the only Subsidiaries of the Borrower. SCHEDULE 4.14 correctly sets
forth, as of the Initial Funding Date, the percentage ownership (direct and
indirect) of the Borrower in each class of capital stock (or other equity
interests) of such Subsidiaries and also identifies the direct owner thereof. On
the Initial Funding Date, no Subsidiary of the Borrower has assets with a book
value or a fair market value of more than $10,000 except Helicon Network
Solutions which has assets with a book value of not less than $100,000.
4.15 COMPLIANCE WITH STATUTES, ETC. Each of the Borrower and
each of its Subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except with respect to each of the
foregoing such noncompliance as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole.
4.16 INVESTMENT COMPANY ACT. Neither the Borrower nor any of
its Subsidiaries is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
4.17 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
4.18 ENVIRONMENTAL MATTERS. (a) Each of the Borrower and each
of its Subsidiaries is in compliance with, in all respects, all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws except such noncompliances which, in the aggregate, could not
reasonably be expected to have a material adverse effect on the performance,
business, assets, nature of assets, liabilities, operations, properties,
condition (financial or otherwise) or prospects of the Borrower and its
Subsidiaries taken as a whole. There are no past, pending or, to the best
knowledge of the Borrower, threatened material Environmental Claims against the
Borrower or any of its Subsidiaries or any Real Property currently owned or
operated by the Borrower or any of its Subsidiaries. There are no facts,
circumstances,
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conditions or occurrences concerning the business or operations of the Borrower
or any of its Subsidiaries or any Real Property owned or operated at any time by
the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower any
property adjoining any such Real Property that could reasonably be expected (i)
to form the basis of an Environmental Claim against the Borrower or any of its
Subsidiaries or any Real Property owned or operated by the Borrower or any of
its Subsidiaries or (ii) to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such Real
Property under any Environmental Law except such Environmental Claims and
restrictions which individually or in the aggregate could not reasonably be
expected to have a material adverse effect on the performance, business, assets,
nature of assets, liabilities, operations, properties, condition (financial or
otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole.
(b) Neither the Borrower nor any of its Subsidiaries has, at
any time, generated, used, treated, stored, transported or released Hazardous
Materials on, to or from any Real Property at any time owned, leased or at any
time operated by the Borrower or any of its Subsidiaries; except for such
Hazardous Material of a type and in a quantity used in the normal course of
business of the Borrower or its Subsidiaries, which Hazardous Material is being
held, used, stored and disposed of, in all material respects, in compliance with
applicable Environmental Laws.
4.19 LABOR RELATIONS. Neither the Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice that could reasonably be
expected to have a material adverse effect on the Borrower and its Subsidiaries
taken as a whole. There is (i) no significant unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against any of them, before the National
Labor Relations Board, and no significant grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against any of them and (ii) no
significant strike, labor dispute, slowdown or stoppage pending against the
Borrower or any of its Subsidiaries or, to the best knowledge of the Borrower,
threatened against the Borrower or any of its Subsidiaries.
4.20 PATENTS, LICENSES, FRANCHISES AND FORMULAS. (a) The
Borrower, together with its Subsidiaries, has a license to use or otherwise has
the right to use all the material patents, patent applications, trademarks,
service marks, trade names, trade secrets, copyrights, proprietary information,
computer programs, data bases, licenses, franchises and formulas, or rights with
respect to the foregoing (including, without limitation, those necessary to the
operation of the CATV Systems) (collectively, "Intellectual Property"), free and
clear of pending or threatened Liens, except for Liens existing under or by
reason of the Senior Debt Documents, and has obtained all licenses and other
rights of whatever nature, necessary for the present conduct of its business,
without any known conflict with the rights of others which, or the failure to
obtain which, as the case may be, could reasonably be expected to have a
material adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
(b) The Borrower, together with its Subsidiaries, has the
right to practice under and use all of its Intellectual Property.
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(c) Neither the Borrower nor any of its Subsidiaries has
knowledge of any claim by any third party contesting the validity,
enforceability, use or ownership of the Intellectual Property, or of any
existing state of facts that would support a claim that use by the Borrower or
any of its Subsidiaries of any such Intellectual Property has infringed or
otherwise violated any Intellectual Property right of any other Person and that
to the best knowledge of the Borrower and its Subsidiaries no claim is
threatened except for such claims that could not individually or in the
aggregate reasonably be expected to have a material adverse affect on the
performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
4.21 EXISTING INDEBTEDNESS. SCHEDULE 4.21 sets forth a true
and complete list of all Indebtedness (other than the Loans) of the Borrower and
each of its Subsidiaries as of the Initial Funding Date after giving effect to
the Transaction and the other transactions contemplated hereby (the "Existing
Indebtedness"), in each case showing the aggregate amount thereof and the name
of the respective obligor and any other entity which directly or indirectly
guaranteed such debt. None of the Existing Indebtedness was incurred in
connection with, or in contemplation of, the Transaction.
4.22 RESTRICTIONS ON OR RELATING TO SUBSIDIARIES. There does
not exist any encumbrance or restriction on the ability of (i) the Borrower or
any Subsidiary thereof to pay dividends or make any other distributions on its
capital stock or any other interest or participation in its profits, or to pay
any Indebtedness, (ii) any Subsidiary of the Borrower to make loans or advances
to any other Subsidiary of the Borrower or (iii) the Borrower or any Subsidiary
thereof to transfer any of its properties or assets to the Borrower or any
Subsidiary thereof, except for such encumbrances or restrictions existing under
or by reason of (w) applicable law, (x) this Agreement and the other Loan
Documents, (y) customary provisions restricting subletting or assignment of any
lease governing a leasehold interest of the Borrower or any of its Subsidiaries,
and (z) Senior Debt.
4.23 THE TRANSACTION. All aspects of the Transaction have been
effected in accordance with the Documents and all applicable law. At the time of
consummation thereof, all consents and approvals of, and filings and
registrations with, and all other actions in respect of, all governmental
agencies, authorities or instrumentalities required in order to consummate the
Transaction shall have been obtained, given, filed or taken and are in full
force and effect (or effective judicial relief with respect thereto has been
obtained). Additionally, at the time of consummation thereof, there does not
exist any judgment, order or injunction prohibiting or imposing material adverse
conditions upon the consummation of the Transaction, and there does not exist
any judgment, order or injunction prohibiting or imposing any material adverse
condition upon the Loans or the performance by the Borrower or any of its
Subsidiaries of its obligations under the Documents.
4.24 MATERIAL CONTRACTS. All Material Contracts of the
Borrower and each of its Subsidiaries as of the Initial Funding Date are listed
on SCHEDULE 4.24 hereto.
4.25 YEAR 2000 REPROGRAMMING. All Information Systems and
Equipment are either Year 2000 Compliant, or any reprogramming, remediation, or
any other corrective action, including the internal testing of all such
Information Systems and Equipment, will be completed
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by September 30, 1999. Further, to the extent that such
reprogramming/remediation and testing action is required, the cost thereof, as
well as the cost of the reasonably foreseeable consequences of failure to become
Year 2000 Compliant, to the Borrower and its Subsidiaries (including, without
limitation, reprogramming errors and the failure of other systems or equipment)
could not reasonably be expected to (x) result in a Default or an Event of
Default or (y) have a material adverse effect on the performance, business,
assets, nature of assets, liabilities, operations, properties, condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries taken
as a whole.
4.26 FCC AND COPYRIGHT MATTERS. Each of the Borrower and its
Subsidiaries (a) has duly and timely filed all cable television registration
statements and other filings that are required to be filed by the Borrower and
each of its Subsidiaries under the Communications Act, the failure to file of
which could reasonably be expected to have a Material Adverse Effect, and (b) is
complying in all material respects with the Communications Act, including,
without limitation, the rules, regulations and published policies of the FCC
relating to the transmission of television, cable and microwave signals, a
violation of which could reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any of its Subsidiaries has any knowledge that
it has not recorded or deposited with and paid to the United States Copyright
Office, the Register of Copyrights and the Copyright Royalty Tribunal all
material notices, statements of account, royalty fees and other documents and
instruments required under the Copyright Act, and, to the knowledge of the
Borrower, neither the Borrower nor any of its Subsidiaries is liable in any
material respect to any Person for copyright infringement under the Copyright
Act as a result of its business operations. Each of the Borrower and its
Subsidiaries has filed or caused to be filed with the FCC all reports,
applications, documents, instruments and information required to be filed
pursuant to all FCC rules, regulations and requests the failure to file of which
could reasonably be expected to have a Material Adverse Effect.
4.27 NO EMPLOYMENT AGREEMENTS. On the Initial Funding Date,
neither the Borrower nor any of its Subsidiaries shall be party to or bound by,
or have any direct, indirect or contingent obligations under, any employment
agreement or other agreement relating to the services of any director, officer
or employee of the Borrower or any such Subsidiary.
SECTION 5. AFFIRMATIVE COVENANTS. The Borrower covenants and
agrees that on and after the Effective Date and until the Loans and Notes,
together with interest, and all other Obligations, are paid in full and for so
long as the Commitment is outstanding:
5.01 INFORMATION COVENANTS. The Borrower shall furnish to each
Lender:
(a) MONTHLY REPORTS. Within 30 days after the end of each
fiscal month the consolidated and consolidating monthly cash flow, the
number of homes passed and the number of subscribers broken down by
system for the period from the beginning of the current fiscal year to
the end of such month, all in form and substance reasonably
satisfactory to the Lenders.
(b) QUARTERLY FINANCIAL STATEMENTS. On the earlier to occur of
(x), the date of the filing of the Borrower's Form 10-Q Report with the
SEC for or (y) the date occurring 45 days after the close of, each of
the first three quarterly accounting periods in each fiscal
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year of the Borrower, the consolidated and consolidating balance sheets
of the Borrower and its Subsidiaries as at the end of such quarterly
period and the related consolidated and consolidating statements of
earnings and stockholders' equity and statement of cash flows for such
quarter, in each case for such quarterly period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
period, in each case setting forth comparative figures for the related
periods in the prior fiscal year and comparable budgeted figures for
such period, all of which shall be certified by the chief financial
officer or controller of the Borrower, subject to normal year-end audit
adjustments and shall be accompanied by a management discussion and
analysis of the results of operations and financial condition with
respect to such period.
(c) ANNUAL FINANCIAL STATEMENTS. On the earlier to occur of
(x) the date of the filing of the Borrower's Form 10-K Report with the
SEC for or (y) the date occurring 90 days after the close, of each
fiscal year of the Borrower, the consolidated and consolidating balance
sheets of the Borrower and its Subsidiaries as at the end of such
fiscal year and the related consolidated and consolidating statements
of earnings and stockholders' equity and statement of cash flows for
such fiscal year and setting forth comparative figures for the
preceding fiscal year and comparable budgeted figures for such period
and certified, (x) in the case of the consolidating statements by the
chief financial officer of the Borrower and (y) in the case of the
consolidated financial statements of the Borrower and its Subsidiaries,
by any of the "big five" or other independent certified public
accountants of recognized national standing reasonably acceptable to
the Required Lenders, together with a signed opinion of such accounting
firm (which opinion shall not be qualified in any respect) stating that
in the course of its regular audit of the financial statements of the
Borrower, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge
of any Default or Event of Default or default or event of default under
any Senior Debt Document which has occurred and is continuing or, if in
the opinion of such accounting firm such a Default or Event of Default
or default or event of default under any Senior Debt Document has
occurred and is continuing, a statement as to the nature thereof and
shall be accompanied by a management discussion and analysis of the
results of operations and financial condition with respect to such
period.
(d) MANAGEMENT LETTERS. Promptly after the receipt thereof by
the Borrower or any Subsidiary of the Borrower, a copy of any
"management letter" received by the Borrower or such Subsidiary from
its certified public accountants.
(e) BUDGETS. As soon as available but in no event later than
60 days after the first day of each fiscal year of the Borrower, a copy
of the plan and forecast (including a projected consolidated income
statement and funds flow statement) of the Borrower for such fiscal
year.
(f) OFFICER'S CERTIFICATES. At the time of the delivery of the
financial statements provided for in Section 5.01(a), (b) and (c), a
certificate of the chief financial officer, of the Borrower to the
effect that no Default or Event of Default or default or event of
default under any Senior Debt Document has occurred and is continuing
or, if any Default or Event of Default or default or event of default
under any Senior Debt
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Document has occurred and is continuing, specifying the nature and
extent thereof, which certificate, in the case of certificates
delivered pursuant to Section 5.01(b) or (c), shall set forth the
calculations required to establish whether the Borrower was in
compliance with the provisions of Sections 6.02, 6.04, 6.06 through
6.08, inclusive, at the end of such fiscal quarter or year, as the case
may be.
(g) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any
event within two Business Days after an officer of any of the Borrower
or its Subsidiaries obtains knowledge thereof, notice of (i) the
occurrence of any event which constitutes a Default or Event of Default
or default or event of default under any Senior Debt Document, (ii) any
litigation or governmental investigation or proceeding pending (x)
against any of the Borrower or its Subsidiaries which could reasonably
be expected to materially and adversely affect the performance,
business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole or (y) with respect to
any Document, (iii) the receipt by the Borrower or any Subsidiary of
the Borrower of any notice from any Governmental Authority of the
expiration without renewal, termination, material modification or
suspension of, or institution of any proceedings to terminate,
materially modify, or suspend, any CATV Franchise, FCC License or other
license granted by any Governmental Authority now or hereafter held by
the Borrower or any Subsidiary the lack of which could reasonably be
expected to have a Material Adverse Effect, and (iv) any other event
which could reasonably be expected to materially and adversely affect
the performance, business, assets, nature of assets, liabilities,
operations, properties, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole.
(h) OTHER REPORTS AND FILINGS. Promptly upon transmission
thereof, copies of any financial information, proxy materials and other
information and reports, if any, which any of the Borrower or its
Subsidiaries (x) has filed with the Securities and Exchange Commission
or any successor thereto (the "SEC") or (y) has delivered to holders
of, or any agent or trustee with respect to, Indebtedness (including
the holders of any Senior Debt) of the Borrower or such Subsidiary of
the Borrower in its capacity as such a holder, agent, or trustee.
(i) ENVIRONMENTAL MATTERS. Promptly upon, and in any event
within two Business Days after an officer of the Borrower or any of its
Subsidiaries obtains knowledge thereof, notice of any of the following
environmental matters: (i) any pending or threatened material
Environmental Claim against the Borrower or any of its Subsidiaries,
any Real Property owned or operated by the Borrower or any of its
Subsidiaries; (ii) any condition or occurrence on or arising from any
Real Property owned or operated at any time by any of the Borrower or
any of its Subsidiaries that (A) could reasonably be anticipated to
result in a material noncompliance by the Borrower or such Subsidiary
of the Borrower with any applicable Environmental Law, or (B) could
reasonably be anticipated to form the basis of a material Environmental
Claim against the Borrower or such Subsidiary of the Borrower or any
Real Property owned or operated by the Borrower or such Subsidiary of
the Borrower; (iii) any condition or occurrence on any Real Property
owned or operated by the Borrower or any of its Subsidiaries or any
property
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adjoining such Real Property that could reasonably be anticipated to
cause such Real Property to be subject to any material restrictions on
the ownership, occupancy, use or transferability of such Real Property
under any Environmental Law; and (iv) the taking of any removal or
remedial action in response to a material Release or material
threatened Release or the actual or alleged presence of any Hazardous
Material on or from any Real Property owned or operated at any time by
the Borrower or any of its Subsidiaries in each case as required by any
Environmental Law or any governmental or other administrative agency.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial
action and the response of the Borrower or such Subsidiary of the
Borrower thereto. In addition, Borrower will provide the Lenders with
copies of all material non-privileged communications with any
government or governmental agency relating to Environmental Claims, all
material communications with any person relating to material
Environmental Claims, and such detailed reports of any material
Environmental Claim as may reasonably be requested by the Required
Lenders.
(j) SENIOR DEBT DOCUMENT NOTICES. Simultaneously upon delivery
under any Senior Debt Document, a copy of any notice of default
furnished by any party pursuant to any Senior Debt Document.
(k) FCC AUTHORIZATIONS AND CORRESPONDENCE. Promptly upon the
request of any Lender copies of all material amendments or renewals of
material franchises, licenses, consents, approvals and authorizations
granted or issued by any Governmental Authority, necessary and
appropriate to operate the CATV Systems and of any other material
communications between the Borrower or any Subsidiary and the FCC or
any other Governmental Authority having jurisdiction over the Borrower
or such Subsidiary.
(l) OTHER INFORMATION. From time to time, such other
information or documents (financial or otherwise) with respect to the
Borrower or any of its Subsidiaries, as any Lender may reasonably
request.
5.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries, in conformity with United States
generally accepted accounting principles and all requirements of law, shall be
made of all dealings and transactions in relation to its business and
activities. The Borrower shall, and shall cause each of its Subsidiaries to,
permit officers and designated representatives of any Lender to visit and
inspect, under guidance of officers of the Borrower or such Subsidiaries, any of
the properties of the Borrower or its Subsidiaries, and to examine the books of
account the Borrower or its Subsidiaries and discuss the affairs, finances and
accounts of the Borrower or its Subsidiaries with, and be advised as to the same
by, its and their officers, all at such reasonable times and intervals and to
such reasonable extent as such Lender may request.
5.03 MAINTENANCE OF PROPERTY, INSURANCE. SCHEDULE 5.03 sets
forth a true and complete listing of all insurance maintained by the Borrower
and each of its Subsidiaries as of the Effective Date. The Borrower will, and
will cause each of its Subsidiaries to, (i) keep all material property useful
and necessary in its business in good working order and condition
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(ordinary wear and tear excepted), (ii) maintain with financially sound and
reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks as are described on SCHEDULE 5.03 and
(iii) furnish to each Lender, upon written request, full information as to the
insurance carried.
5.04 CORPORATE FRANCHISES. The Borrower shall, and shall cause
each of its Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises licenses and patents; PROVIDED, HOWEVER, that nothing in this
Section 5.04 shall prevent the withdrawal of any such Person of its
qualification as a foreign corporation in any jurisdiction where such withdrawal
could not reasonably be expected to have a material adverse effect on the
performance, business, assets, nature of assets, liabilities, properties,
operations, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
5.05 COMPLIANCE WITH STATUTES, ETC. The Borrower shall, and
shall cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property except such noncompliance as could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the performance, business, assets, nature of assets,
liabilities, operations, properties, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole.
5.06 COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) The Borrower
shall, and shall cause each of its Subsidiaries to, comply, in all material
respects, with all Environmental Laws applicable to the ownership or use of all
the Real Property, and shall promptly pay, or cause its Subsidiaries to promptly
pay all costs and expenses incurred in such compliance, and will keep or cause
to be kept the Borrower's or its Subsidiaries' interest in all owned Real
Properties free and clear of any Liens imposed pursuant to such Environmental
Laws imposed in connection with their ownership or use. Neither the Borrower nor
any of its Subsidiaries will generate, use, treat, store, release or dispose of,
or permit the generation, use, treatment, storage, Release or disposal of
Hazardous Materials on any Real Property, or transport or permit the
transportation of Hazardous Materials to or from any Real Property other than in
the normal course of business in compliance with applicable law. If required to
do so under any applicable directive or order of any governmental agency, the
Borrower agrees to undertake, and cause each of its Subsidiaries to undertake,
any clean up, removal, remedial or other action necessary to remove and clean up
any Hazardous Materials from any Real Property owned, leased or operated by the
Borrower or any of its Subsidiaries in accordance with, in all material
respects, such orders and directives of all governmental authorities, except to
the extent that the Borrower or such Subsidiary is contesting such order or
directive in good faith and by appropriate proceedings and for which adequate
reserves have been established to the extent required by GAAP; provided that it
will not constitute a breach of this Section 5.06 if a Person other than the
Borrower and its Subsidiaries takes such action on behalf of the Borrower and
its Subsidiaries.
(b) At the request of the Required Lenders at any time and
from time to time during the existence of this Agreement: (i) if an Event of
Default exists under this Agreement, (ii) upon the reasonable belief by the
Required Lenders that the Borrower or any of its Subsidiaries has breached any
representation or covenant herein with respect to any
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environmental matters and such breach is continuing, or (iii) in the event
notice is provided under Section 5.01(i) herein, the Borrower shall provide, at
its sole cost and expense, an environmental site assessment report concerning
any of its or its Subsidiaries' Real Property, prepared by an environmental
consulting firm approved by the Required Lenders, indicating the presence or
Release, if any, of Hazardous Materials on or from any of the Real Property and
the potential cost of any removal or remedial action required by any
Environmental Laws in connection with any Hazardous Materials on such Real
Property. If the Borrower fails to provide the same after 30 days' notice or as
soon thereafter as is reasonably possible, the Required Lenders may order the
same, and the Borrower shall grant and hereby grants to the Lenders and their
agents access to such Real Property and specifically grants to the Lenders an
irrevocable non-exclusive license to undertake such an assessment all at the
Borrower's expense, which assessments, if obtained, will be provided to the
Borrower.
5.07 ERISA. As soon as possible and, in any event, within ten
(10) days after the Borrower, any Subsidiary of the Borrower or any ERISA
Affiliate knows or has reason to know of the occurrence of any of the following,
the Borrower will deliver to each of the Lenders a certificate of the chief
financial officer of the Borrower setting forth the full details as to such
occurrence and the action, if any, that the Borrower, such Subsidiary or such
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed by the Borrower, such Subsidiary,
the Plan administrator or such ERISA Affiliate to or with any governmental
agency, or a Plan participant and any notice received by the Borrower, such
Subsidiary or ERISA Affiliate from any government agency, or a Plan participant,
the Plan administrator with respect thereto that any contribution required to be
made with respect to a Plan has not been timely made; that the Borrower, any
Subsidiary of the Borrower or any ERISA Affiliate will or may incur any
liability (including any indirect, contingent, or secondary liability) with
respect to a Plan under Section 4975 of the Code or Section 409 or 502(i) or
502(l) of ERISA or with respect to a group health plan (as defined in Section
607(l) of ERISA or Section 4980B(g)(2) of the Code) under Section 4980B of the
Code; or that the Borrower or any Subsidiary of the Borrower may incur any
material liability pursuant to any employee welfare benefit plan (as defined in
Section 3(l) of ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA) or any Plan.
The Borrower will deliver to each of the Lenders a complete copy of the annual
report (on Internal Revenue Service Form 5500-series) of each Plan (including,
to the extent required, the related financial statements and opinions and other
supporting statements, certifications, schedules and information) required to be
filed with the Internal Revenue Service. In addition to any certificates or
notices delivered to the Lenders pursuant to the first sentence hereof, copies
of annual reports and any records, documents or other information required to be
furnished to any government agency, and any material notices received by the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate with respect to
any Plan shall be delivered to the Lenders no later than ten (10) days after the
date such annual report has been filed with the Internal Revenue Service or such
records, documents and/or information has been furnished to any government
agency or such notice has been received by the Borrower, the Subsidiary or the
ERISA Affiliate, as applicable.
5.08 END OF FISCAL YEARS; FISCAL QUARTERS. The Borrower will
cause its, and each of its Subsidiaries', fiscal years to end on December 31 of
each year and each of its, and each of
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its Subsidiaries', four fiscal quarters to end on March 31, June 30, September
30 and December 31 of each year.
5.09 PAYMENT OF TAXES. The Borrower shall, and shall cause
each of its Subsidiaries to, pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which penalties would
otherwise attach thereto, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of any of its Subsidiaries not otherwise
permitted under Section 6.01; PROVIDED, HOWEVER, that neither the Borrower nor
any of its Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with generally accepted accounting principles.
5.10 USE OF PROCEEDS, MARGIN REGULATIONS. (a) The Borrower
shall use all proceeds of the Loans as provided in Section 4.08(a).
(b) No part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the proceeds thereof will violate or be inconsistent with the provisions
of the Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
5.11 YEAR 2000 COMPLIANCE. The Borrower will ensure that its
Information Systems and Equipment are at all times after September 30, 1999 Year
2000 Compliant, except insofar as the failure to do so could not reasonably be
expected to have a Material Adverse Effect, and shall notify each Lender
promptly upon detecting any failure of the Information Systems and Equipment to
be Year 2000 Compliant. In addition, the Borrower shall provide each Lender with
such information about its year 2000 computer readiness (including, without
limitation, information as to contingency plans, budgets and testing results) as
such Lender shall reasonably request.
5.12 OBSERVATION OF BOARD OF DIRECTORS. In the event that any
holder of debt securities or equity securities of the Borrower (other than
Theodore Baum, Ruth Baum or David Baum) is granted the right to attend any Board
of Directors meeting or meeting of a similar body of the Borrower or its general
partner, then PCF shall be entitled to designate one individual (the "Observer")
to attend all such meetings. The Observer shall be entitled to receive all
reports, presentations and materials, as if the Observer were a member of the
Board of Directors, all at the expense of the Borrower. The Borrower agrees to
give the Observer prior written notice of all meetings of the Board of Directors
of the Borrower promptly after the scheduling thereof and in any event no later
than five (5) Business Days prior to such meeting, or if such meeting is
scheduled less than five (5) Business Days in advance, on the date preceding the
date for which such meeting has been scheduled.
5.13 INTELLECTUAL PROPERTY RIGHTS. The Borrower will, and will
cause each of its Subsidiaries to maintain in full force and effect all
Intellectual Property rights necessary or appropriate to the business of the
Borrower or any Subsidiary of the Borrower and take no action (including,
without limitation, the licensing of Intellectual Property), or fail to take an
action, as
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the case may be, in connection with such Intellectual Property rights which
could reasonably be expected to result in a material adverse effect on the
performance, business, assets, nature of assets, liabilities, properties,
operations, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole. The Borrower shall, and shall cause each of
its Subsidiaries to, diligently prosecute all pending applications filed in
connection with seeking the Intellectual Property rights and take all other
reasonable actions necessary for the protection and maintenance of the
Intellectual Property rights necessary or appropriate to the business of the
Borrower or any Subsidiary of the Borrower at all times from and after the
Initial Funding Date other than any such actions the failure of which, in the
aggregate, could not reasonably be expected to have a material adverse effect on
the performance, business, assets, nature of assets, liabilities, operations,
properties, condition (financial or otherwise) or prospects of the Borrower and
its Subsidiaries taken as a whole.
5.14 OWNERSHIP OF SUBSIDIARIES. The Borrower shall, at all
times, unless otherwise expressly permitted by Section 6.02, indirectly own,
except as set forth on SCHEDULE 4.14, 100% of the capital stock and stock
equivalents of each of the Subsidiaries; provided that if the Borrower
indirectly owns less than 99% of the capital stock and stock equivalents of any
such Subsidiary on the Effective Date, the Borrower shall maintain, at least,
its percentage of the capital stock and stock equivalents of such Subsidiary as
of the Effective Date as is set forth on SCHEDULE 4.14.
5.15 CORPORATE SEPARATENESS. HPIAC and the Borrower will take,
and will cause each of their respective Subsidiaries to take, all such action as
is necessary to keep the operations of the Borrower and its Subsidiaries
separate and apart from those of HPIAC and its Subsidiaries including, without
limitation, ensuring that all customary corporate formalities, including the
maintenance of corporate records and holding regular meetings of members and
directors are followed. No bank account of the Borrower or any of its
Subsidiaries shall be commingled with any bank account of HPIAC or any of its
Subsidiaries. Any financial statements distributed to any creditors of HPIAC or
any of its Subsidiaries shall clearly establish the corporate separateness of
such Persons from the Borrower and its Subsidiaries. None of HPIAC or any of its
Subsidiaries shall take any action, or conduct its affairs in a manner, which is
likely to result in the corporate existence of the Borrower or any of its
Subsidiaries on the one hand and of HPIAC or any of its Subsidiaries on the
other hand being disregarded, or in the assets and liabilities of the Borrower
or any of its Subsidiaries being substantively consolidated with those of HPIAC
or any of its Subsidiaries in a bankruptcy, reorganization or other insolvency
proceeding. Notwithstanding anything to the contrary contained in this Section
5.15, with respect to the Boone, NC System, the Borrower may keep its operations
together with HPIAC, including, without limitation, keeping monthly collections
from customers in one central lockbox.
5.16 CONDUCT OF BUSINESS; MAINTENANCE OF LICENSES. The
Borrower will and will cause each Subsidiary to: (i) carry on and conduct its
business in the ordinary course in substantially the same manner and in
substantially the same fields of enterprise as it is presently conducted; (ii)
do all things necessary to remain duly organized, validly existing and in good
standing as a domestic limited liability company, partnership, or corporation in
its jurisdiction of organization and maintain all requisite authority to conduct
its business in each jurisdiction in
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which the failure to maintain such authority could reasonably be expected to
have a Material Adverse Effect; (iii) preserve its tax status as a limited
partnership under the Code and other applicable law; and (iv) do all things
necessary to renew, extend and continue in effect all permits, licenses and
authorizations which may at any time and from time to time be necessary to
operate the CATV Systems in compliance with all applicable laws and regulations,
the failure to comply with which could reasonably be expected to have a Material
Adverse Effect.
SECTION 6. NEGATIVE COVENANTS. The Borrower hereby covenants
that on and after the Effective Date and until the Loans and Notes, together
with interest and all other Obligations incurred hereunder and thereunder, have
been paid in full and the Commitment is no longer outstanding:
6.01 LIENS. The Borrower shall not, and shall not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
or with respect to any of their respective property or assets (real or personal,
tangible or intangible), whether now owned or hereafter acquired, or sell any
such property or assets subject to an understanding or agreement, contingent or
otherwise, to repurchase such property or assets (including sales of accounts
receivable with recourse to the Borrower or any of its Subsidiaries), or assign
any right to receive income or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording or
notice statute; PROVIDED, HOWEVER, that the provisions of this Section 6.01
shall not prevent the Borrower or any of its Subsidiaries from creating,
incurring, assuming or permitting Liens set forth in Section 7.2(i) through
7.2(ix) of the Credit Agreement as in effect on the date hereof without giving
effect to any waivers thereto (Liens described in said Section 7.2 of the Credit
Agreement are herein referred to as "Permitted Liens").
6.02 CONSOLIDATION, MERGER, PURCHASE OR SALE OF ASSETS, ETC.
The Borrower shall not, and shall not permit any of its Subsidiaries to, (i)
wind up, liquidate or dissolve its affairs, (ii) enter into any transaction of
merger or consolidation, (iii) convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or any part of its
property or assets, including without limitation assets consisting of capital
stock of a Subsidiary thereof or stock equivalents, (iv) enter into any
partnerships, joint ventures or sale-leaseback transactions, or (v) purchase,
lease or otherwise acquire (in one or a series of related transactions) any part
of the property or assets of any Person, or make or maintain any loan, extension
of credit or advance to any Person, or own or purchase or otherwise acquire any
capital stock or equity interests or obligations of or other securities of any
Person, or otherwise make any other investment or capital contribution in any
Person, except that the following shall be permitted:
(A) purchases or other acquisitions by the Borrower and its
Subsidiaries of inventory, materials and equipment in the ordinary
course of business;
(B) capital expenditures permitted by the Credit Agreement (as
in effect on the date hereof);
(C) so long as there shall exist no Default or Event of
Default, the Borrower and its Subsidiaries may sell assets so long as
the amount of Net Sale Proceeds from such sales in any one fiscal year
does not exceed $200,000 in the aggregate and such proceeds
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are used, or irrevocably committed to be used, to purchase, within 360
days from the date of sale, assets to be used in the business of the
Borrower or its Subsidiaries;
(D) the Borrower and its Subsidiaries may lease (as lessee)
real or personal property in the ordinary course of business so long as
such leases are not Capitalized Lease Obligations;
(E) the Borrower and its Subsidiaries may make and maintain
investments (1) consisting of receivables owing to any of them
(including, without limitation, through the indirect acquisition
thereof through a security interest), if created or acquired in the
ordinary course of business and payable or dischargeable in accordance
with customary terms, (2) in cash and Cash Equivalents, (3) in Rate
Hedging Agreements entered into pursuant to the requirements of the
Credit Agreement (as in effect on the date hereof), (4) consisting of
loans and advances in the ordinary course of business and consistent
with past practices to their respective employees for moving, travel
and emergency expenses and other similar expenses, so long as the
aggregate principal amount thereof at any one time outstanding
(determined without regard to any write-downs or write-offs of such
loans and advances) shall not exceed $200,000 and (5) consisting of
purchases or acquisitions of securities of trade creditors or customers
received in any plan of reorganization or similar arrangement on the
bankruptcy or insolvency of such trade creditors or customers or
received in settlement of delinquent obligations of, and other disputes
with, suppliers arising in the ordinary course of business;
(F) the Borrower and its Subsidiaries may sell inventory in
the ordinary course of business;
(G) the Transaction may be consummated in accordance with the
Documents;
(H) Dividends may be paid to the extent permitted by Section
6.03;
(I) each of the Borrower and its Subsidiaries may enter into
licensing arrangements with respect to Intellectual Property, in
accordance with customary past practice of the Borrower or such
Subsidiary (as the case may be);
(J) the Borrower may make investments consisting of capital
contributions in or purchases of the equity of Wholly-Owned
Subsidiaries to the extent the aggregate amount of such capital
contributions in and equity purchases of (without giving effect to any
write-downs or write-offs with respect thereto) all such Wholly-Owned
Subsidiaries does not exceed $100,000; provided, however, in the case
of Helicon Network Solutions the aggregate amount of such capital
contributions and equity purchases (without giving effect to any
write-downs or write-offs with respect thereto) shall not exceed
$7,000,000;
(K) so long as there shall exist no Default or Event of
Default (both before and after giving effect thereto), the sale of ISP
Assets so long as such assets are sold for cash and for fair market
value and the proceeds from such sale (a) of up to $7,000,000 are first
applied to repay all Indebtedness secured by the ISP Assets that was
paid as consideration in connection with the purchase of the ISP Assets
and, at the Borrower's option, to repay
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other Existing Indebtedness secured by the ISP Assets and any excess
thereof is used to purchase within 180 days of the receipt thereof
assets used in the Borrower's cable systems business and/or Helicon
Network Solutions and (b) in excess of $7,000,000 are applied in
accordance with Section 2.02(c);
(L) so long as there shall exist no Default or Event of
Default (both before and after giving effect thereto) the Borrower and
its Subsidiaries may sell for cash for a fair market value of at least
$1,200 per subscriber cable assets of up to 800 subscribers during the
period beginning on the Initial Funding Date and ending on December 31,
1999 so long as the proceeds therefrom are used to purchase within 180
days of receipt thereof assets used in the Borrower's cable systems
business;
(M) the Borrower and its Subsidiaries may make consulting
payments to Messrs. Thomas Gimbel, Gregory A. Kriser and Herbert
Roberts as long as the aggregate amount thereof does not exceed
$150,000 in any one fiscal year of the Borrower and there shall exist
no Default or Event of Default both before and after giving effect to
such payments; and
(N) so long as there shall exist no Default or Event of
Default (both before and after giving effect thereto) the Borrower and
its Subsidiaries may swap cable assets of up to 1,000 subscribers for
cable assets of other subscribers with a fair market value at least
equal to the fair market value of the cable assets being swapped by the
Borrower and its Subsidiaries at any time on or after the Effective
Date.
6.03 DIVIDENDS. The Borrower will not, nor will the Borrower
permit any of its Subsidiaries to, declare or pay any Dividends with respect to
the Borrower or any of its Subsidiaries, except any Dividends expressly
permitted pursuant to the terms of the Credit Agreement as in effect on the date
hereof.
6.04 INDEBTEDNESS. The Borrower shall not, nor shall it permit
any of its Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the
other Loan Documents;
(ii) Senior Debt;
(iii) any Indebtedness of the Borrower expressly permitted
pursuant to the terms of the Credit Agreement as in effect on the date
hereof;
(iv) Indebtedness of the Borrower as set forth on SCHEDULE
4.21, including any refinancing, renewal or extension (other than
Indebtedness) thereof so long as the amount of Indebtedness is not
increased;
(v) Indebtedness of the Borrower evidenced by Capitalized
Lease Obligations and purchase money Indebtedness secured by Liens on
the assets purchased with the proceeds of such Indebtedness; PROVIDED
that the aggregate amount of Indebtedness evidenced by
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Capitalized Lease Obligations under all Capital Leases entered into
after the Initial Funding Date when aggregated with the amount of
purchase money Indebtedness incurred after the Initial Funding Date
shall not exceed $250,000; and
(vi) so long as there exist no Default or Event of Default at
the time of incurrence thereof (and after giving effect thereto),
additional Indebtedness of the Borrower in an aggregate principal
amount incurred after the date hereof not to exceed $250,000;
6.05 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, be party to any transaction with an
Affiliate unless the terms and conditions relating thereto are as favorable to
the Borrower as those which would be obtainable at the time in a comparable
arms-length transaction with a Person other than an Affiliate, or permit any of
its Subsidiaries so to do; PROVIDED, HOWEVER, notwithstanding the foregoing, the
Borrower will not, and will not permit any of its Subsidiaries to, enter into
any transaction or series of related transactions, whether or not in the
ordinary course of business with HPIAC, Helicon Corp. or any of their
Subsidiaries except as set forth on SCHEDULE 6.05. In no event may any
management, closing or similar fees be paid or payable by the Borrower or any of
its Subsidiaries to any Person except that so long as there shall exist no
Default or Event of Default up to $150,000 in any one fiscal year of the
Borrower of consulting payments to executives of the Borrower shall be permitted
as set forth in Section 6.02 (M) hereof and so long as there shall exist no
Default or Event of Default (both before after giving effect to such payments),
payments in accordance with the Management Contract may be made so long as in no
event shall such payments exceed 5% of the Borrower's Gross Revenues (as defined
in the Management Contract); provided that any management fees payable pursuant
to the Management Contract which are not permitted to be paid in accordance with
the provisions hereof may be permitted to be deferred to a date after the
payment in full in cash of all Obligations and shall be subordinated pursuant to
the Subordination Agreement.
6.06 LEVERAGE RATIO. The Borrower will not permit the Leverage
Ratio at any time during a period set forth below to be more than the ratio set
forth opposite such period below:
Period Ratio
------ -----
Initial Funding Date through 6.55:1.00
December 31, 1999
January 1, 2000 through 6.25:1.00
June 30, 2000
July 1, 2000 and thereafter 6.00:1.00
6.07 FIXED CHARGE COVERAGE RATIO. The Borrower will not permit
the Fixed Charge Coverage Ratio for any period of four consecutive fiscal
quarters, in each case taken as one accounting period, to be less than
1.00:1.00.
6.08 CAPITAL EXPENDITURES. The Borrower will not, and it will
not permit any of its Subsidiaries to, make any Capital Expenditures, except
that the Borrower and its Subsidiaries
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may make Capital Expenditures (a) consisting of the purchase of assets with the
proceeds from asset sales described in Sections 6.02(K) and 6.02(L) and (b)
other Capital Expenditures so long as the aggregate amount thereof under this
clause (b), in any fiscal year does not exceed the amount set forth opposite
such fiscal year below:
Fiscal Year Amount
----------- ------
1999 $12,400,000
2000 $10,000,000
2001 $10,000,000
6.09 RESTRICTIONS ON ADDITIONAL SUBORDINATED INDEBTEDNESS. The
Borrower will not create or suffer to exist any Indebtedness for borrowed money
which (i) provides that it is subordinate in right of payment to any Senior
Indebtedness and (ii) is senior in right of payment to or PARI PASSU with the
Loans or other Obligations and the Borrower will not permit any of its
Subsidiaries to create or suffer to exist any Indebtedness for borrowed money
which provides that it is subordinate in right of payment to any Senior
Indebtedness.
6.10 LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS;
LIMITATION ON MODIFICATIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN
OTHER AGREEMENTS; ETC. The Borrower shall not, and shall not permit its
Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption (including pursuant to
any change of control provision) or acquisition for value of
(including, without limitation, by way of depositing with the trustee
with respect thereto money or securities before due for the purpose of
paying when due), of any Indebtedness that is not Senior Indebtedness;
(ii) amend or modify, or permit the amendment or modification of
any provision of the Existing Indebtedness or any agreement relating to
any of the foregoing except for amendments to the Credit Agreement
which do not (i) decrease the average weighted-life to maturity of
Indebtedness under the Credit Agreement by more than six (6) months
from that in effect on the date hereof (calculated as if such amendment
was entered into on the date hereof and taking into account all
previous amendments) or (ii) increase the interest rate of Indebtedness
under the Credit Agreement to a rate in excess of the maximum interest
rates calculated from time to time permitted under Section 3.1 of the
Credit Agreement as such section is in effect on the date hereof, PLUS
2%;
(iii) amend, modify or change its Certificate of Limited
Partnership, Agreement of Limited Partnership, Articles of
Incorporation (including, without limitation, by the filing or
modification of any certificate of designation) or By-Laws (or similar
organizational documents), in a manner adverse to the Lenders or any
agreement entered into by it, with respect to its capital stock,
limited partnership interests and partnership interests or other equity
interest, or enter into any new agreement with respect to its capital
stock, limited partnership interests and partnership interests or other
equity interest;
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(iv) amend, modify or change, terminate, or enter into any new
Shareholders' Agreement, except for such amendments, modifications or
changes which are not in a manner adverse to the Lenders;
(v) amend, modify or change, terminate or enter into any new
Tax Sharing Agreement or amend, modify or change the Management
Contract; or
(vi) amend, modify or change, or enter into any new Management
Agreement, Employee Benefit Plan or Employment Agreement except if the
aggregate cost to the Borrower and its Subsidiaries as a result of such
amendments, modifications, changes to such plans and agreements and new
plans and agreements is not reasonably likely to have a material
adverse effect on the performance, business, property, assets, nature
of assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole.
6.11 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. The
Borrower will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (i) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Borrower or any Subsidiary
of the Borrower, or pay any Indebtedness owed to the Borrower or a Subsidiary of
the Borrower, (ii) make loans or advances to the Borrower or any Subsidiary of
the Borrower or (iii) transfer any of its properties or assets to the Borrower,
except for such encumbrances or restrictions existing under or by reason of (v)
applicable law, (w) this Agreement and the other Loan Documents, (x) the Credit
Agreement (as in effect on the date hereof) and, (y) customary provisions
restricting subletting or assignments of any lease governing a leasehold
interest of the Borrower or any other Subsidiary of the Borrower.
6.12 LIMITATION ON ISSUANCE OF CAPITAL STOCK. (a) The Borrower
shall not permit any of its Subsidiaries to issue any capital stock (including
by way of sales of treasury stock) or other ownership interests or any options
or warrants to purchase, or securities convertible into, capital stock or other
ownership interests, except (i) for transfers and replacements of then
outstanding interests, (ii) for stock splits, stock dividends and similar
issuances which do not decrease the percentage ownership of any Person in any
class of the capital stock or other ownership interests of the Borrower or such
Subsidiary or (iii) upon the formation of any new Subsidiary as permitted by
Section 6.14.
(b) The Borrower will not issue any capital stock, except for
issuances of partnership interests for cash where in all such cases, after
giving effect to such issuance, no Default or Event of Default would exist under
Section 7.08.
(c) The Borrower will make prepayments pursuant to Section
2.02(c) with cash proceeds derived from issuance of ownership interests pursuant
to this Section 6.12.
6.13 BUSINESS AND NAME CHANGES. The Borrower will not, and
permit any of its Subsidiaries to, change (directly or indirectly) in any
material respect the nature of its business as
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conducted on the Effective Date, or alter or modify its name, structure or
status from that in effect on the Effective Date.
6.14 LIMITATION ON CREATION OF SUBSIDIARIES. The Borrower will
not, and will not permit any Subsidiary to, establish, create or acquire any new
Subsidiary except that Wholly-Owned Subsidiaries of the Borrower may be formed
to the extent required for FCC regulatory purposes and Helicon Network
Solutions.
6.15 NO FURTHER NEGATIVE PLEDGES. Except (a) as otherwise
permitted by or under the terms of the Credit Agreement (as in effect on the
date hereof) and the Senior Indenture (as in effect on the date hereof), and (b)
with respect to specific property encumbered to secure payment of particular
Indebtedness permitted to be incurred by the terms hereof, the Borrower shall
not, and shall not permit any of its Subsidiaries to, enter into any agreement
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired.
6.16 NO PENSION PLANS. Neither the Borrower nor any of its
Subsidiaries nor any ERISA Affiliate shall maintain or contribute to (or have or
incur any obligation to contribute to) any Plan subject to Section 302 or Title
IV of ERISA or Section 412 of the Code.
SECTION 7. EVENTS OF DEFAULT. Upon the occurrence of any of
the following specified events (each, an "Event of Default"):
7.01 PAYMENTS. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for two or more Business Days, in the payment
when due of any interest on any Loan or Note or any fees or other amounts owing
by it hereunder; or
7.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by the Borrower herein or in any other Loan Document, or in any
certificate delivered pursuant hereto or thereto, shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
7.03 COVENANTS. (a) The Borrower or any of its Subsidiaries
shall (i) default in the due performance or observance by it of any term,
covenant or agreement contained in Section 5.01(g)(i), 5.08, 5.15 or 6 and (ii)
default in the due performance or observance by it of any other term, covenant
or agreement contained in this Agreement and such default shall continue
unremedied for a period of 30 days after written notice to the Borrower by any
Lender; or (b) any Loan Party shall default in the due performance or observance
by it of any term, covenant or agreement contained in any other Loan Document
after any applicable notice provided for therein has been given or any lapse of
time provided for therein has occurred; or
7.04 DEFAULT UNDER OTHER AGREEMENTS. (i) The Borrower or any
of its Subsidiaries shall default (x) in any payment of any Indebtedness (other
than the Obligations) on the stated maturity thereof or (y) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the
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effect of which default or other event or condition is to cause any such
Indebtedness to become due prior to its stated maturity; or (ii) any
Indebtedness of the Borrower or any of its Subsidiaries (other than the
Obligations) shall be declared to be due and payable prior to the stated
maturity thereof provided that it shall not constitute an Event of Default
pursuant to this Section 7.04 unless the aggregate amount of all Indebtedness
referred to in the preceding clauses (i) and (ii) above exceeds $1,000,000 at
any one time; or
7.05 BANKRUPTCY, ETC. The Borrower or any of its Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case is commenced
against the Borrower or any of its Subsidiaries and the petition is not
controverted within 10 days, or is not dismissed or discharged, within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any of its Subsidiaries, or the Borrower or any of
its Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Borrower or any of its Subsidiaries, or there is
commenced against the Borrower or any of its Subsidiaries any such proceeding
which remains undismissed or undischarged for a period of 60 days, or the
Borrower or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Borrower or any of its Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; the Borrower or any of its
Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by the Borrower or any of its Subsidiaries for the
purpose of effecting any of the foregoing; or
7.06 ERISA. (a) A contribution required to be made with
respect to a Plan has not been timely made, the Borrower or any Subsidiary of
the Borrower or any ERISA Affiliate has incurred or is likely to incur any
liability to or on account of a Plan under Section 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Code or on account of a group health plan (as
defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code, or the Borrower or any Subsidiary of the Borrower has
incurred or is likely to incur liabilities pursuant to one or more employee
welfare benefit plans (as defined in Section 3(1) of ERISA) that provide
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) any applicable law, rule or regulation is adopted,
changed or interpreted, or the interpretation or administration thereof is
changed, in each case after the date hereof, by any governmental authority or
agency or by any court (a "Change in Law"), or, as a result of a Change in Law,
an event occurs following a Change in Law, with respect to or otherwise
affecting any Plan; (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) such lien, security interest or
liability, individually, and/or in the aggregate, in the opinion of the Required
Lenders, has had, or could reasonably be expected to have, a material adverse
effect upon the business, operations, condition (financial or otherwise) or
prospects of the Borrower or any Subsidiary of the Borrower; or
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7.07 JUDGMENTS. One or more judgments or decrees shall be
entered against the Borrower or any of its Subsidiaries involving in the
aggregate for the Borrower and its Subsidiaries a liability (not paid or fully
covered by a reputable insurance company) in excess of $500,000 and all such
judgments or decrees shall not be satisfied, vacated, discharged or stayed or
bonded pending appeal for any period of 30 consecutive days; or
7.08 OWNERSHIP. There shall be a Change of Control; or
7.09 LICENSES. (a) Any license, franchise, permit, right,
approval or agreement of the Borrower or any of its Subsidiaries, is not
renewed, or is suspended, revoked or terminated and the non-renewal, suspension,
revocation or termination thereof would have a Material Adverse Effect; or
(b) Any license, authorization, consent or permit (including
without limitation, any CATV Franchise or FCC License) necessary for the
ownership or essential for the operation by the Borrower or any Subsidiary of
any CATV System shall expire, and on or prior to such expiration, the same shall
not have been renewed or replaced by another license, authorization, consent or
permit authorizing substantially the same operations of such CATV System; or
(ii) any license, authorization, consent or permit (including, without
limitation, any CATV Franchise or FCC License) necessary for the ownership or
essential for the operation of any CATV System shall be canceled, revoked,
terminated, rescinded, annulled, suspended or modified in a materially adverse
respect, or shall no longer be in full force and effect, or the grant or the
effectiveness thereof shall have been stayed, vacated, reversed or set aside,
and such action shall be no longer subject to further administrative or judicial
review; or (iii) the FCC shall have issued any hearing designation order in any
non-comparative license renewal proceeding or any license revocation proceeding
involving any license necessary for the ownership or essential for the operation
of any CATV Systems; or (iv) in any comparative (multiple applicant) license
renewal proceeding involving any license necessary for the ownership or
essential for the operation of any CATV System, any administrative law judge of
the FCC (or successor to the functions of an administrative law judge of the
FCC) shall have issued an initial decision to the effect that the Borrower or
any Subsidiary lacks the qualifications to own or operate such CATV System, and
such initial decision shall not have been timely appealed or shall otherwise
have become an order that is final and no longer subject to further
administrative or judicial review, (provided, however, that none of the
foregoing events described in clause (i), (ii), (iii) or (iv) of this Section
7.09 shall constitute a Default if, assuming the final and non-appealable loss
by the Borrower or any Subsidiary of any such license, authorization, consent or
permit at the conclusion of all legal proceedings incident thereto, such loss
could not reasonably be expected to have a Material Adverse Effect); or (v) any
CATV System shall fail for any period of five consecutive calendar days to
operate and the revenue stream derived from the particular CATV System failing
to so operate is material to the revenue stream of the Borrower and the
Subsidiaries taken as a whole;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Required Lenders, shall by written notice to the
Borrower, take any or all of the following actions, without prejudice to the
rights of any Lender or the holder of any Note to enforce its claims against any
Loan Party (PROVIDED that, if an Event of Default specified in Section 7.05
shall occur with respect to the Borrower, the result which would occur upon the
giving
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of written notice by the Required Lenders to the Borrower as specified below
shall occur automatically without the giving of any such notice): (i) declare
the principal of and any accrued interest in respect of all Loans and the Notes
and all Obligations to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower and (ii) terminate all commitments.
SECTION 8. DEFINITIONS AND ACCOUNTING TERMS.
8.01 DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Acquisition" shall mean the proposed purchase by the Borrower
of certain cable television systems from Frontier Vision Partners pursuant to
the Acquisition Documents.
"Acquisition Documents" shall mean and include (i) the Asset
Purchase Agreement, dated as of September 10, 1998, by and between
FrontierVision Operating Partners, L.P., a Delaware limited partnership and
Helicon Partners I, L.P., a Delaware limited partnership, (ii) the bills of sale
and all other documents executed or delivered in connection therewith and (iii)
the Assignment and Assumption Agreement, dated as of December 30, 1998, by and
between Helicon Partners I, L.P. and the Borrower (as the same may be amended,
modified, renewed or extended from time to time).
"Affiliate" shall mean, with respect to any Person, any other
Person which directly or indirectly is in control of, is controlled by, or is
under common control with, such Person. For purposes of this definition, control
of a Person shall mean the power, direct or indirect, (i) to vote 10% or more of
the securities or other interests having ordinary voting power for the election
of directors or other managing Persons thereof or (ii) to direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise. For all purposes of this Agreement, none of the Bank Agent, any Bank,
any Lender or any of its respective Affiliates, shall be considered an Affiliate
of the Borrower or any Subsidiary of the Borrower.
"Affiliate Contracts" shall have the meaning set forth in
Section 3.01(j)(vii).
"Agreement" shall mean this loan agreement, as modified,
supplemented or amended from time to time.
"Annualized Operating Cash Flow" shall mean as at any date of
determination thereof, Operating Cash Flow for the most recently ended fiscal
quarter TIMES four.
"Bank" shall mean each financial institution party to the
Credit Agreement from time to time.
"Bank Agent" shall mean the Agent under the Credit Agreement,
and shall include any successor to the Bank Agent appointed pursuant to the
terms thereof.
"Bankruptcy Code" shall have the meaning provided in Section
7.05.
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"Bankruptcy Event" shall have the meaning provided in Section
9.02.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrowing" shall mean the borrowing of Loans from all the
Lenders having Commitments on a pro rata basis on the Initial Funding Date and
the Subsequent Funding Date.
"Business Day" shall mean any day except Saturday, Sunday and
any day which shall be in New York City a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.
"Capital Expenditures" shall mean without duplication, any
expenditures for any purchase or other acquisition of any asset which would be
classified as a fixed or capital asset on a consolidated balance sheet of the
Borrower and its Subsidiaries prepared in accordance with GAAP, excluding (i)
expenditures of insurance proceeds to rebuild or replace any asset after a
casualty loss, (ii) leasehold improvement expenditures for which the Borrower or
a Subsidiary is reimbursed promptly by the lessor and (iii) the costs of assets
acquired with Capitalized Lease Obligations.
"Capitalized Lease," as applied to any Person, shall mean any
lease of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with generally accepted accounting principles, is accounted
for as a capital lease on the balance sheet of that Person.
"Capitalized Lease Obligations" of any Person shall mean all
rental obligations under Capitalized Leases, in each case taken at the amount
thereof accounted for as Indebtedness in accordance with generally accepted
accounting principles.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (PROVIDED that the full faith
and credit of the United States is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (ii) time deposits
and certificates of deposit of any commercial bank organized under the laws of
the United States, any State thereof or the District of Columbia having, or
which is the principal banking subsidiary of a bank holding company organized
under the laws of the United States, any State thereof, or the District of
Columbia having, capital, surplus and undivided profits aggregating in excess of
$200,000,000 and having a long-term unsecured debt rating of at least "A" or the
equivalent thereof from Standard & Poor's Corporation ("S&P") or "A2" or the
equivalent thereof from Moody's Investors Service, Inc. ("Moody's"), with
maturities of not more than twelve months from the date of acquisition by such
Person, (iii) repurchase obligations with a term of not more than 7 days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
commercial paper issued by any Person incorporated in the United States and/or
tax exempt securities issued by any agency or instrumentality of any state of
the United States or subdivision thereof, in each case rated at least A-2 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's
and in each case maturing not more than 12 months after the date of acquisition
by such
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Person and (v) investments in money market funds substantially all of whose
assets are comprised of securities of the types described in clauses (i) through
(iv) above.
"CATV Franchise" shall mean collectively, (i) any franchise,
license, permit, wire agreement or easement granted by any political
jurisdiction or unit or other franchising authority pursuant to which a Person
has the right to operate a CATV System, (ii) any pole attachment agreement or
underground conduit use agreement entered into in connection with the operation
of any CATV System, and (iii) any legislation, regulation, bill, ordinance,
agreement or other instrument or document setting forth all of any part of the
terms of any FCC License or franchise, license, permit, wire agreement or
easement described in clause (i) of this definition.
"CATV System" shall mean a system owned by the Borrower or any
of its Subsidiaries which transmits audio, video, digital or other signals or
information by cable, optical antennae, microwave, or satellite means, to
Persons who pay to receive such transmissions.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 et seq.
"Change in Control" shall mean Theodore B. Baum shall cease to
own, free and clear of all Liens or other encumbrances (other than Liens in
favor of the Banks), at lease 50.1% of the voting control of the Borrower either
directly or through another Person, indirectly.
"Claims" shall have the meaning provided in the definition of
"Environmental Claims."
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder. Section references to the Code are to the Code, as in effect
at the date of this Agreement, and to any subsequent provisions of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collective Bargaining Agreements" shall have the meaning set
forth in Section 3.01(j)(iv).
"Commitment" shall mean and include for each Lender, such
Lender's Initial Commitment and Subsequent Commitment.
"Communications Act" shall mean the Communications Act of
1934, as amended and in effect from time to time.
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or
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payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency 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 such
primary obligation against loss in respect thereof; PROVIDED, HOWEVER, that the
term Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Credit Agreement" shall mean the Credit Agreement, dated as
of June 26, 1997 and as amended by Amendment No. 1, dated as of January 5, 1999,
by and among the Borrower, the Bank Agent and the Banks, as such agreement may,
subject to Section 6.10, be amended, restated, extended, replaced, supplemented,
restructured or otherwise modified from time to time (in whole or in part
without limitation as to terms, extensions of maturities, increasing the amount
of borrowings or other conditions or covenants), including all related notes,
collateral documents, guarantees, instruments and agreements entered into in
connection therewith, as the same may be amended, modified, supplemented,
restated, restructured, replaced or refinanced from time to time.
"Debt Agreement" shall have the meaning set forth in Section
3.01(j)(v).
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Dividend", with respect to any Person, shall mean that such
Person has declared or paid a dividend or returned any equity capital to its
stockholders or partners or authorized or made any other distribution, payment
or delivery of property (other than capital stock of such Person) or cash to its
stockholders or partners in their capacity as stockholders or partners, or
redeemed, retired, purchased or otherwise acquired or liquidated, directly or
indirectly, for a consideration any shares of any class of its capital stock or
partnership interests outstanding on or after the Effective Date (or any options
or warrants issued by such Person with respect to its capital stock or
partnership interests), or set aside any funds for any of the foregoing
purposes, or shall have permitted any Subsidiary of such Person to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock or other ownership interests of such Person outstanding on or after the
Initial Funding Date (or any options or warrants issued by such Person with
respect to its capital stock or other ownership interests). Without limiting the
foregoing, "Dividends" with respect to any Person shall also include all cash
payments made or required to be made by such Person with respect to any stock
appreciation rights, equity incentive plans or any similar plans or setting
aside of any funds for the foregoing purposes.
"Documents" shall mean the Loan Documents, the Acquisition
Documents and any other documents executed in connection with the transactions
contemplated hereby.
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"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Effective Date" shall have the meaning provided in Section
10.10.
"Eligible Transferee" shall mean and include a commercial
bank, financial institution, other "accredited investor" (as defined in
Regulation D of the Securities Act) other than individuals, or a "qualified
institutional buyer" as defined in Rule 144A of the Securities Act.
"Employee Benefit Plans" shall have the meaning provided in
Section 3.01(j)(i).
"Employment Agreements" shall mean any employment agreements
entered into by the Borrower or any Subsidiary of the Borrower with any officer
or director of the Borrower, or any Subsidiary of the Borrower.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any violation of, or liability under, any
Environmental Law or any permit issued, or any approval given, under any such
Environmental Law (hereafter, "Claims"), including, without limitation, (a) any
and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials arising from alleged injury
or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, policy and rule of common
law now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, relating to the environment, health, safety
or Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. ss. 1251 et seq.; the Toxic
Substances Control Act, 15 U.S.C. ss. 7401 et seq.; the Clean Air Act, 42 U.S.C.
ss. 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. ss. 3803 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq.; the Occupational Safety
and Health Act, 29 U.S.C. ss. 651 et seq.; and any applicable state and local or
foreign counterparts or equivalents.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as in
effect at the date of this Agreement, and to any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which, together with the Borrower or any Subsidiary of
the Borrower would be deemed to be a "single employer" (i) within the meaning of
Section 414(b), (c), (m) or (o) of the Code or (ii) as a
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result of the Borrower or a Subsidiary of the Borrower being or having been a
general partner of such person.
"Event of Default" shall have the meaning provided in Section
7.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as in effect on the Effective Date.
"Existing Board of Directors" shall mean the existing board of
directors of the Borrower, consisting of Theodore Baum, Ruth Baum and David
Baum.
"Existing Indebtedness" shall have the meaning provided in
Section 4.21.
"Expiration Date" shall mean January 31, 1999.
"FCC" shall mean the Federal Communications Commission or any
other regulatory body which succeeds to the functions of the Federal
Communications Commission.
"FCC License" shall mean any community antenna relay service,
broadcast auxiliary license, business radio, microwave or special safety radio
service license issued by the FCC pursuant to the Communications Act.
"Fixed Charge Coverage Ratio" shall mean at any date of
determination thereof, the ratio of (i)(a) Operating Cash Flow, MINUS (b) the
sum of (1) Capital Expenditures (limited to maintenance Capital Expenditures
calculated as a greater of (x) the actual maintenance Capital Expenditures or
(y) $35 per subscriber for the average number of basic subscribers during the
period tested), (2) Management Fees paid and (3) cash taxes, all calculated for
the four fiscal quarter period ending on such date, or if such date is not the
last day of a fiscal quarter for the immediately preceding four fiscal quarter
period, to (ii) the aggregate amount of payments of interest, scheduled
principal payments of Indebtedness, permitted distributions and fees (excluding
any one-time structuring and closing fees) required to be made or made during
such four consecutive fiscal quarter, all calculated for the Borrower and its
Subsidiaries on a consolidated basis.
"Funding Date" shall mean and include each of the Initial
Funding Date and the Subsequent Funding Date.
"Governmental Authority" shall mean any foreign, federal,
state, municipal or other government, or any department, commission, board,
bureau, agency, public authority, or instrumentality thereof, or any court or
arbitrator.
"Hazardous Materials" means (a) petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain,
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," "toxic substances,"
"toxic pollutants," "contaminants," or "pollutants," or words of similar meaning
and regulatory effect, under any applicable
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Environmental Law; and (c) any other chemical, material or substance, exposure
to which is prohibited, limited or regulated under applicable Environmental
Laws.
"HCC" shall mean Helicon Capital Corp., a corporation
organized and existing under the laws of the State of Delaware.
"Helicon Corp." shall mean Helicon Corp. a corporation
organized and existing under the laws of the State of New Jersey.
"Helicon Network Solutions" shall mean Helicon Network
Solutions, L.P., a limited partnership organized and existing under the laws of
the State of Delaware.
"HPIAC" shall mean HPI Acquisition Co. LLC.
"Indebtedness" shall mean, as to any Person, at a particular
time, all items which constitute, without duplication, (i) indebtedness for
borrowed money, (ii) indebtedness in respect of the deferred purchase price of
Real Property (other than trade payables incurred in the ordinary course of
business), (iii) indebtedness evidenced by notes, bonds, debentures or similar
instruments, (iv) obligations with respect to any conditional sale or title
retention agreement, (v) indebtedness arising under acceptance facilities and
the amount available to be drawn under all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder to
the extent such Person shall not have reimbursed their issuer in respect of the
issuer's payment thereof, (vi) all liabilities secured by any Lien on any Real
Property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof (other than carriers',
warehousemen's, mechanics', repairmen's or other like non-consensual statutory
Liens arising in the ordinary course of business), (vii) Capitalized Lease
Obligations, (viii) all obligations of such Person in respect of capital stock
subject to mandatory purchase or redemption or purchase or redemption at the
option of the holder thereof, in whole or in part, (ix) all Contingent
Obligations of such Person in respect of any of the foregoing and (x) all
obligations under any Rate Hedging Agreements or under any control disbursement
accounts, repurchase agreements, reverse repurchase agreements, caps, collars,
derivatives, currency hedge agreements or other similar types of agreements.
"Indemnified Matters" shall have the meaning provided in
Section 10.01.
"Indemnitees" shall have the meaning provided in Section
10.01.
"Information Systems and Equipment" shall mean all computer
hardware, firmware and software, as well as other information processing
systems, or any equipment continuing embedded microchips, whether directly
owned, licensed, leased, operated or otherwise controlled by the Borrower or any
of its Subsidiaries, including through third-party service providers, and which,
in whole or in part, are used, operated, relied upon, or integral to, the
Borrower's or any of its Subsidiaries' conduct of their business.
"Initial Commitment" shall mean for each Lender, the amount
set forth opposite such Lender's name on Schedule I hereto directly below the
column entitled "Initial Commitments," as the same may be (x) reduced or
terminated from time to time pursuant to
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Section 2.01 or (y) adjusted from time to time as a result of assignments to or
from such Lender pursuant to Section 10.04.
"Initial Funding Date" shall mean the first date on which
Loans are made to the Borrower pursuant to this Agreement.
"Intellectual Property" shall have the meaning provided in
Section 4.20.
"ISP Assets" shall mean assets of the Borrower, consisting of
telephone dial-up internet access and other related internet services provided
by the Borrower to approximately 17,000 internet access subscribers under the
name "Helicon Online."
"Leasehold Properties" of any Person means all right, title
and interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first
paragraph of this Agreement.
"Leverage Ratio" shall mean at any date of determination, the
ratio of (i) Total Debt to (ii) Annualized Operating Cash Flow.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" has the meaning specified in Section 1.01.
"Loan Documents" shall mean, collectively, this Agreement,
each Note, the Subordinated Guaranty and the Subordination Agreement.
"Loan Party" shall mean each of the Borrower, and the
Subordinated Guarantor and Helicon Corp.
"Management Agreements" shall have the meaning set forth in
Section 3.01(j)(iii).
"Management Contract" shall mean the management agreement,
dated as of November 2, 1993, by and among the Borrower and Helicon Corp., as in
effect on the date hereof.
"Management Fees" shall mean all salaries, costs and other
expenses from time to time directly or indirectly paid or payable under the
Management Contract by the Borrower or any of its Subsidiaries to any Person for
managerial services.
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"Margin Stock" shall have the meaning provided in Regulation
U.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the performance, assets, liabilities, condition (financial or otherwise),
operations, business, prospects or properties of the Borrower or any of its
Subsidiaries taken as a whole, (ii) the ability of the Borrower Party to perform
its obligations under any of the Loan Documents to which it is a party or (iii)
the ability of any Lender to enforce any of the Loan Documents.
"Material Contracts" shall have the meaning provided in
Section 3.01(j)(viii).
"Maturity Date" shall mean the third anniversary of the
Initial Funding Date.
"Moody's" shall have the meaning provided in the definition of
"Cash Equivalents."
"Net Mark-to-Market Exposure" shall mean with respect to any
Person, as of any date of determination, the excess (if any) of all unrealized
losses over all unrealized profits of such Person arising from Rate Hedging
Agreements. "Unrealized losses" means the fair market value of the cost to such
person of replacing such Rate Hedging Agreement were to be terminated as of that
date), and "unrealized profits" means the fair market value of the gain to such
Person of replacing such Rate Hedging as of the date of determination (assuming
such Rate Hedging Agreement were to be terminated as of that date).
"Net Sale Proceeds" shall mean for any sale or other
disposition of assets including capital stock and securities, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from such sale, net of reasonable transaction costs (including, without
limitation, attorneys' fees), the amount of such gross cash proceeds required to
be used to permanently repay any Indebtedness which is secured by the respective
assets which were sold, and the estimated marginal increase in income taxes and
any stamp tax which will be payable by the Borrower's consolidated group as a
result of such sale.
"Note" shall have the meaning provided in Section 1.04(a).
"Notice of Borrowing" shall have the meaning provided in
Section 1.02.
"Obligations" shall mean all amounts, direct or indirect,
contingent or absolute, of every type or description, and at any time existing,
owing to any Lender pursuant to the terms of this Agreement or any other Loan
Document, including, without limitation, all principal, interest, premium,
penalties, fees, expenses, indemnification, reimbursements, damages and any
other liabilities, together with and including any amounts received upon the
exercise of rights of rescission or other rights of action (including claims for
damages) or otherwise.
"Observer" shall have the meaning provided in Section 5.12.
"Operating Cash Flow" shall mean for any period of
determination thereof, the sum of (i) pre-tax income or deficit, as the case may
be (excluding extraordinary gains and losses), (ii) interest expense, (iii)
Management Fees expense and (iv) depreciation and
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amortization, all calculated for the Borrower and its Subsidiaries on a
consolidated basis for such period after giving effect to any acquisitions and
dispositions of assets of the Borrower and its Subsidiaries made during such
period as if made on the first day of such period.
"PCF" shall mean Paribas Capital Funding LLC, a limited
liability company organized and existing under the laws of the State of
Delaware.
"Permitted Liens" shall have the meaning provided in Section
6.01.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, limited liability company, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any pension plan, as defined in Section 3(2)
of ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower, a Subsidiary of the Borrower or an
ERISA Affiliate, and each such plan for the five year period immediately
following the latest date on which the Borrower, a Subsidiary of the Borrower or
an ERISA Affiliate maintained, contributed to or had an obligation to contribute
to such plan.
"Projections" shall have the meaning provided in Section
3.01(h)(B).
"Quarterly Payment Date" shall mean the first Business Day of
each March, June, September and December of each calendar year.
"Rate Hedging Agreement" shall mean an agreement, device or
arrangement providing for payment which are related to fluctuations of interest
rates, exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross currency interest rate exchange agreement, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C.ss. 6901 et seq.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures, including
Leasehold Properties.
"Redemption Price" shall have the meaning set forth in Section
2.02(a) hereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof.
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"Related Fund" shall mean, with respect to any Lender that is
a fund that invests in loans, any other fund that invests in loans and is
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Required Lenders" shall mean, at any time, Lenders the sum of
whose then outstanding Loans and Commitments represents at least a majority of
all then outstanding Commitments and Loans.
"Returns" shall have the meaning provided in Section 4.09.
"S&P" shall have the meaning provided in the definition of
"Cash Equivalents."
"SEC" shall have the meaning provided in Section 5.01(h).
"Section 2.04(b)(ii) Certificate" shall have the meaning
provided in Section 2.04(b)(ii).
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Debt" shall mean all payment obligations now or
hereafter incurred pursuant to and in accordance with the terms of the Credit
Agreement and the Senior Indenture Documents (including without limitation all
principal and interest, premium, penalties, fees, expenses, indemnification,
reimbursements, damages and other liabilities payable under such documents;
PROVIDED, that in no event shall the principal amount of Senior Debt exceed
$135,000,000 (as such amount is reduced by repayments thereof after the date
hereof except for repayments in connection with refinancings)). Senior Debt
outstanding under the Credit Agreement and the Senior Indenture Documents shall
continue to constitute Senior Debt for all purposes hereof, notwithstanding that
such Senior Debt or any claim in respect thereof may be disallowed, avoided or
subordinated pursuant to any insolvency law, the Bankruptcy Code or any similar
federal or state law for the relief of debtors or other applicable insolvency
law or equitable principles as a claim for unmatured interest.
"Senior Debt Documents" shall mean collectively the Credit
Agreement and the Senior Indenture Documents.
"Senior Indebtedness" shall mean, with respect to the Borrower
and its Subsidiaries, the Senior Debt.
"Senior Indenture" shall mean the Indenture, dated as of
October 15, 1993, by and among the Borrower, Helicon Capital Corp. and Shawmut
Bank Connecticut, National Association, as trustee, as the same may be amended,
modified or supplemented in accordance with Section 6.10.
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"Senior Indenture Documents" shall mean and include the Senior
Indenture, the Senior Indenture Notes and all security agreements, pledges and
other agreements and documents executed and delivered in connection therewith,
as the same may be amended, modified or supplemented in accordance with Section
6.10.
"Senior Indenture Notes" shall mean the notes issued pursuant
to the Senior Indenture, as the same may be amended, modified or supplemented in
accordance with Section 6.10.
"Shareholders' Agreements" shall have the meaning set forth in
Section 3.01(j)(ii).
"Subordinated Guarantor" shall mean each Subsidiary of the
Borrower which has entered into the Subordinated Guaranty in accordance with
this Agreement.
"Subordinated Guaranty" shall have the meaning set forth in
Section 3.01(i) hereof.
"Subordinated Obligations" shall have the meaning set forth in
Section 9.01.
"Subordination Agreement" shall have the meaning set forth in
Section 3.01(p) hereof.
"Subsequent Commitment" shall mean for each Lender, the amount
set forth opposite such Lender's name on Schedule I hereto directly below the
column entitled "Subsequent Commitments," as the same may be (x) reduced or
terminated from time to time pursuant to Section 2.01 or (y) adjusted from time
to time as a result of assignments to or from such Lender pursuant to Section
10.04.
"Subsequent Funding Date" shall mean the one date, other than
the Initial Funding Date, on which Loans are made, and which date shall occur no
later than March 1, 1999.
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through and/or one or more Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
directly or indirectly through and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time.
"Tax Sharing Agreements" shall have the meaning set forth in
Section 3.01(j)(vi).
"Taxes" shall have the meaning provided in Section 2.04(a).
"Total Commitment" shall mean the aggregate Commitments of the
Lenders.
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"Total Debt" shall mean the sum of, without duplication, all
Indebtedness, Net Mark-to-Market Exposure and obligations under non-compete
agreements of the Borrower and its Subsidiaries on a consolidated basis.
"Transaction" shall mean collectively, (i) the incurrence of
Loans hereunder on the applicable Funding Date, (ii) the execution and delivery
of the Loan Documents on the Initial Funding Date, (iii) consummation of the
Acquisition, (iv) the payment of the Transaction Fees and Expenses in connection
therewith and (v) the amendment of the Credit Agreement to permit the
transactions contemplated hereby.
"Transaction Fees and Expenses" shall mean all fees and
expenses incurred in connection with and arising out of the Transaction and the
transactions contemplated thereby and hereby.
"Trustee" shall mean State Street Bank and Trust Company, as
trustee under the Senior Indenture.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"United States" and "U.S." shall each mean the United States
of America.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i)
any corporation 99% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person has a 99% equity
interest at such time.
"Year 2000 Compliant" shall mean that all Information Systems
and Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise impair the accuracy
or functionality of Information Systems and Equipment.
SECTION 9. SUBORDINATION
9.01 NOTES SUBORDINATE TO SENIOR INDEBTEDNESS. The Borrower
covenants and agrees, and each Lender and each other holder of any Note, if any,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Section 9, the payment of the Obligations, including pursuant
to any amendment, modification, restatement or renewal thereof (the
"Subordinated Obligations"), is hereby expressly made subordinate and subject in
right of payment as provided herein to the prior payment in full in cash or cash
equivalents of all Senior Indebtedness.
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9.02 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. In the
event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Borrower or to its creditors, as such, or
to its assets, or (b) any liquidation, dissolution or other winding up of the
Borrower, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets or liabilities of the Borrower (collectively,
"Bankruptcy Events"), then and in any such event:
(1) the holders of Senior Indebtedness shall be entitled to
receive payment in full in cash or cash equivalents of all amounts due
on or in respect of all Senior Indebtedness, including any interest
accrued subsequent to a Bankruptcy Event, whether or not such interest
is an allowed claim enforceable against the debtor under the United
States Bankruptcy Code, or provision satisfactory to the holders of
Senior Indebtedness shall be made for such payment in cash or cash
equivalents, before the holders of any Note are entitled to receive any
payment of any kind or character; and
(2) any payment or distribution of assets of the Borrower of
any kind or character, whether in cash, property or securities, set-off
or otherwise, to which the holders of any Note would be entitled but
for the provisions hereof shall be paid by the liquidating trustee or
agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Indebtedness or their representative
or representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any such Senior Indebtedness may
have been issued, ratably according to the aggregate amounts remaining
unpaid on account of Senior Indebtedness held or represented by each,
to the extent necessary to make payment in full in cash or cash
equivalents of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to or for the holders
of Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section, the holder of any Note shall have received
any payment or distribution of assets of the Borrower of any kind or
character, whether in cash, property or securities before all Senior
Indebtedness is paid in full in cash or cash equivalents or payment
thereof provided for in cash or cash equivalents in a manner
satisfactory to the holders of Senior Indebtedness, then and in such
event such payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or
distribution of assets of the Borrower for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to
pay all Senior Indebtedness in full in cash or cash equivalents, after
giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness.
The consolidation of the Borrower with, or the merger of the
Borrower with or into, another Person or the liquidation or dissolution of the
Borrower following the conveyance, transfer or lease of its properties and
assets substantially as an entirety to another Person shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment for the benefit
of creditors or marshaling of assets and liabilities of the Borrower for the
purposes of this Section if
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the Person formed by such consolidation or the surviving entity of such merger
or the Person which acquires by conveyance, transfer or lease such properties
and assets substantially as an entirety, as the case may be, shall, as a part of
such consolidation, merger, conveyance, transfer or lease, comply with the
conditions set forth in the Senior Debt Documents.
9.03 SUSPENSION OF PAYMENT IN CERTAIN CIRCUMSTANCES. (a) If a
payment default under the Senior Debt Documents shall have occurred and is
continuing, no payment or distribution of any assets of the Borrower of any kind
or character shall be made by or on behalf of the Borrower to the holders of any
Note unless and until such default shall have been cured or waived or shall have
ceased to exist.
(b) If a default under the Senior Debt Documents other than a
payment default shall have occurred and is continuing, no payment or
distribution of any assets of the Borrower of any kind or character shall be
made by or on behalf of the Borrower to the holders of any Note for a period of
180 days unless and until such default shall have been cured or waived or shall
have ceased to exist.
(c) In the event that any payment prohibited by the foregoing
provisions of this Section is made to a holder of any Note, then and in such
event such payment shall be held in trust for the benefit of and shall be
promptly paid over or delivered to the holders of Senior Indebtedness remaining
unpaid (pro rata to such holders) to the extent necessary to pay in full all
amounts payable on or in connection with Senior Indebtedness in accordance with
its terms.
9.04 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS.
Subject to the payment in full in cash or cash equivalents of all Senior
Indebtedness, the holders of any Note shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to Senior Indebtedness until the principal
of, premium, if any, and interest on any Note shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
Senior Indebtedness of any cash, property or securities to which the holder of
any Note would be entitled except for the provisions hereof, and no payments
over pursuant to the provisions hereof to the holders of Senior Indebtedness by
holders of any Note, shall, as among the Borrower, its creditors other than
holders of Senior Indebtedness, and the holders of any Note, be deemed to be a
payment or distribution by the Borrower to or on account of Senior Indebtedness.
9.05 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions hereof are intended solely for the purpose of defining the relative
rights of the holders of any Note on the one hand and the holders of Senior
Indebtedness on the other hand. Nothing contained herein is intended to or shall
(a) impair, as among the Borrower, its creditors other than holders of Senior
Indebtedness and the holders of any Note, the obligation of the Borrower, which
is absolute and unconditional, to pay to holders of any Note all amounts due
thereon as and when the same shall become due and payable, or (b) affect the
relative rights against the Borrower of holders of any Note and creditors of the
Borrower other than the holders of Senior Indebtedness, or (c) prevent the
holders of any Note from exercising all remedies otherwise permitted by
applicable law upon default under the Notes, subject to the rights, if any,
herein of the holders of Senior Indebtedness (1) in any case, proceeding,
dissolution, liquidation or other winding up, assignment for the benefit of
creditors or other marshaling of assets and liabilities of the Borrower referred
to in
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Section 9.02, to receive, pursuant to and in accordance with such Section, cash,
property and securities otherwise payable or deliverable to holders of any Note,
or (2) under the conditions specified in Section 9.03, to prevent any payment
prohibited by such Section or enforce their rights pursuant to Section 9.03(c).
9.06 NO WAIVER OF SUBORDINATION PROVISIONS. (a) No right of
any present or future holder of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Borrower or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Borrower
with the terms, provisions and covenants of any document evidencing or governing
such Senior Indebtedness or the Notes, regardless of any knowledge thereof any
such holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of this
Section, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the holders of any Note, without
incurring responsibility to the holders of any Note and without impairing or
releasing the subordination provided herein or the obligations hereunder of the
holders of any Note to the holders of Senior Indebtedness, do any one or more of
the following: (1) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, the Senior Debt Documents or any
instrument evidencing the same or any agreement under which the Senior
Indebtedness is outstanding; (2) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing the Senior Indebtedness;
(3) release any Person liable in any manner for the collection or payment of
Senior Indebtedness; and (4) exercise or refrain from exercising any rights
against the Borrower and any other Person; PROVIDED that in no event shall any
such actions limit the right of the holders of any Note to take any action to
accelerate the maturity of such Note or to pursue any rights or remedies if the
taking of such action does not otherwise violate or conflict with the terms
hereof.
9.07 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT. Upon any payment or distribution of assets of the Borrower referred to
herein, the holders of any Note shall be entitled to rely upon any order or
decree entered by any court of competent jurisdiction in which an insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding relative to the Borrower, its creditors, as such,
or its assets is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to the
holders of any Note, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Indebtedness
and other indebtedness of the Borrower, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto, PROVIDED that the foregoing shall apply only if such court has been
fully apprised of the provisions hereof.
9.08 NO SUSPENSION OF REMEDIES. Nothing contained herein shall
limit the right of the holders of any Note to take any action to accelerate the
maturity of such Note or to pursue any rights or remedies under applicable law
or under the agreement or instrument governing such Note, subject to the rights
hereunder of the holders, from time to time, of Senior Indebtedness.
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9.09 MISCELLANEOUS SUBORDINATION PROVISION. The agreements
contained in this Section 9 shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of the Senior Indebtedness is
rescinded or must otherwise be returned by any holder of Senior Indebtedness
upon any Bankruptcy Event of the Borrower, all as though such payment had not
been made.
SECTION 10. MISCELLANEOUS.
10.01 PAYMENT OF EXPENSES, ETC. The Borrower agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of PCF (including, without
limitation, the reasonable fees and disbursements of White & Case LLP) in
connection with the preparation, execution and delivery of this Agreement and
the other Loan Documents and the documents and instruments referred to herein
and therein and any amendment, waiver or consent relating hereto or thereto, and
of each of the Lenders in connection with the enforcement of this Agreement and
the other Loan Documents and the documents and instruments referred to herein
and therein (including, without limitation, the reasonable fees and
disbursements of counsel for each of the Lenders); (ii) pay and hold each of the
Lenders harmless from and against any and all present and future stamp, excise
and other similar taxes with respect to the foregoing matters and save each of
the Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Lender) to pay such taxes; and (iii) defend, protect, indemnify and hold
harmless each Lender, and each of its respective officers, directors, employees,
representatives, attorneys, agents, Affiliates, any other Person in control of
any Lender or its affiliates (collectively called the "Indemnitees") from and
against any and all liabilities, obligations (including removal or remedial
actions), losses, damages (including foreseeable and unforeseeable consequential
damages and punitive damages), penalties, claims, actions, judgments, suits,
proceedings, costs, expenses and disbursements (including reasonable attorneys'
and consultants fees and disbursements) of any kind or nature whatsoever that
may at any time be incurred by, imposed on or assessed against the Indemnitees
directly or indirectly based on, or arising or resulting from, or in any way
related to, or by reason of (a) any investigation, litigation or other
proceeding (whether or not any Lender is a party thereto and whether or not any
such investigation, litigation or other proceeding is between or among any
Lender, the Borrower or any of its Subsidiaries, or any third Person or
otherwise) related to the entering into and/or performance of this Agreement or
any other Document or the proceeds of any Loans hereunder or the consummation of
any transactions contemplated herein (including, without limitation, the
Transaction) or in any other Document or the exercise of any of their rights or
remedies provided herein or in the other Loan Documents; or, (b) the actual or
alleged generation, presence or Release of Hazardous Materials on or from, or
the transportation of Hazardous Materials to or from, any Real Property owned or
at any time operated by the Borrower or any of its Subsidiaries; or (c) any
Environmental Claim relating to the Borrower, any of its Subsidiaries or any
Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries; or (d) the exercise of the rights of any Lender under any of the
provisions of this Agreement, any other Loan Document, or any other Document or
any Loans hereunder; or (e) the consummation of any transaction contemplated
herein (including, without limitation, the Transaction) or in any other Loan
Document (the "Indemnified Matters") regardless of when such Indemnified Matter
arises,
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<PAGE>
but excluding any such Indemnified Matter based solely on the gross negligence
or willful misconduct of any Indemnitee.
10.02 RIGHT OF SETOFF. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
an Event of Default, each Lender is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind to the
Borrower or any of its Subsidiaries or to any other Person, any such notice
being hereby expressly waived, but in any event subject to Section 9, to set off
and to appropriate and apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Lender (including, without
limitation, by branches and agencies of such Lender wherever located) to or for
the credit or the account of the Borrower or any of its Subsidiaries against and
on account of the Subordinated Obligations and liabilities of the Borrower or
any of its Subsidiaries to such Lender under this Agreement or under any of the
other Loan Documents, including, without limitation, all interests in
Subordinated Obligations purchased by such Lender pursuant to Section 10.06, and
all other claims of any nature or description arising out of or connected with
this Agreement or any other Loan Document, irrespective of whether or not such
Lender shall have made any demand hereunder and although said Subordinated
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured. The Lenders hereby agree to provide notice to the Borrower and the
Bank Agent of any action taken pursuant to this Section 10.02; PROVIDED, that
the failure to give such notice shall not affect any action taken by such Lender
pursuant to this Section 10.02.
10.03 NOTICES. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
its address specified opposite its signature below; if to any Lender, at its
address specified opposite its name below; if to the Banks or the Bank Agent, to
the address specified in the Credit Agreement; or, as to the Borrower or any
Lender, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to the Bank Agent and each Bank, at
such other address as shall be designated by the Bank Agent or such Bank in a
written notice to the Borrower and each Lender. All such notices and
communications shall, when mailed, telegraphed, telexed, facsimile, or cabled or
sent by overnight courier, be effective three Business Days after deposited in
the mails, certified, return receipt requested, when delivered to the telegraph
company or cable company or one Business Day following delivery to an overnight
courier, as the case may be, or sent by telex or facsimile device, except that
notices and communications to a Lender or the Bank Agent shall not be effective
until received by such Lender or the Bank Agent.
10.04 BENEFIT OF AGREEMENT. (a) This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; PROVIDED, HOWEVER, that the
Borrower may not assign or transfer any of its rights, obligations or interest
hereunder or under any other Loan Document without the prior written consent of
all Lenders; and PROVIDED FURTHER, that although any Lender may transfer, assign
or grant participations in its rights hereunder, such Lender shall remain a
"Lender" for all purposes hereunder (and may not transfer or assign all or any
portion of its Loans hereunder except as
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<PAGE>
provided in Section 10.04(b)) and the transferee, assignee or participant, as
the case may be, shall not constitute a "Lender" hereunder; and PROVIDED
FURTHER, that no Lender shall transfer or grant any participation under which
the participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Loan Document except to the extent such amendment or
waiver would: (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating, or reduce the rate or extend the time
of payment of interest (except in connection with a waiver of applicability of
any post-default increase in interest rates) or reduce the principal amount
thereof over the amount thereof then in effect (it being understood that waivers
of any Defaults or Events of Default or of a mandatory repayment shall not
constitute a change in the terms of such participation), or (ii) consent to the
assignment or transfer by or a release of the Borrower of any of its rights and
obligations under this Agreement or any other Loan Document. In the case of any
such participation, the participant shall not have any rights under this
Agreement or any of the other Loan Documents (the participant's rights against
such Lender in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder and thereunder shall be
determined as if such Lender had not sold such participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender
together with one or more other Lenders) may assign all or a portion of its
outstanding principal amount of Loans to one or more Eligible Transferees or to
a Related Fund each of which assignees shall become a party to this Agreement as
a Lender by execution of an assignment and assumption agreement substantially in
the form of EXHIBIT H (appropriately completed); PROVIDED that: (i) at such time
SCHEDULE I shall be deemed modified to reflect the outstanding Loans of such new
Lender and of the existing Lenders; and (ii) new Notes will be issued, at the
Borrower's expense, to such new Lender and to the assigning Lender upon the
request of such new Lender or assigning Lender, such new Notes to be in
conformity with the requirements of Section 1.04 (with appropriate
modifications) to the extent needed to reflect the revised outstanding Loans. At
the time of each assignment pursuant to this Section 10.04(b) to a Person which
is not already a Lender hereunder and which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes, the respective assignee Lender shall provide to the Borrower the
appropriate Internal Revenue Service Forms (and, if applicable, a Section
2.04(b)(ii) Certificate) required by Section 2.04(b).
10.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on
the part of any Lender or any holder of any Note in exercising any right, power
or privilege hereunder or under any other Loan Document and no course of dealing
between the Borrower or any of its Subsidiaries or any Lender or the holder of
any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Loan Document expressly provided are cumulative
and not exclusive of any rights, powers or remedies which any Lender or the
holder of any Note would otherwise have. No notice to or demand on the Borrower
or any of its Subsidiaries in any case shall entitle any such Person to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any Lender or the holder of any Note to any
other or further action in any circumstances without notice or demand.
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10.06 PAYMENTS PRO RATA. Each of the Lenders agrees that, if
it should receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Loan Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, of a sum which with respect to the
related sum or sums received by other Lenders is in a greater proportion than
the total of such Subordinated Obligations then owed and due to such Lender
bears to the total of such Subordinated Obligations then owed and due to all of
the Lenders immediately prior to such receipt, then such Lender receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Lenders an interest in the Subordinated Obligations to such other Lenders
in such amount as shall result in a proportional participation by all the
Lenders in such amount; PROVIDED, that if all or any portion of such excess
amount is thereafter recovered from such purchasing Lender, such purchase shall
be rescinded and the purchase price restored to the extent of such recovery, but
without interest.
10.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements
to be furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Lenders); PROVIDED, that except as otherwise specifically provided herein, all
computations determining compliance with Section 6, including the definitions
used therein, shall utilize accounting principles and policies in conformity
with those used to prepare the historical financial statements for the fiscal
year ended December 31, 1997 delivered to the Lenders pursuant to Section
4.05(a).
(b) All computations of interest and fees, hereunder shall be
made on the basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) occurring in the period for which such
interest or fees are payable.
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. 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 NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER HEREBY IRREVOCABLY DESIGNATES, ACCEPTS AND EMPOWERS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
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<PAGE>
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY LENDER OR THE HOLDER
OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER
JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE
AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.09 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be maintained by the
Borrower and the Lenders.
10.10 EFFECTIVENESS. This Agreement shall become effective on
the date (the "Effective Date") on which the Borrower and each of the Lenders
shall have signed a copy hereof (whether the same or different copies) and shall
have delivered the same to each other party hereto at the appropriate address
required by Section 10.03.
10.11 HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
10.12 AMENDMENT OR WAIVER. Neither this Agreement nor any
other Loan Document nor any terms hereof or thereof may be amended, changed,
waived, discharged or terminated unless such amendment, change, waiver,
discharge or termination is in writing signed by the Borrower and the Required
Lenders; PROVIDED, that no such amendment, change, waiver, discharge or
termination shall, without the consent of each Lender: (i) extend the final
scheduled maturity of any Loan or Note beyond the Maturity Date, or reduce the
rate or extend the time of payment of interest thereon (except in connection
with a waiver of applicability of any post-default increase in interest rates),
or reduce the principal amount thereof; (ii) amend, modify or waive any
provision of this Section 10.12; (iii) reduce the percentage specified in, or
otherwise modify, the definition of Required Lenders (it being understood that,
with the consent of the Required Lenders, additional extensions of credit
pursuant to this Agreement may be included in the determination of the Required
Lenders on substantially the same basis as the extensions of
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Loans are included on the Effective Date); or (iv) consent to the assignment or
transfer by the Borrower any of its rights and obligations under this Agreement.
10.13 SURVIVAL. All indemnities set forth herein including,
without limitation, in Sections 2.04 and 10.01 shall survive the execution and
delivery of this Agreement and the Notes and the making and repayment of the
Loans.
10.14 DOMICILE OF LOANS. Each Lender may transfer and carry
its Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Lender.
10.15 POST-CLOSING OBLIGATIONS. The Borrower hereby
acknowledges that in connection with certain assignments hereof, any of the
Lenders may be required to obtain a rating of the Subordinated Obligations and
Commitments hereunder of the Borrower and the Borrower hereby consents to such
Lender providing to the respective rating agency such information regarding the
Subordinated Obligations and creditworthiness of the Borrower as is customary
practice of such rating agency.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
ADDRESS THE HELICON GROUP, L.P.
630 Palisade Avenue
Englewood Cliffs, New Jersey 07632 By: BAUM INVESTMENTS, INC.,
Attention: Herbert Roberts as its general partner,
Telephone: (201) 568-7720
Facsimile: (201) 568-6228 Name: /s/ Herbert J. Roberts
Title: Senior Vice President
<PAGE>
787 Seventh Avenue PARIBAS CAPITAL FUNDING LLC
New York, New York 10019
Attention: Jeffrey Youle
Telephone: (212) 841-2000
Facsimile: (212) 841-2369 By: /s/ Jeffrey Youle
Title: Managing Director
<PAGE>
SCHEDULE I
COMMITMENTS
INITIAL COMMITMENTS
Lender Commitment
------ ----------
Paribas Capital Funding LLC $7,000,000
SUBSEQUENT COMMITMENTS
Lender Commitment
------ ----------
Paribas Capital Funding LLC $5,000,000
TOTAL COMMITMENT $12,000,000
<PAGE>
Schedule 4.10
ERISA
<PAGE>
Schedule 4.12
REAL PROPERTY
<PAGE>
Schedule 4.13
CAPITALIZATION
<PAGE>
Schedule 4.14
SUBSIDIARIES
<PAGE>
Schedule 4.21
EXISTING INDEBTEDNESS
<PAGE>
Schedule 4.24
MATERIAL CONTRACTS
<PAGE>
INSURANCE
<PAGE>
SCHEDULE 6.01
LIENS
<PAGE>
SCHEDULE 6.05
TRANSACTIONS WITH AFFILIATES
<PAGE>
TABLE OF CONTENTS
<TABLE>
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SECTION 1. Amountand Terms of Loans..............................................................................1
1.01 TheLoans.....................................................................................1
1.02 Noticeof Borrowing...........................................................................1
1.03 Disbursementof Funds.........................................................................1
1.04 Notes........................................................................................1
1.05 Interest.....................................................................................2
1.06 IncreasedCosts, etc..........................................................................2
1.07 Fees.........................................................................................2
SECTION 2. Commitments;Repayment; Prepayments; Payments; Taxes...................................................3
2.01 Terminationof Commitments; Payment of Loans .................................................3
2.02 Mandatoryand Voluntary Prepayments...........................................................3
2.03 Methodand Place of Payment...................................................................4
2.04 NetPayments..................................................................................4
SECTION 3. ConditionsPrecedent to Loans..........................................................................6
3.01 ConditionsPrecedent to Loans on the Initial Funding Date.....................................6
(a) Officer's Certificate.................................................................6
(b) Opinions of Counsel...................................................................6
(c) Corporate Documents; Proceedings......................................................6
(d) Capitalization........................................................................6
(e) Senior Debt Documents.................................................................7
(f) Fees, etc. ...........................................................................7
(g) Approvals.............................................................................7
(h) Financial Statements; Projections; Management Letter Reports..........................7
(i) Subordinated Guaranty.................................................................8
(j) Plans; Shareholders'Agreements; Management Agreements; Employment Agreements;
Collective Bargaining Agreements; Debt Agreements; Affiliate Contracts; Tax
Sharing Agreements and Material Contracts.........................................8
(k) Insurance Analyses....................................................................9
(l) Consummation of the Acquisition.......................................................9
(n) Notes.................................................................................9
(o) Operating Cash Flow..................................................................10
(p) Subordination Agreement..............................................................10
3.02 ConditionsPrecedent to All Loans............................................................10
(a) No Default; Representations and Warranties...........................................10
(i)
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(b) Notice of Borrowing..................................................................10
(c) Litigation...........................................................................10
(d) Material Adverse Change, etc.........................................................10
(e) Senior Debt Documents................................................................10
SECTION 4. Representations,Warranties and Agreements............................................................11
4.01 Status......................................................................................11
4.02 Powerand Authority..........................................................................11
4.03 NoViolation.................................................................................11
4.04 GovernmentalApprovals.......................................................................12
4.05 FinancialStatements; Financial Condition; Undisclosed Liabilities; Projections; etc.........12
4.06 Litigation..................................................................................13
4.07 Trueand Complete Disclosure.................................................................13
4.08 Useof Proceeds; Margin Regulations..........................................................13
4.09 TaxReturns and Payments.....................................................................14
4.10 Compliancewith ERISA........................................................................14
4.11 Representations and Warranties in Documents.................................................15
4.12 Properties..................................................................................15
4.13 Capitalization..............................................................................15
4.14 Subsidiaries................................................................................15
4.15 Compliancewith Statutes, Etc................................................................15
4.16 Investment Company Act......................................................................15
4.17 Public Utility Holding Company Act..........................................................15
4.18 Environmental Matters.......................................................................16
4.19 Labor Relations.............................................................................16
4.20 Patents, Licenses, Franchises and Formulas..................................................16
4.21 Existing Indebtedness.......................................................................17
4.22 Restrictionson or Relating to Subsidiaries..................................................17
4.23 The Transaction.............................................................................17
4.24 Material Contracts..........................................................................17
4.25 Year 2000 Reprogramming.....................................................................18
4.26 FCC and Copyright Matters...................................................................18
4.27 No Employment Agreements....................................................................18
SECTION 5. AffirmativeCovenants.................................................................................18
5.01 InformationCovenants........................................................................18
(a) Monthly Reports......................................................................18
(b) Quarterly Financial Statements.......................................................18
(c) Annual Financial Statements..........................................................19
(d) Management Letters...................................................................19
(e) Budgets..............................................................................19
(f) Officer's Certificates...............................................................19
(g) Notice of Default or Litigation......................................................20
(h) Other Reports and Filings............................................................20
(ii)
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(i) Environmental Matters................................................................20
(j) Senior Debt Document Notices.........................................................21
(k) FCC Authorizations and Correspondence................................................21
(l) Other Information....................................................................21
5.02 Books, Records and Inspections..............................................................21
5.03 Maintenance of Property, Insurance..........................................................21
5.04 Corporate Franchises........................................................................21
5.05 Compliance with Statutes, Etc...............................................................21
5.06 Compliance with Environmental Laws..........................................................22
5.07 ERISA.......................................................................................22
5.08 Endof Fiscal Years; Fiscal Quarters.........................................................23
5.09 Paymentof Taxes.............................................................................23
5.10 Useof Proceeds, Margin Regulations..........................................................23
5.11 Year 2000 Compliance........................................................................23
5.12 Observation of Board of Directors...........................................................24
5.13 Intellectual Property Rights................................................................24
5.14 Ownershipof Subsidiaries....................................................................24
5.15 Corporate Separateness......................................................................24
5.16 Conductof Business; Maintenance of Licenses.................................................25
SECTION 6. NegativeCovenants....................................................................................25
6.01 Liens.......................................................................................25
6.02 Consolidation, Merger, Purchase or Sale of Assets, Etc......................................25
6.03 Dividends...................................................................................27
6.04 Indebtedness................................................................................27
6.05 Transactions with Affiliates................................................................28
6.06 Leverage Ratio..............................................................................28
6.07 Fixed Charge Coverage Ratio.................................................................28
6.08 Capital Expenditures........................................................................28
6.09 Restrictionson Additional Subordinated Indebtedness.........................................29
6.10 Limitationon Voluntary Payments and Modifications; Limitation on Modifications of
Certificate of Incorporation, By-Laws and Certain Other Agreements; Etc...................29
6.11 Limitationon Certain Restrictions on Subsidiaries...........................................29
6.12 Limitationon Issuance of Capital Stock......................................................30
6.13 Businessand Name Changes....................................................................30
6.14 Limitationon Creation of Subsidiaries.......................................................30
6.15 NoFurther Negative Pledges..................................................................30
6.16 NoPension Plans.............................................................................30
SECTION 7. Eventsof Default.....................................................................................30
7.01 Payments....................................................................................31
7.02 Representations,Etc.........................................................................31
7.03 Covenants...................................................................................31
7.04 DefaultUnder Other Agreements...............................................................31
(iii)
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7.05 Bankruptcy,Etc..............................................................................31
7.06 ERISA.......................................................................................31
7.07 Judgments...................................................................................32
7.08 Ownership...................................................................................32
7.09 Licenses....................................................................................32
SECTION 8. Definitionsand Accounting Terms......................................................................33
8.01 DefinedTerms................................................................................33
SECTION 9. Subordination........................................................................................44
9.01 Notes Subordinate to Senior Indebtedness....................................................44
9.02 Payment Over of Proceeds Upon Dissolution, etc..............................................45
9.03 Suspension of Payment in Certain Circumstances..............................................46
9.04 Subrogation to Rights of Holders of Senior Indebtedness.....................................46
9.05 Provisions Solely to Define Relative Rights.................................................46
9.06 No Waiver of Subordination Provisions.......................................................46
9.07 Reliance on Judicial Order or Certificate of Liquidating Agent..............................47
9.08 No Suspension of Remedies...................................................................47
9.09 Miscellaneous Subordination Provision.......................................................47
SECTION 10. Miscellaneous.......................................................................................47
10.01 Payment of Expenses, Etc...................................................................47
10.02 Right of Setoff............................................................................48
10.03 Notices....................................................................................49
10.04 Benefit of Agreement.......................................................................49
10.05 No Waiver; Remedies Cumulative.............................................................50
10.06 Payments Pro Rata..........................................................................50
10.07 Calculations;Computations..................................................................50
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.....................50
10.09 Counterparts...............................................................................51
10.10 Effectiveness..............................................................................51
10.11 Headings Descriptive.......................................................................51
10.12 Amendmentor Waiver.........................................................................51
10.13 Survival...................................................................................52
10.14 Domicile of Loans..........................................................................52
10.15 Post-Closing Obligations...................................................................52
</TABLE>
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Note
Exhibit C Form of Section 2.04(b)(ii) Certificate
Exhibit D Form of Officer's Certificate
(iv)
<PAGE>
Exhibit E Form of Opinion
Exhibit F Form of Secretary's Certificate
Exhibit G Form of Subordinated Guaranty
Exhibit H Form of Assignment and Assumption Agreement
Exhibit I Form of Subordination Agreement
SCHEDULES
Schedule I Commitments
Schedule 4.10 ERISA
Schedule 4.12 Real Property
Schedule 4.13 Capitalization
Schedule 4.14 Subsidiaries
Schedule 4.21 Existing Indebtedness
Schedule 4.24 Material Contracts
Schedule 5.03 Insurance
Schedule 6.01 Liens
Schedule 6.05 Transactions with Affiliates
(v)
<PAGE>
EXHIBIT 10.26
PURCHASE AGREEMENT
DATED AS OF MARCH 22, 1999
AMONG
CHARTER COMMUNICATIONS, INC.,
CHARTER COMMUNICATIONS, LLC,
CHARTER HELICON, LLC,
HELICON PARTNERS I, L.P.,
BAUM INVESTMENTS, INC.,
AND
THE LIMITED PARTNERS
OF HELICON PARTNERS I, L.P.
<PAGE>
LIST OF EXHIBITS
(the following exhibits have been omitted and will be supplementally provided to
the SEC upon their request.)
Name Exhibit
- ---- -------
Amended LLC Agreement A
Excluded Assets B
Indemnity Agreement C
Release of Debt Obligations D
Put Agreement E
Sellers' Addresses F
<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT (this "AGREEMENT") is dated as of March 22,
1999, by and among CHARTER COMMUNICATIONS, INC., a Delaware corporation
("CHARTER"), CHARTER COMMUNICATIONS LLC, a Delaware limited liability company
("BUYER"), CHARTER HELICON, LLC, a Delaware limited liability company ("GP
BUYER"), HELICON PARTNERS I, L.P., a Delaware limited partnership ("HELICON"),
BAUM INVESTMENTS, INC., a Delaware corporation ("BII"),, and the Limited
Partners.
RECITALS:
A. BII holds certain assets, including the BII Assets, and, as of the
date of this Agreement, the Limited Partners comprise all of Helicon's limited
partners and hold all of Helicon's limited partnership interests and preferred
interests.
B. Buyer and GP Buyer are indirect wholly owned subsidiaries of
Charter.
C. Buyer desires to acquire from the Limited Partners all of their
limited partnership interests and preferred interests in Helicon.
D. GP Buyer desires to acquire the BII Assets by the contribution of
such BII Assets to GP Buyer, with BII receiving, in exchange for the
contribution of the BII Assets, the Preferred LLC Interest.
E. The parties hereto desire to set forth the terms in accordance with
which BII shall contribute the BII Assets to GP Buyer, and the Partners shall
transfer their Helicon limited partnership interests and preferred interests to
Buyer, in each case for the consideration and on the terms and conditions set
forth in this Agreement.
AGREEMENTS:
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, the parties to this Agreement, intending
to be bound legally, agree as follows:
SECTION 1: CERTAIN DEFINITIONS
<PAGE>
1.1 TERMS DEFINED IN THIS SECTION. The following terms, as used in this
Agreement, have the meanings set forth in this Section:
"ACCOUNTS RECEIVABLE" means all rights of the Helicon Companies to
payment for goods or services provided prior to the Adjustment Time (including,
but not limited to, rights to payment for cable services provided to customers
of the Systems, the sale of advertising, the leasing of channels, and other
goods, services and rentals).
"ADJUSTMENT TIME" means 11:59 p.m., East Coast time on the Closing
Date.
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, the specified Person.
"AMENDED LLC AGREEMENT" means the Amended and Restated Operating
Agreement of GP Buyer, substantially in the form attached hereto as EXHIBIT A.
"ASSETS" means all of the tangible and intangible assets that are
owned, leased or held by the Helicon Companies and that are used or held for use
in connection with the conduct of their business or the operation of the Systems
other than the Excluded Assets and less any such Assets that are sold,
transferred or otherwise conveyed by the Helicon Companies to third Persons
prior to the Closing in accordance with the provisions of this Agreement;
PROVIDED, that, with respect to any assets that are leased by the Helicon
Companies, or otherwise not owned by the Helicon Companies, "Assets" includes
only the interest, title and rights in such assets held by the Helicon
Companies.
"BASIC SUBSCRIBER" means, with respect to any System, any Subscriber to
a System at the regular basic monthly subscription rate (including discounted
rates offered in the ordinary course of business consistent with past practice)
for at least broadcast basic cable service (either alone or in combination with
any other service) for such System, who has rendered payment for at least one
month's service and who has not more than Five Dollars ($5.00) more than two (2)
months past due from the last day of the period to which any outstanding bill
relates.
"BAUM" means Theodore B. Baum, who is the sole stockholder of BII.
"BII ASSETS" means the assets of BII set forth on SCHEDULE 3.3.
-3-
<PAGE>
"BULK SUBSCRIBER" means, with respect to any System, any Subscriber,
other than a Basic Subscriber, to at least broadcast basic cable service (either
alone or in combination with any other service) which is billed on a bulk basis
to bulk commercial accounts, such as hotels, motels, hospitals, apartment houses
and similar multiple dwelling units or other commercial accounts and who has
rendered payment for at least one month's service at such Subscriber's regular
basic monthly subscription rate without discount (except regularly offered
discounts) and who does not have more than $10.00 that is more than two (2)
months past due from the last day of the period to which any outstanding bill
relates.
"CABLE ACT" means Title VI of the Communications Act of 1934, as
amended, 47 U.S.C. Section 151 ET SEQ., all other provisions of the Cable
Communications Policy Act of 1984 and the provisions of the Cable Television
Consumer Protection and Competition Act of 1992, and the provisions of the
Telecommunications Act of 1996 amending Title VI of the Communications Act of
1934, in each case as amended and in effect from time to time.
"CALL AGREEMENT" means the Agreement, dated December 16, 1998, as
amended January 25, 1999, among BII (as assignee) and the Subordinated Holders,
entitling BII to acquire, in accordance with the terms thereof, the Warrants for
an acquisition price of $43,250,000.
"CHARTER'S DISCLOSURE SCHEDULES" means the Disclosure Schedules
referred to in Section 5 of this Agreement and attached to this Agreement.
"CHARTER PARTIES" means Charter, Buyer and GP Buyer.
"CLOSING" means the purchase and sale of the Purchased Interests and
the consummation of the BII Contribution pursuant to this Agreement.
"CLOSING DATE" means the date on which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, all as amended and in effect from
time to time.
"COMPENSATION ARRANGEMENT" means any plan or compensation arrangement
other than an Employee Plan, whether written or unwritten, which provides to
employees, former employees, officers, directors and shareholders of Helicon or
any ERISA Affiliate any compensation or other benefits, whether deferred or not,
in excess of base salary or wages, including, but not limited to, any bonus or
incentive plan, stock rights plan, deferred compensation arrangement, life
insurance, stock purchase plan, severance pay plan and any other employee fringe
benefit plan.
-4-
<PAGE>
"CONSENTS" means the consents, permits, approvals and authorizations of
Governmental Authorities and other Persons necessary to transfer the Purchased
Interests to Buyer, to effect the BII Contribution or otherwise to consummate
the transactions contemplated by this Agreement.
"CONTRACTS" means all leases, easements, rights-of-way, rights of
entry, programming agreements, pole attachment and conduit agreements, customer
agreements, and other agreements, written or oral (including any amendments and
other modifications thereto) to which any Helicon Company is a party or which
are binding upon any Helicon Company.
"COPYRIGHT ACT" means the Copyright Act of 1976, as amended and in
effect from time to time.
"EMPLOYEE PLAN" means any pension, retirement, profit-sharing, deferred
compensation, vacation, severance, bonus, incentive, medical, vision, dental,
disability, life insurance, other employee benefit plan as defined in Section
3(3) of ERISA or any other employee plan, program, arrangement or agreement to
which any Helicon Company or any ERISA Affiliate of any Helicon Company
contributes or is required to contribute, or which any Helicon Company or any
such ERISA Affiliate sponsors or maintains.
"ENCUMBRANCES" means any pledge, claim, mortgage, lien, charge,
encumbrance, right to purchase, right of first refusal, adverse interest,
attachment, exception to or defect in title or other ownership interest or
security interest of any kind or nature whatsoever.
"ENFORCEABILITY EXCEPTIONS" means the exceptions or limitations to the
enforceability of contracts under bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, by judicial discretion in the enforcement
of equitable remedies and by public policies generally.
"ENVIRONMENTAL CLAIM" means any claim, complaint, action, suit,
proceeding, investigation or notice, including without limitation any proceeding
before any federal, state or local administrative body by any Person, agent or
agency of a federal, state or local government alleging potential liability
arising out of, based on or resulting from (i) the release or disposal into, or
the presence in the environment, including, without limitation, the indoor
environment, soil, subsurface, surface or groundwater, of any pollutant,
contaminant, waste, toxic substance, hazardous substance, petroleum or petroleum
derivative at any location, whether or not owned by the Seller, or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
-5-
<PAGE>
"ENVIRONMENTAL LAW" means any and all federal, state or local laws,
statues, rules, regulations, ordinances, orders, decrees or other binding
obligations (i) related to releases or threatened releases of any Hazardous
Material to soil, surface water, groundwater, air or any other environmental
media; (ii) governing the use, treatment, storage, disposal, transport, or
handling of Hazardous Material; or (iii) related to the protection of the
environment and human health. Such Environmental Laws shall include, but are not
limited to, RCRA, CERCLA, EPCRA, the Clean Air Act, the Clean Water Act, the
Safe Drinking Water Act, the Toxic Substances Control Act, the Endangered
Species Act, and any other federal, state or local laws, statutes, ordinances,
rules, orders, permit conditions, licenses or any terms or provisions thereof
related to clauses (i), (ii), or (iii) above.
"EQUITY INTERESTS" means any and all shares, interests or other
equivalent interests (however designated) in the equity of any Person, including
capital stock, partnership interests and membership interests, and including any
rights, options or warrants with respect thereto.
"EQUIVALENT SUBSCRIBERS" means, with respect to any System as of any
date, the sum of: (A) the number of Basic Subscribers served by such System as
of such date; and (B) the number of Basic Subscribers represented by the Bulk
Subscribers served by such System as of such date, which number shall be
calculated for each class of service provided by such System by dividing (1) the
monthly billings attributable to such System's Bulk Subscribers for each such
class of service provided by such System for the calendar month immediately
preceding the date on which such calculation is made, by (2) the full,
non-discounted monthly rate charged by such System for such class of service,
respectively (excluding pass-through charges for sales taxes, line-itemized
franchise fees, fees charged by the FCC and other similar line-itemized
charges). For purposes of the foregoing, monthly billings shall exclude billings
for A LA CARTE or digital service tiers and for premium services, pass-through
charges for sales taxes, line-itemized franchise fees, fees charged by the FCC
and other similar line-itemized charges, and nonrecurring charges or credits
which include those relating to installation, connection, relocation and
disconnection fees and miscellaneous rental charges for equipment such as remote
control devices and converters.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder, all as amended and in effect
from time to time.
"ERISA AFFILIATE" means a trade or business affiliated within the
meaning of Sections 414(b), (c) or (m) of the Code.
-6-
<PAGE>
"ESCROW AGENT" means State Street Bank and Trust Company, or any other
bank reasonably acceptable to Buyer and the Partners.
"EXCLUDED ASSETS" means the assets listed on EXHIBIT B.
"FCC" means the Federal Communications Commission, or any successor
agency thereof.
"FCC LICENSE" means any domestic satellite, business radio or other
License issued by the FCC.
"FCC REGULATIONS" means the rules, regulations and published policies
and decisions of the FCC promulgated by the FCC with respect to the Cable Act,
all as in effect from time to time.
"FRANCHISE" means any cable television franchise, related agreements,
ordinances, permits, instruments, resolutions or other authorizations issued or
granted to a Helicon Company by any Franchising Authority, including all
amendments thereto and renewals or modifications thereof authorizing the
construction or operation of a cable television system.
"FRANCHISE AREA" means the specific geographic area, comprising a
municipality or portion of a county or other political instrumentality, in which
a Helicon Company provides cable television service (A) pursuant to a Franchise,
or (B) where a Franchise is being renewed or is not required, pursuant to
applicable Legal Requirements.
"FRANCHISE/FCC CONSENT" means any Consent that is necessary or required
for the transfer of control to Charter to occur upon the consummation of the
transactions contemplated by this Agreement, from a Franchising Authority or the
FCC with respect to, respectively, the Franchises or the FCC Licenses.
"FRANCHISING AUTHORITIES" means all Governmental Authorities that have
issued or granted any Franchises relating to the operation of a System.
"GAAP" means generally accepted accounting principles as in effect in
the United States from time to time.
"GP INTEREST" means the general partnership interest in Helicon held by
BII.
"GOVERNMENTAL AUTHORITY" means any federal, state or local governmental
authority or instrumentality, including any court, tribunal or administrative or
regulatory agency, department, bureau, commission or board.
-7-
<PAGE>
"HAZARDOUS SUBSTANCE" means any substance, hazardous material, or other
substance or compound regulated under Environmental Laws, including, without
limitation, petroleum or any refined product or fraction or derivative thereof.
"HCC" means Helicon Capital Corp., a Delaware corporation.
"HELICON COMPANIES" means Helicon, THGLP, HPIAC, HCC and their
respective Subsidiaries as listed on SCHEDULE 3.3 hereto, each of which may be
referred to herein individually as a "Helicon Company."
"HELICON CORP." means Helicon Corp., a Delaware corporation, which is
one of the Limited Partners and provides certain management services pursuant to
the Management Agreements with respect to the operation of the Helicon
Companies.
"HELICON'S DISCLOSURE SCHEDULES" means the Disclosure Schedules
referred to in Sections 3, 4 and 6.1 of this Agreement and attached to this
Agreement.
"HELICON PARTIES" means Helicon, BII and the Limited Partners.
"HPIAC" means HPI Acquisition Co., LLC, a Delaware limited liability
company.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, and the regulations promulgated by the Federal Trade Commission with
respect thereto, all as amended and in effect from time to time.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money (including but not limited to the THGLP Note);
(b) all obligations issued, undertaken or assumed as the deferred purchase price
of property or services (other than trade payables 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 repossessions or sale of such property); (f) all
capitalized lease obligations; (g) all net obligations with respect to swap
Contracts; (h) all indebtedness referred to in clauses (a) through (g) 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 contract rights) owned by such Person, even though such
Person
-8-
<PAGE>
has not assumed or become liable for the payment of such Indebtedness; and (i)
all guaranty obligations in respect of indebtedness or obligations of another
Person that is not a Helicon Company of the kinds referred to in clauses (a)
through (g) above.
"INDEMNITY AGREEMENT" means the Indemnity Agreement among Buyer (as
agent for and on behalf of the Charter Parties), Helicon Corp. (as agent for and
on behalf of Sellers), and the Escrow Agent, substantially in the form of
EXHIBIT C.
"INDEMNITY FUND" means the amount of $10,000,000 being deposited by
Buyer with, or at Sellers' option, being provided by Sellers in the form of the
Letters of Credit delivered to and in favor of, the Escrow Agent pursuant to the
Indemnity Agreement in accordance with Sections 2.5 and 10.4 hereof and the
terms of the Indemnity Agreement, to provide a fund for the payment of any
indemnification to which any Charter Party shall be entitled under Section 10
hereof.
"INTANGIBLES" means all copyrights, trademarks, trade names, service
marks, service names, patents, permits, proprietary information, technical
information and data, machinery and equipment warranties, and other similar
intangible property rights and interests issued to or owned by any of the
Helicon Companies.
"LEGAL REQUIREMENTS" means applicable common law and any applicable
statute, permit, ordinance, code or other law, rule, regulation, order,
technical or other standard, requirement or procedure enacted, adopted,
promulgated or applied by any Governmental Authority, including any applicable,
order, judicial decision, decree or judgment which may have been handed down,
adopted or imposed by any Governmental Authority, all as in effect from time to
time.
"LEGAL RESTRICTIONS" means restrictions on transfer arising under
federal and state securities laws, the Cable Act, FCC Regulations, the
Franchises and the Licenses.
"LETTERS OF CREDIT" means the original irrevocable letters of credit in
the aggregate amount of $10,000,000 that may, at the Sellers' option, be
delivered to the Escrow Agent at Closing to fund the Indemnity Fund, which
letters shall permit partial drawings and be issued in customary commercial form
by financial institutions reasonably acceptable to Buyer.
"LICENSES" means all FCC Licenses, permits or other authorizations, and
all other licenses, authorizations and permits issued by any Governmental
Authority, that are held by a Helicon Company for the business or operation of
the Systems, excluding the Franchises.
-9-
<PAGE>
"LIMITED PARTNERS" shall mean all holders of the LP Interests,
PROVIDED, HOWEVER, that BII shall only be a Limited Partner upon the exercise of
the Warrants pursuant to Section 6.9.
"LOSS" or "LOSSES" means any claims, damages, losses, liabilities,
taxes, injuries to persons, property or natural resources, fines, penalties,
costs and expenses (excluding any and all consequential and incidental damages),
including without limitation, settlement costs and any reasonable legal,
accounting or other expenses incurred in connection with investigating or
defending any action or threatened actions.
"LP INTERESTS" means the limited partnership interests in Helicon held
by the Limited Partners, and by BII as contemplated by Section 6.9.
"MANAGEMENT AGREEMENTS" means the Agreement, dated April 8, 1996,
between Helicon and Helicon Corp., and the Agreement, dated November 2, 1993,
between THGLP and Helicon Corp.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, financial condition, results of operations, Assets or liabilities of
the Helicon Companies, taken as a whole, other than those resulting from changes
in economic conditions that are applicable to the cable industry generally on a
national, state, or regional basis, any changes in conditions (including Rate
Regulatory Matters, and other proposed or enacted federal or state governmental
legislation, regulations or decisions or policies formally adopted pursuant
thereto) that are applicable to the cable industry generally on a national,
state or regional basis, or any changes in competitive activities affecting the
Systems.
"MATERIAL CONTRACT" means any Contract (i) that is material to the
business, financial condition or results of operations of the Helicon Companies,
taken as a whole or (ii) that requires payments in the aggregate of more than
$50,000 per year.
"ORGANIZATIONAL DOCUMENTS" means the articles or certificate of
incorporation, bylaws, certificate of limited partnership, partnership
agreement, certificate of formation, limited liability company operating
agreement, and all other organizational documents of any Person other than an
individual.
"PARTNERS" means BII and the Limited Partners.
"PARTNERSHIP AGREEMENT" means the Agreement of Limited Partnership of
Helicon Partners I, L.P., dated as of April 8, 1996, among BII and the Limited
Partners.
-10-
<PAGE>
"PERMITTED ENCUMBRANCES" means each of the following: (A) liens for
current taxes and other governmental charges that are not yet due and payable;
(B) liens for taxes, assessments, governmental charges or levies, or claims the
non-payment of which is being diligently contested in good faith or liens
arising out of judgments or awards against the Helicon Companies with respect to
which at the time there shall be a prosecution for appeal or there shall be a
proceeding to review or the time limit has not yet run for such an appeal or
review with respect to such judgment or award; PROVIDED that with respect to the
foregoing liens in this clause (B) adequate reserves shall have been set aside
on the Helicon Companies' books, and no foreclosure, distraint, sale or similar
proceedings shall have been commenced with respect thereto that remain unstayed
for a period of 60 days after their commencement; (C) liens of carriers,
warehousemen, mechanics, laborers, and materialmen and other similar statutory
liens incurred in the ordinary course of business for sums not yet due or being
diligently contested in good faith, and for which adequate reserves have been
set aside on the Helicon Companies' books; (D) liens incurred in the ordinary
course of business in connection with worker's compensation and unemployment
insurance or similar laws; (E) statutory landlords' liens; (F) with respect to
the Real Property, leases, easements, rights to access, rights-of-way, mineral
rights or other similar reservations and restrictions which are either of record
or set forth in Schedule 3.9 or in the deeds or leases to such Real Property or
which, either individually or in the aggregate, do not materially and adversely
affect or interfere with the ownership or use of any such Real Property in the
business and operations of the Systems as presently conducted; and (G) any
Encumbrances relating to the Debt Obligations or as described in Schedule 3.9.
"PERSON" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, Governmental Authority or other entity or organization.
"PREFERRED INTERESTS" means all preferred partnership interests in
Helicon, including the Preferred Partnership Interests, the Additional Preferred
Interests, any Pari Passu Preferred Interests and any Senior Equity Interests,
as such terms are defined in the Partnership Agreement.
"PREFERRED LLC INTEREST" means the preferred interest in GP Buyer to be
issued to BII pursuant to the BII Contribution and whose terms are set forth in
the Amended LLC Agreement.
"PURCHASED INTERESTS" means the LP Interests and the Preferred
Interests.
"RATE REGULATORY MATTER" means, with respect to any cable television
system, any matter or any effect on such system or the business or operations
thereof, arising out of or related to the Cable Act, any FCC Regulations
heretofore adopted thereunder, or
-11-
<PAGE>
any other present or future Legal Requirement dealing with, limiting or
affecting the rates which can be charged by cable television systems to their
customers (whether for programming, equipment, installation, service or
otherwise).
"REAL PROPERTY" means all of the fee and leasehold estates and, to the
extent of the interest, title, and rights of the Helicon Companies in the
following: buildings and other improvements thereon, easements, licenses, rights
to access, rights-of-way, and other real property interests that are owned or
held by any of the Helicon Companies and used or held for use in the business or
operations of the Systems, plus such additions thereto and less such deletions
therefrom arising between the date hereof and the Closing Date in accordance
with this Agreement.
"REQUIRED CONSENTS" means the Consents that are designated by the
symbol "(R)(C)" on Schedules 3.4 and 4.2 .
"SEC" means the U.S. Securities and Exchange Commission, or any
successor agency thereto.
"SECURITIES ACT" means the Securities Act of 1933, and the rules and
regulations of the SEC promulgated thereunder, as amended, all as in effect from
time to time.
"SELLERS" means the Partners with respect to the sale of their LP
Interests, the Limited Partners with respect to the sale of their Preferred
Interests, and solely with respect to the representations and warranties set
forth in Section 4 and the indemnification provisions set forth in Section 10,
BII with respect to the BII Assets.
"SUBORDINATED HOLDERS" means Sandler Mezzanine Partners, L.P. Sandler
Mezzanine T-E Partners, L.P., Sandler Mezzanine Foreign Partners, L.P.,
SunAmerica, Inc., Permal Private Equity Holdings, L.P., Private Equity Holdings,
L.P. and Union Venture Corporation.
"SUBSCRIBER" means any Person to whom any Helicon Company provides
cable television programming or other service through the Systems into a single
household, a multiple dwelling unit, a hotel or motel unit, a commercial
business or any other real property improvement.
"SUBSIDIARY" means, with respect to any Person, any other Person of
which the outstanding voting Equity Interests sufficient to elect at least a
majority of its board of directors or other governing body (or, if there are no
such voting interests, of which 50% or more of the Equity Interests) is owned
(beneficially or otherwise) directly or indirectly by such first Person or any
Subsidiary thereof.
-12-
<PAGE>
"SYSTEMS" means the cable television systems owned and operated by any
Helicon Company or any combination of any of them, each of which may be referred
to herein individually as a "System."
"TANGIBLE PERSONAL PROPERTY" means all of the equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
converters, spare parts and other tangible personal property which are owned or
leased by any of the Helicon Companies and used or held for use in the conduct
of the business or operations of the Systems, plus such additions thereto and
less such deletions therefrom arising between the date hereof and the Closing
Date in accordance with this Agreement.
"TAX" means any and all taxes, fees, levies, duties, tariffs, imposts
and other charges of any kind imposed by any government or taxing authority,
including without limitations: federal, state, local, or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding, or other
tax or governmental assessment, together with any interest, additions, or
penalties with respect thereto and any interest in respect of such additions or
penalties.
"TAX RETURN" means any tax return, declaration of estimated tax, tax
report or other tax statement, or any other similar filing, including any
schedule or attachment thereto, and including any amendment thereof, required to
be submitted to any Governmental Authority with respect to any Tax.
"THGLP" means The Helicon Group, L.P., a Delaware limited partnership.
"THGLP NOTE" means the promissory note dated November 2, 1993, executed
by THGLP and held by Baum, in the original principal amount of $5,000,000.
"TRANSACTION DOCUMENTS" means this Agreement, the Indemnity Agreement,
the Amended LLC Agreement, the Put Agreement, the Option Agreements and the
other documents, agreements, certificates and other instruments to be executed,
delivered and performed by the parties in connection with the transactions
contemplated by this Agreement.
"TRANSFERABLE FRANCHISE AREA" means any Franchise Area with respect to
which (A) any Consent necessary under a Franchise in connection with the
consummation of the transactions contemplated by this Agreement shall have been
obtained or shall have been deemed obtained by operation of law in accordance
with the provisions of the Cable Act, or (B) no Consent is necessary under a
Franchise in connection with the consummation of the transactions contemplated
by this Agreement.
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"UPSET DATE" means July 31, 1999; PROVIDED, HOWEVER, that (A) in the
event that the Closing shall not have occurred on or prior to July 31, 1999 due
to a "governmental delay," the Upset Date shall be extended to August 30, 1999,
and (B) thereafter, in the event that the Closing shall not have occurred on or
prior to August 30, 1999 due to a "governmental delay," the Upset Date shall be
extended to September 29, 1999; with "governmental delay" meaning the failure,
without any breach by any of the parties hereto of their obligations hereunder,
to receive from a Governmental Authority any consents or authorizations which
are required as a condition of Closing. In the event that the Closing shall not
have occurred on or prior to September 29, 1999 due to a "governmental delay,"
Sellers shall have the option, exercisable by written notice to the Charter
Parties no later than the close of business on such date, to extend the Upset
Date to November 30, 1999; provided, that, as a condition to the exercise of
such option, Helicon shall have exercised commercially reasonable efforts to
obtain such consents and authorizations prior to September 29, 1999; and
PROVIDED, FURTHER, that, Sellers shall continue to exercise commercially
reasonable efforts to obtain such consents and authorizations as soon after
September 29, 1999 as is practicable.
"WARRANTS" means the Warrants issued as of April 8, 1996, to the
Subordinated Holders by Helicon entitling them to purchase an aggregate of
2,419.1 units of Class B Common LP Interests in Helicon.
1.2 TERMS DEFINED ELSEWHERE IN THIS AGREEMENT. For purposes of this
Agreement, and in addition to the definitions set forth in the first paragraph
hereof and in Section 1.1, the following terms have the meanings set forth in
the sections indicated:
<TABLE>
<CAPTION>
----------------------------------------------------------
Term Section
---- -------
----------------------------------------------------------
<S> <C>
Adjustment Assets Section 2.4(b)(1)
----------------------------------------------------------
Adjustment Liabilities Section 2.4(b)(2)
----------------------------------------------------------
Allocation Agreement Section 6.10(d)(ii)
----------------------------------------------------------
Antitrust Division Section 6.5
----------------------------------------------------------
BII Contribution Section 2.1
----------------------------------------------------------
Cash Consideration Section 2.3
----------------------------------------------------------
Charter Agent Section 11.7(b)
----------------------------------------------------------
Charter Financial Statements Section 5.6
----------------------------------------------------------
Claimant Section 10.6(a)
----------------------------------------------------------
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----------------------------------------------------------
Term Section
---- -------
----------------------------------------------------------
Closing Equivalent Subscribers Section 2.4(a)
----------------------------------------------------------
Closing Subscriber Data Section 2.5
----------------------------------------------------------
Closing Net Liabilities Section 2.4(b)
----------------------------------------------------------
Confidential Information Section 6.2(a)
----------------------------------------------------------
Debt Obligations Section 2.4(b)(3)
----------------------------------------------------------
Estimated Cash Consideration Section 2.5
----------------------------------------------------------
Fee Properties Section 3.9
----------------------------------------------------------
Final Closing Statement Section 2.6(a)
----------------------------------------------------------
Financial Statements Section 3.5
----------------------------------------------------------
FTC Section 6.5
----------------------------------------------------------
Indemnity Fund Section 10.4
----------------------------------------------------------
Indemnifying Party Section 10.6(a)
----------------------------------------------------------
Inventory Section 3.19
----------------------------------------------------------
Investment Person Section 3.3(a)
----------------------------------------------------------
IRS Section 3.13(f)(viii)
----------------------------------------------------------
Leased Properties Section 3.9
----------------------------------------------------------
Leases Section 3.9
----------------------------------------------------------
Option Agreements Section 6.16
----------------------------------------------------------
Partnership Assets Section 6.10(d)(1)
----------------------------------------------------------
Preliminary Closing Statement Section 2.5
----------------------------------------------------------
Purchase Consideration Section 6.10(d)(2)
----------------------------------------------------------
Put Agreement Section 6.16
----------------------------------------------------------
Sellers' Agent Section 11.7(a)
----------------------------------------------------------
Tax Partnership Section 3.12(f)
----------------------------------------------------------
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----------------------------------------------------------
Term Section
---- -------
----------------------------------------------------------
THGLP Note Purchase Price Section 2.2(c)
----------------------------------------------------------
Welfare Plan Section 3.13(d)
----------------------------------------------------------
Year 2000 Plan Section 6.21
----------------------------------------------------------
Year 2000 Matters Section 3.21
----------------------------------------------------------
</TABLE>
1.3 RULES OF CONSTRUCTION. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender and any other number as the context requires. As used
in this Agreement, the word "including" is not limiting, and the word "or" is
not exclusive. Except as specifically otherwise provided in this Agreement in a
particular instance, a reference to a Section is a reference to a Section of
this Agreement, a reference to an Exhibit is a reference to an Exhibit to this
Agreement, a reference to a Schedule is a reference to a Schedule to this
Agreement, and the terms "hereof," "herein," and other like terms refer to this
Agreement as a whole, including the Disclosure Schedules and the Exhibits to
this Agreement, and not solely to any particular part of this Agreement. The
descriptive headings in this Agreement are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
SECTION 2: CONTRIBUTION OF BII ASSETS; SALE AND PURCHASE OF PURCHASED INTERESTS;
CASH CONSIDERATION
2.1 CONTRIBUTION. Subject to the terms and conditions of this
Agreement, BII hereby agrees to contribute, transfer, assign and deliver to GP
Buyer at the Closing, and GP Buyer hereby agrees to acquire and assume at the
Closing, all of BII's right, title and interests in, to and under the BII
Assets, free and clear of all Encumbrances, subject to Legal Restrictions, in
consideration of GP Buyer's issuance and transfer to BII of the Preferred LLC
Interest (the "BII CONTRIBUTION").
2.2 AGREEMENT TO SELL AND BUY PURCHASED INTERESTS. Subject to the terms
and conditions set forth in this Agreement, each Seller hereby agrees to sell,
transfer, assign and deliver to Buyer at the Closing, and Buyer hereby agrees to
purchase and assume at the Closing, the Purchased Interests held by such Seller,
free and clear of all Encumbrances, subject to Legal Restrictions as follows:
(a) Each of the Partners shall sell, transfer and convey to
Buyer such Partner's LP Interest, and Buyer shall buy such LP Interest for such
portion of the Cash
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Consideration as shall be determined in accordance with the provisions of
Sections 2.3 and 2.5 hereof.
(b) Each of the Limited Partners shall sell, transfer and
convey to Buyer such Limited Partner's Preferred Interest, and Buyer shall buy
such Preferred Interest for such portion of the Cash Consideration as shall be
determined in accordance with the provisions of Sections 2.3 and 2.5 hereof.
(c) In addition thereto, Baum shall sell, transfer and convey
to Buyer the THGLP Note, and Buyer shall buy the THGLP Note for a purchase price
equaling the sum, as of the Closing Date, of the principal outstanding under the
THGLP Note, plus all accrued and unpaid interest thereon (the "THGLP NOTE
PURCHASE PRICE").
2.3 CASH CONSIDERATION FOR LP INTERESTS AND PREFERRED INTERESTS. Buyer
shall pay and deliver to the Partners, as consideration for the sale of the LP
Interests and the Preferred Interests, an aggregate cash payment equal to the
difference of (A) Five Hundred Twenty-Eight Million Six Hundred Twenty-Eight
Thousand Two Hundred Fifty Dollars ($528,628,250) less (B) the amount of the
THGLP Note Purchase Price, as adjusted in accordance with Sections 2.4, 2.5 and
2.6 below (the "CASH CONSIDERATION"). The Cash Consideration (including any
adjustments thereto) payable with respect to the LP Interests and Preferred
Interests shall be allocated among the Partners, as determined by the Partners
and specified and noticed to Buyer on the Preliminary Closing Statement (as may
be modified by the Limited Partners prior to and after Closing to reflect
adjustments thereto agreed to among the Partners). Each Partner shall agree,
with Buyer's acknowledgment, to such allocation in writing at or prior to the
Closing, and such notice and written acknowledgment shall control the allocation
of the Estimated Cash Consideration among the Limited Partners at Closing.
2.4 CASH CONSIDERATION ADJUSTMENTS.
(a) CLOSING EQUIVALENT SUBSCRIBERS. The Cash Consideration
shall be decreased by the number, if any, by which the number of Closing
Equivalent Subscribers is less than 170,300 multiplied by $3,230. For purposes
of this Agreement, "CLOSING EQUIVALENT SUBSCRIBERS" means the total number of
Equivalent Subscribers for all of the Systems as of the Closing Date.
(b) CLOSING NET LIABILITIES. The Cash Consideration shall be
decreased by the amount of the Closing Net Liabilities. For purposes of this
Agreement, "CLOSING NET LIABILITIES" means Adjustment Liabilities as of the
Adjustment Time, DECREASED BY Adjustment Assets as of the Adjustment Time.
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(1) Subject to the other provisions of this Section
2.4(b), "ADJUSTMENT ASSETS" means, as of any date, in each case computed for the
Helicon Companies on a consolidated basis and without duplication in accordance
with GAAP, the sum of: (A) cash and cash equivalents; (B) prepaid expenses and
deposits; (C) Accounts Receivable and other receivables; (D) Tax refunds due to
any of the Helicon Companies for any Tax period ending prior to the Adjustment
Time; and (E) any other current assets which are reflected in the Financial
Statements or, pursuant to GAAP, should have been but were not reflected in the
Financial Statements. For purposes of the foregoing, Accounts Receivable (net of
any allowance for doubtful accounts) shall be valued at 100% of all Subscriber
receivables that are less than one month past due, 99% of all Subscriber
receivables that are between one and two months past due, 60% of all Subscriber
receivables between two and three months past due, and 95% of all advertising
and other receivables that are less than three months past due, in each case
determined from the later of the last day of the period to which any outstanding
bill relates, or the date of billing.
(2) Subject to the other provisions of this Section
2.4(b), "ADJUSTMENT LIABILITIES" means, as of any date, in each case computed
for the Helicon Companies on a consolidated basis and without duplication in
accordance with GAAP, the sum of: (A) accounts payable; (B) expenses of the
Helicon Companies relating to the consummation of the transactions contemplated
by this Agreement, including fees and expenses of attorneys, accountants,
financial advisors and broker fees, if such fees and expenses are paid after the
Closing Date, but excluding any expenses that Buyer agrees to pay or is
obligated to pay pursuant to this Agreement; (C) accrued and unpaid expenses;
(D) Subscriber prepayments and deposits; (E) Tax payments due and payable by any
of the Helicon Companies to any Governmental Authority for all Tax periods
ending on or prior to the Adjustment Time; (F) all obligations for any
management fees (deferred or otherwise) owed by the Helicon Companies to Helicon
Corp. under the Management Agreements; (G) the amount of the Debt Obligations as
of the Adjustment Time; (H) accrued and unpaid vacation pay and sick leave
related to any and all persons employed by any of the Helicon Companies; (I)
one-half of the Taxes and fees described in Section 6.10(e); and (J) any other
current liabilities which are reflected in the Financial Statements or, pursuant
to GAAP, should have been but were not reflected in the Financial Statements.
(3) "DEBT OBLIGATIONS" means, with respect to the
Helicon Companies on a consolidated basis without duplication, Indebtedness of
the Helicon Companies, including, but not limited to, all liabilities of the
Helicon Companies (as defined and determined in accordance with GAAP) under the
debt instruments listed in SCHEDULE 3.6; PROVIDED, HOWEVER, that, neither Debt
Obligations nor Adjustment Liabilities shall include: (i) any amounts payable to
the Subordinated Holders with respect to the Warrants; (ii) any amounts in
respect of performance bonds issued on
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behalf of any of the Helicon Companies to secure its performance in the ordinary
course of business; (iii) any amounts in the nature of prepayment penalties or
other fees or expenses that are required to be paid under the terms of such debt
instruments with respect to the assumption of the Debt Obligations, or the
refinancing or satisfaction thereof, or the change of control of the Helicon
Companies; (iv) any amounts payable with respect to leases of equipment or
vehicles; and (v) any amounts payable under mortgages securing local financings
as listed in Item 9 on SCHEDULE 3.6, and (vi) the THGLP Note Purchase Price.
(4) Revenues and expenses shall be treated as prepaid
or accrued so as to reflect the principle that revenues and expenses
attributable to the period prior to the Adjustment Time shall be for the account
of the Partners, and revenues and expenses attributable to the period after the
Adjustment Time shall be for the account of Buyer.
(5) Deferred income Taxes of any Helicon Company
shall not be treated as Adjustment Assets or Adjustment Liabilities.
(c) CLOSING DATE REIMBURSEMENTS. The Cash Consideration shall
be increased by the amounts, if any, provided for in Sections 6.1(c)(3), and
decreased by the amount, if any, provided for in Section 6.1(c)(4).
2.5 PAYMENTS AT CLOSING. Helicon shall arrange for CableData, Inc., to
complete a print-out of Subscriber data (the "CLOSING SUBSCRIBER DATA") as of a
date on or about fifteen (15) days prior to the date scheduled for the Closing,
a copy of which print-out will be promptly provided by Helicon to Charter. No
later than ten (10) days prior to the date scheduled for the Closing, Helicon
shall prepare and deliver to Buyer a written report (the "PRELIMINARY CLOSING
STATEMENT") setting forth Helicon's estimates of Closing Net Liabilities,
Closing Equivalent Subscribers, and the Cash Consideration (including the
portion thereof payable to each Partner) determined in accordance with Sections
2.3, 2.4 and this Section 2.5. The Preliminary Closing Statement shall be
prepared by Helicon in good faith in accordance with GAAP and shall be certified
by Helicon to be its good faith estimate of the Closing Net Liabilities, Closing
Equivalent Subscribers and Cash Consideration as of the date thereof. Helicon
shall make available to Buyer such information as Buyer shall reasonably request
relating to the matters set forth in the Preliminary Closing Statement. Buyer
shall notify Helicon in writing in the event Buyer disputes any amount set forth
on the Preliminary Closing Statement. Buyer and Helicon shall, in good faith,
use all reasonable efforts to resolve any dispute with respect to any amount set
forth on the Preliminary Closing Statement prior to the date scheduled for the
Closing. At Closing, in addition to the payment of the THGLP Note Purchase Price
to Baum, Buyer shall pay (a) unless the Sellers shall have elected to deliver
the Letters of Credit, to the Escrow Agent the amount of the Indemnity Fund, to
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be held by the Escrow Agent in escrow on behalf of Sellers in accordance with
the terms of the Indemnity Agreement, and (b) to the Partners (allocated to them
as they shall have agreed pursuant to Section 2.3), the portion of the Cash
Consideration, as adjusted on the basis of the Preliminary Closing Statement (as
adjusted by Helicon and Buyer prior to Closing) less the aggregate amount, if
any, paid to the Escrow Agent under clause (a), with the sum of the amounts paid
by Buyer under clauses (a) and (b) being referred to as the "ESTIMATED CASH
CONSIDERATION".
2.6 POST-CLOSING PAYMENT OF CASH CONSIDERATION ADJUSTMENTS.
(a) FINAL CLOSING STATEMENT. Within ninety (90) days after the
Closing Date, Buyer shall prepare and deliver to Helicon Corp. a written report
(the "FINAL CLOSING STATEMENT") setting forth Buyer's final estimates of Closing
Net Liabilities and Closing Equivalent Subscribers, determined in accordance
with Section 2.4. The Final Closing Statement shall be prepared by Buyer in good
faith in accordance with GAAP and shall be certified by Buyer to be, as of the
date prepared, its good faith estimate of the Closing Net Liabilities, Closing
Equivalent Subscribers and Cash Consideration. Buyer shall allow Helicon Corp.
and its agents reasonable access after the Closing Date to make copies of the
books, records and accounts of the Helicon Companies and make available to
Helicon Corp. such information as Helicon Corp. reasonably requests to allow
Helicon Corp. to examine the accuracy of the Final Closing Statement. If Buyer
fails to deliver the Final Closing Statement to Helicon Corp. within ninety (90)
days of the Closing, Buyer shall be deemed to have waived its right to payment
of any Cash Consideration adjustment pursuant to Section 2.6(b)(1)(B). Within
thirty (30) days after the date that the Final Closing Statement is delivered by
Buyer to Helicon Corp., Helicon Corp. shall complete its examination thereof and
may deliver to Buyer a written report setting forth any proposed adjustments to
any amounts set forth in the Final Closing Statement. If Helicon Corp. notifies
Buyer of its acceptance of the amounts set forth in the Final Closing Statement,
or if Helicon Corp. fails to deliver its report of any proposed adjustments
within the thirty (30) day period specified in the preceding sentence, the
amounts set forth in the Final Closing Statement shall be conclusive, final, and
binding on the parties as of the last day of such thirty (30) day period. Buyer
and Helicon Corp. shall, in good faith, use all reasonable efforts to resolve
any dispute involving the amounts set forth in the Final Closing Statement. If
Helicon Corp. and Buyer fail to agree on any amount set forth in the Final
Closing Statement within fifteen (15) days after Buyer receives Helicon Corp.'s
report pursuant to this Section 2.6, then Helicon Corp. will retain Deloitte &
Touche LLP to make the final determination, under the terms of this Agreement,
of any amounts under dispute. Deloitte & Touche LLP shall endeavor to resolve
the dispute as promptly as practicable and such firm's resolution of the dispute
shall be final and binding on the parties, and a judgment may be entered thereon
in any court of competent jurisdiction. The costs and expenses of Deloitte &
Touche LLP and
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its services rendered pursuant to this Section 2.6 shall be borne one-half by
Buyer and one-half by Sellers.
(b) PAYMENT OF CASH CONSIDERATION ADJUSTMENTS.
(1) After the amount of the Cash Consideration is
finally determined pursuant to Section 2.6(a), payments shall be made as
follows:
(A) If the amount of the Cash Consideration
as finally determined pursuant to Section 2.6(a) exceeds the amount of the
Estimated Cash Consideration, then within three (3) business days after the date
the amount of the Cash Consideration is finally determined, Buyer shall pay the
amount of such excess to the Limited Partners, by wire or accounts transfer of
immediately available funds to an account or accounts designated by the Limited
Partners by written notice to Buyer. Such payment shall be made to the Limited
Partners pro rata in the proportions set forth on the notice and acknowledgment
referred to in Section 2.3.
(B) If the amount of the Cash Consideration
as finally determined pursuant to Section 2.6(a) is less than the amount of the
Estimated Cash Consideration, then within three (3) business days after the date
the amount of the Cash Consideration is finally determined, the Limited Partners
shall pay to Buyer the amount of such deficiency, by wire or accounts transfer
of immediately available funds to an account or accounts designated by Buyer by
written notice to the Limited Partners. In the event the Limited Partners do not
fulfill their obligations under this Section 2.6(b)(i)(B), Buyer shall be
entitled to receive the amount of such deficiency from the Indemnity Fund.
(2) Any amount which becomes payable pursuant to this
Section 2.6 will constitute an adjustment to the Cash Consideration for all
purposes.
SECTION 3: REPRESENTATIONS AND WARRANTIES OF THE HELICON COMPANIES
Subject to any provisions of this Agreement limiting, qualifying or
excluding any of the representations or warranties made herein, and to the
disclosures set forth in the Helicon Disclosure Schedules, as such schedules are
referenced herein, Helicon represents and warrants to the Charter Parties as set
forth in this Section 3.
3.1 ORGANIZATION AND AUTHORITY OF HELICON. Helicon is a limited
partnership duly formed, validly existing, and in good standing under the laws
of the State of Delaware. Helicon has the requisite partnership power and
authority to own, lease and operate its properties, to carry on its business in
the places where such properties are now
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owned, leased or operated and in the manner in which such business is now
conducted, and to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party according to their respective
terms.
3.2 AUTHORIZATION AND BINDING OBLIGATION. The execution, delivery and
performance by Helicon of this Agreement and the other Transaction Documents to
which Helicon is a party have been duly authorized by all necessary partnership
action on the part of Helicon. This Agreement and the other Transaction
Documents to which Helicon is or will become a party have been duly executed and
delivered by Helicon (or, in the case of Transaction Documents to be executed
and delivered at Closing, when executed and delivered will be duly executed and
delivered) and constitute (or, in the case of Transaction Documents to be
executed and delivered at Closing, when executed and delivered will constitute)
the legal, valid, and binding obligation of Helicon enforceable against Helicon
in accordance with their terms, except as the enforceability of this Agreement
and such other Transaction Documents may be limited by Enforceability
Exceptions.
3.3 ORGANIZATION AND OWNERSHIP OF HELICON COMPANIES.
(a) SCHEDULE 3.3 sets forth the name of each Helicon Company,
including the jurisdiction of incorporation or formation (as the case may be) of
each. Each Helicon Company that is a corporation is a corporation duly
incorporated, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each Helicon Company that is a limited
partnership is a limited partnership duly formed, validly existing, and in good
standing under the laws of the jurisdiction of its formation. Each Helicon
Company that is a limited liability company is a limited liability company duly
formed, validly existing, and in good standing under the laws of the
jurisdiction of its formation. Each Helicon Company is duly qualified and in
good standing as a foreign corporation, limited partnership, or limited
liability company, as the case may be, in each jurisdiction listed in SCHEDULE
3.3, which are all jurisdictions in which such qualification is required, except
as described in SCHEDULE 3.3. Except as disclosed in SCHEDULE 3.3, no Helicon
Company, directly or indirectly, owns, of record or beneficially, any Equity
Interest in any Person (each such Person described in SCHEDULE 3.3, an
"INVESTMENT PERSON") or has the right or obligation to acquire, any Equity
Interests in any Person. Except as disclosed in SCHEDULE 3.3, the Helicon
Company that owns the Equity Interests of each such Investment Person owns such
Equity Interests free and clear of all Encumbrances subject to Legal
Restrictions.
(b) SCHEDULE 3.3 sets forth all of the authorized, issued and
outstanding Equity Interests of Helicon and each other Helicon Company and the
record and beneficial owner of each issued and outstanding Equity Interest of
each of them. All of such issued and outstanding Equity Interests of the Helicon
Companies have been duly authorized, validly issued, fully paid and, as
pertaining to capital stock interests, non-
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assessable, and have not been issued in violation of any federal or state
securities laws. Except as set forth in SCHEDULE 3.3, the owner of the Equity
Interests of each Helicon Company owns such Equity Interests free and clear of
all Encumbrances subject to Legal Restrictions (except that no representation is
made in this Section 3 as to the LP Interests and Preferred Interests held by
the Partners or the BII Assets). Except as disclosed in SCHEDULE 3.3, there are
no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which any Helicon
Company is a party or by which any of them is bound obligating such Helicon
Company to issue, deliver or sell, or cause to be issued, delivered or sold, any
additional Equity Interests of such Helicon Company or obligating such Helicon
Company to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. Helicon
has delivered to Buyer complete and correct copies of the Organizational
Documents of each Helicon Company as in effect on the date hereof.
3.4 ABSENCE OF CONFLICTING AGREEMENTS; CONSENTS. Except for the
expiration or termination of any applicable waiting period under the HSR Act, or
as set forth in SCHEDULE 3.4 or SCHEDULE 3.8, the execution, delivery and
performance by Helicon of this Agreement and the other Transaction Documents to
which Helicon is a party: (a) do not require the consent of, notice or
declaration to, or filing with any Governmental Authority or any other Person
under any Franchise, License (including any FCC License), or Material Contract;
(b) will not conflict with any provision of the Organizational Documents of
Helicon or any other Helicon Company, each as currently in effect; (c) assuming
receipt of all Consents set forth on SCHEDULE 3.4, will not conflict with,
result in a breach of, or constitute a default under any Legal Requirement to
which Helicon or any other Helicon Company is bound; (d) assuming receipt of all
Consents set forth on SCHEDULE 3.4, will not conflict with, constitute grounds
for termination of, result in a material breach of, constitute a material
default under, or accelerate or permit the acceleration of any performance
required by the terms of any Franchise, License (including any FCC License), or
Material Contract; and (e) assuming receipt of the Consents set forth on
SCHEDULE 3.4, will not result in the creation of any Encumbrance upon the Assets
or the Purchased Interests. Notwithstanding the foregoing, Helicon makes no
representation or warranty regarding any of the foregoing that may result from
the specific legal or regulatory status of any of the Charter Parties or as a
result of any other facts that specifically relate to the business or activities
in which any of the Charter Parties is or proposes to be engaged other than the
cable television business.
3.5 FINANCIAL STATEMENTS. Helicon has furnished Buyer with true and
complete copies of the audited financial statements (including the notes and
schedules thereto) and unaudited financial statements listed in SCHEDULE 3.5
(collectively, the "FINANCIAL STATEMENTS"), and such Financial Statements are by
this reference incorporated into and deemed a part of Helicon's Disclosure
Schedules. Except as disclosed in SCHEDULE 3.5
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and except, in the case of the unaudited Financial Statements, for the omission
of footnotes and changes resulting from customary and recurring year-end
adjustments, (which will be in accordance with past practice and are not
expected to be material) the Financial Statements: (1) have been prepared from
the books and records of the Helicon Companies to which they relate, with no
material difference between such Financial Statements and the financial records
maintained, and the accounting methods applied, by the Helicon Companies for tax
purposes; (2) have been prepared in accordance with GAAP consistently applied
and maintained throughout the periods indicated (except as indicated in the
notes thereto); and (3) present fairly in all material respects the financial
condition of the Helicon Companies to which they relate as at their respective
dates and the results of operations and with respect to the audited Financial
Statements, the cash flows, for the periods then ended.
3.6 DEBT OBLIGATIONS; ABSENCE OF UNDISCLOSED LIABILITIES.
(a) Except as provided in or arising pursuant to the loan or
credit agreements, notes, bonds, indentures and other agreements and instruments
listed in SCHEDULE 3.6, or under certain of the leases for Tangible Personal
Property listed in SCHEDULE 3.9, the Helicon Companies have no Indebtedness.
(b) None of the Helicon Companies has any Indebtedness,
liability, or obligation of a type required by GAAP to be reflected on a balance
sheet that is not reflected or reserved against in the latest balance sheet of
such Helicon Company included in the Financial Statements, other than
Indebtedness, liabilities and obligations that were incurred in the ordinary
course of business after the date of the latest balance sheet of such Helicon
Company, which would not, in the aggregate, reasonably be expected to be
material.
3.7 ABSENCE OF CERTAIN CHANGES. Between September 30, 1998 and the date
of this Agreement, except as disclosed in SCHEDULE 3.7 and except for matters
occurring after the date hereof that are permitted by the provisions of this
Agreement or consented to by the Charter Parties, no Helicon Company has:
(a) made any sale, assignment, lease, or other transfer of
assets other than in the ordinary course of business with suitable replacements
being obtained therefor (unless such assets were unnecessary or obsolete);
(b) issued any note, bond or other debt security, or created,
incurred, assumed, or guaranteed any Indebtedness;
(c) made or promised any material increase in the salary or
other compensation payable or to become payable to any executive officer or
other employee of
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any Helicon Company other than in the ordinary course of business or as
contemplated under any employment arrangement currently in effect;
(d) experienced any occurrences, or been involved in any
transactions which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(e) entered into any transaction, other than transactions
entered into in the ordinary course of business, which would be required to be
presented in the audited financial statements of the Helicon Companies and the
notes thereto prepared in conformity with GAAP, applied in a manner consistent
with the past practices of the Helicon Companies relating to the preparation of
audited financial statements of the Helicon Companies;
(f) amended or terminated any Material Contract, or any
material License, agreement or understanding to which any Helicon Company is a
party, except in the ordinary course of business;
(g) waived or released any material right or claim relating to
any Helicon Company or the Systems except in the ordinary course of business;
PROVIDED, HOWEVER, that all material rights or claims related to any Helicon
Company or the Systems waived or released between December 31, 1998 and the date
of this Agreement are set forth on SCHEDULE 3.7; PROVIDED FURTHER, HOWEVER, that
for purposes of the indemnification provisions set forth in Section 10,
"material" shall not be "read out" of the previous proviso; or
(h) entered into an agreement to do any of the things
described in the preceding clauses (a) through (g).
3.8 FRANCHISES, LICENSES, MATERIAL CONTRACTS. SCHEDULE 3.8 contains a
list of the Franchises (including the Franchising Authority which granted each
Franchise, the stated expiration date of each Franchise, and the System to which
the Franchise applies), material FCC Licenses and other material Licenses and
Material Contracts in effect on the date hereof, each pending application for a
Franchise, material License or Material Contract, and a list of any System or
portion thereof owned or operated by the Helicon Companies which does not
require a Franchise authorizing the installation, construction, development,
ownership or operation of the same; which list is true, correct and complete in
all material respects. Except as disclosed in SCHEDULE 3.8, each Helicon Company
has obtained and possesses and is the legal holder of all material Franchises
and material Licenses (including FCC Licenses) which are necessary or required
to entitle it to install, construct, develop, own or lease, operate and use its
assets and properties and to carry on and conduct its business and operations as
presently conducted. Helicon has delivered to
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Buyer true and complete copies of all Franchises, FCC Licenses, other material
Licenses and Material Contracts. Except as disclosed in SCHEDULE 3.8, the
Franchises, FCC Licenses, other material Licenses and Material Contracts are in
full force and effect (subject to expiration at the end of their current term as
disclosed on SCHEDULE 3.8), and are valid, binding and enforceable in accordance
with their terms, except to the extent such enforceability may be affected by
Enforceability Exceptions. Except as disclosed in SCHEDULE 3.8, the Helicon
Companies are in material compliance with the terms of the Franchises (including
the payment of any fees due thereunder), FCC Licenses, other material Licenses
and Material Contracts, and as of the date of this Agreement none of the Helicon
Companies has received any written notice from a Franchising Authority, the FCC,
or a consultant representing a Franchising Authority, any state cable regulatory
authority or the FCC to the effect that any of the Helicon Companies are not
currently in material compliance with the terms of the Franchise granted by any
Franchising Authority or with an FCC License. Except as set forth in SCHEDULE
3.8, a valid request for renewal has been timely filed in accordance with
Section 626(a) of the Cable Act with the proper Franchising Authority with
respect to each Franchise that has expired prior to, or will expire within,
thirty (30) months after the date of this Agreement.
3.9 TITLE TO AND CONDITION OF REAL PROPERTY AND TANGIBLE PERSONAL
PROPERTY. SCHEDULE 3.9 lists all (i) material Real Property owned in fee by any
of the Helicon Companies as of the date of this Agreement ("FEE PROPERTIES") and
describes the current use thereof; (ii) material Real Property leasehold
interests held by any of the Helicon Companies, as lessee, as of the date of
this Agreement (the "LEASED PROPERTIES") and describes the current use thereof
and describes the applicable leases and any amendments or modifications thereof
(collectively, the "LEASES") pursuant to which the Helicon Companies lease such
Leased Properties; and (iii) material Leases under which any Helicon Company is
a lessor affecting such Fee Properties, of any such Helicon Company. Helicon has
delivered to Buyer a true and correct copy of (i) each deed pursuant to which
any of the Helicon Companies acquired any material Fee Property, together with
any survey and title insurance policies issued to such Helicon Company and in
its possession, (ii) each lease under which any Helicon Company is a lessor
affecting such Fee Property and in its possession, (iii) any other material
easements, rights-of-way, covenants, conditions and restrictions, document or
agreement affecting title to such Fee Property and in the case of this clause
(iii) in the possession of the Helicon Companies; and (iv) each material lease
for a Leased Property under which any Helicon Company is a lessee. Except as
disclosed in SCHEDULE 3.9, (a) each Helicon Company owning a material Fee
Property has good and marketable title thereto; (b) each Helicon Company that
owns any material item of Tangible Personal Property has good and valid title
thereto; (c) each Helicon Company that leases a material Leased Property has a
valid leasehold interest therein (subject to expiration of such lease in
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accordance with its terms); (d) each Helicon Company that leases any material
item of Tangible Personal Property has a valid leasehold interest therein
(subject to expiration of such lease in accordance with its terms), in each case
of (a), (b), (c) and (d) above, free and clear of all Encumbrances other than
Permitted Encumbrances; (e) each of the material Leases are in full force and
effect and have not been modified or amended in any respect; (f) no material
default exists under any of the Leases; (g) none of the Helicon Companies are a
party to any lease of Tangible Personal Property with annual lease payments in
excess of $50,000; and (h) all material easements, rights-of-way and similar
agreements benefitting any of the Fee Properties or Leased Properties and which
are material to the business of any of the Helicon Companies as presently
conducted are in full force and effect, and the Helicon Companies are in
material compliance with such agreements and no material default exists
thereunder. All structures on the Fee Properties and Leased Properties are
structurally sound and in good operating condition and repair, and all Tangible
Personal Property are in good operating condition, normal wear and tear
excepted, except that the foregoing representation is not made with respect to
any Real Property, improvements thereon and Tangible Personal Property acquired
in acquisitions of Systems since December 31, 1998, which property is "as is,
where is." Notwithstanding the express language of this Section 3.9 or as may
otherwise be provided in this Agreement, no representation or warranty is being
made as to title to the internal wiring, house drops and unrecorded
dwelling-units easements, rights of entry or rights-of-way held or used by the
Helicon Companies.
3.10 INTANGIBLES. SCHEDULE 3.10 contains a true and complete
description of the material Intangibles (exclusive of those required to be
listed in SCHEDULE 3.8), that are owned or leased by any of the Helicon
Companies and that are reasonably necessary for the conduct of the business or
operations of the Systems as currently conducted. To Helicon's knowledge, except
as to potential copyright liability arising from the performance, exhibition or
carriage of any music on the Systems or except as disclosed in SCHEDULE 3.10,
none of the Helicon Companies is infringing upon any trademarks, trade names,
copyrights or similar intellectual property rights of others.
3.11 INFORMATION REGARDING THE SYSTEMS.
(a) Helicon has delivered to Buyer a copy of the "System
Profiles" that are prepared by the Helicon Companies in the ordinary course of
business. The "System Profiles" are substantially accurate; PROVIDED, HOWEVER,
that if any information in the System Profiles shall conflict with any
information disclosed in Helicon's Disclosure Schedules, such scheduled
information shall be considered to be the more accurate information.
(b) SUBSCRIBERS. SCHEDULE 3.11 sets forth the approximate
number of Equivalent Subscribers as of the date indicated therein (including the
approximate number of Equivalent Subscribers served in each Franchise Area and
served by each headend, in case as of the date indicated therein). The "System
Profiles" delivered
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pursuant to Section 3.11(a) provide a description, as of the respective dates
set forth therein, of all Subscriber rates, tariffs and other charges for cable
television and other services provided by any Helicon Company. Helicon has
delivered to Buyer a Cable Data, Inc. print-out listing all free, discount or
other promotional service obligations of any Helicon Company with respect to the
Systems as of the date of such print-out. None of the Helicon Companies has any
obligation or liability for the refund of the monies to Subscribers other than
as evidenced by their respective refund (including deposit) account credit
balances or as may be required under the rules and regulations relating to rates
promulgated by the FCC under the Cable Act. The Subscriber records of the
Helicon Companies are prepared by Cable Data, Inc. in accordance with its
customary practices. At January 31, 1999, (i) the total number of Subscribers
was approximately 170,000, and (ii) the Systems were capable of providing
service to approximately 235,000 homes without the need for any line extension
other than a standard drop from an adjoining public road. As used in the
preceding sentence, a "home" shall mean a unit of residential housing, including
single family and each unit of a multi-family dwelling units, and any commercial
or institutional real property improvement.
(c) CERTAIN SYSTEMS INFORMATION. SCHEDULE 3.11 sets forth the
approximate number of plant miles for each System and the approximate bandwidth
capability of each System. The "System Profiles" delivered pursuant to Section
3.11(a) provide a list of the stations and signals carried by each System, and
the channel position of each such signal and station. Except as set forth on
SCHEDULE 3.11, each such station is carried pursuant to a retransmission
consent, "must carry" request or other programming agreement.
(d) FRANCHISE AND FCC MATTERS. All reports or other documents,
payments or submissions required to be filed by any of the Helicon Companies
with any of the Franchising Authorities or the FCC have been duly filed or
submitted and were materially correct when filed. The Helicon Companies are
permitted under all applicable Franchises and FCC Regulations to distribute the
television broadcast signals distributed by the Systems (except during periods
covered by bona fide requests for nonduplication or syndex blackouts in
accordance with FCC Regulations) and to utilize all carrier frequencies
generated by the operations of the Systems, and are authorized or licensed in
all material respects to operate all the facilities of the Systems required by
Legal Requirements to be authorized or licensed.
(e) REQUEST FOR SIGNAL CARRIAGE. Except for nonduplication and
blackout notices received in the ordinary course of business, none of the
Helicon Companies has received any FCC order requiring any System to carry a
television broadcast signal or to terminate carriage of a television broadcast
signal with which it has not complied, and, except as disclosed in SCHEDULE
3.11, the Helicon Companies have complied in all material respects with all
written and bona fide requests or demands
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received from television broadcast stations to carry or to terminate carriage of
a television broadcast signal on a System.
(f) RATE REGULATORY MATTERS. SCHEDULE 3.11 sets forth a list
of all Governmental Authorities that are certified to regulate basic service
rates of the Systems pursuant to the Cable Act and FCC Regulations as of the
date of this Agreement. No pending rate complaints have been filed with the FCC
against the Systems according to the FCC's log, dated January 1, 1999, which
reflects rate complaints filed through December 31, 1998. Except as set forth on
SCHEDULE 3.11, as of the date of this Agreement, none of the Helicon Companies
has received any written notice, and to Helicon's knowledge, any notice (other
than written notice) from any Governmental Authority that it has any obligation
or liability to refund to subscribers of the Systems any portion of the revenue
received by any of such Helicon Company from Subscribers of the Systems
(excluding revenue with respect to deposits for converters, encoders, decoders,
and related equipment and other prepaid items) that has not been resolved.
(g) INSURANCE. The Systems and Assets are insured against
claims, loss or damage in amounts generally customary in the cable television
industry and consistent with the Helicon Companies' past practices. SCHEDULE
3.11 lists all policies of insurance maintained, owned or held by all Helicon
Companies on the date hereof with respect to the Systems and Assets, which list
is true and complete in all material respects. All such policies are outstanding
and in full force and effect on the date hereof and, to Helicon's knowledge, are
with financially sound insurers. From December 31, 1997 to the date of this
Agreement, no insurance carrier has denied any material claim for insurance made
by any Helicon Company in respect of any of the Systems and Assets or refused to
renew any policy covering any of the Systems and Assets.
(h) RIGHT OF FIRST REFUSAL. Except as set forth on SCHEDULE
3.11, no Person (including any Governmental Authority) has any right to acquire
any interest in connection with the transactions contemplated hereby in any of
the Systems (including, without limitation, any right of first refusal or
similar right), other than rights of condemnation or eminent domain afforded by
law or upon the termination of or default under any Franchise.
3.12 TAXES.
(a) The Helicon Companies have timely filed or have caused to
be filed all required Tax Returns with the appropriate Governmental Authorities
in all jurisdictions in which such Tax Returns are required to be filed by the
Helicon Companies (except Tax Returns listed on SCHEDULE 3.12 for which the
filing date has been extended and such extension period has not expired), and
all Taxes of the Helicon Companies have been properly accrued or paid to the
extent such Taxes have become due
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and payable. Helicon has delivered to Buyer true, correct and complete copies of
the Tax Returns (in the form filed) listed in SCHEDULE 3.12. The Financial
Statements reflect an adequate reserve in accordance with GAAP (without regard
to any amounts reserved for deferred taxes) for all material unpaid Taxes
payable by the Helicon Companies for all Tax periods and portions thereof
through the date of such Financial Statements. Except as disclosed in SCHEDULE
3.12, none of the Helicon Companies has executed any waiver or extensions of any
statute of limitations on the assessment or collection of any Tax or with
respect to any liability arising therefrom. Except as disclosed in SCHEDULE
3.12, none of the federal, state or local income Tax Returns filed by the
Helicon Companies during the prior three years has been audited by any taxing
authority. Except as disclosed in SCHEDULE 3.12, (i) neither the IRS nor any
other Governmental Authority has asserted, or to the best knowledge of each of
the Helicon Companies, threatened to assert any deficiency or claim for
additional Taxes against, or any adjustment of Taxes relating to, any of the
Helicon Companies and, to the best knowledge of each of the Helicon Companies,
no basis exists for any such deficiency, claim or adjustment, and (ii) to the
best knowledge of each of the Helicon Companies, there are no proposed
reassessments of any property owned by any of the Helicon Companies that would
affect the Taxes of any of the Helicon Companies. There are no material Tax
liens on any assets of the Helicon Companies, other than liens for current Taxes
not yet due and payable and liens for Taxes that are being contested in good
faith by appropriate proceedings and are disclosed on SCHEDULE 3.12.
(b) Except as disclosed in SCHEDULE 3.12, none of the Helicon
Companies was included or is includible in any consolidated, combined or unitary
Tax Return with any entity.
(c) None of the Helicon Companies has entered into any
compensatory agreements with respect to the performance of services which
payment thereunder would result in a non-deductible expense to such Helicon
Company pursuant to Section 280G of the Code or an excise Tax to the recipient
of such payment pursuant to Section 4999 of the Code. No acceleration of the
vesting schedule for any property that is substantially unvested within the
meaning of the regulations under Section 83 of the Code will occur in connection
with the transactions contemplated by this Agreement.
(d) No consent under Section 341(f) of the Code has been filed
with respect to any of the Helicon Companies.
(e) Each of the Helicon Companies has had since its inception
and will continue to have through the Closing Date the federal tax status (i.e.,
partnership, C corporation or S corporation) such entity reported on its 1997
federal Tax Returns, except as results from any actions taken pursuant to this
Agreement.
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(f) Except as disclosed in SCHEDULE 3.12, none of the Helicon
Companies have been at any time a member of any partnership, joint venture or
other arrangement or contract which is treated as a partnership for federal,
state, local or foreign tax purposes (a "TAX PARTNERSHIP") or the holder of a
beneficial interest in any trust for any period for which the statute of
limitations for any Tax has not expired, except for a Tax Partnership which is a
Helicon Company.
(g) The Helicon Companies have withheld or collected and paid
over to the appropriate Governmental Authorities or are properly holding for
such payment all material Taxes required by law to be withheld or collected.
(h) Except as disclosed in SCHEDULE 3.12, there are no tax
sharing agreements or similar arrangements with respect to or involving any of
the Helicon Companies.
(i) Except as disclosed in SCHEDULE 3.12, none of the Helicon
Companies has any (i) income reportable for a period ending after the Closing
Date but attributable to a transaction (E.G., an installment sale) occurring in
or a change in accounting method made for a period ending on or prior to the
Closing Date which resulted in a deferred reporting of income from such
transaction or from such change in accounting method (other than a deferred
intercompany transaction), or (ii) deferred gain or loss arising out of any
deferred intercompany transaction.
3.13 EMPLOYEE MATTERS.
(a) EMPLOYEE PLANS. SCHEDULE 3.13 contains a list of all
Employee Plans and material Compensation Arrangements. The Helicon Companies
have delivered or made available to Buyer true, complete and correct copies of
each Employee Plan and each Compensation Arrangement, if any, and all material
related documents, including without limitation: (i) the most recent summary
plan description (together with any summary of material modifications) and
material employee communications, (ii) any governmental filing or communication,
including material documents received from any Governmental Authority for the
past three years, (iii) any funding agreements or contracts, and (iv) any other
material contracts or agreements related to such Employee Plan or Compensation
Arrangement. None of the Helicon Companies or any of their ERISA Affiliates has
experienced a complete or partial withdrawal, within the meaning of ERISA
Section 4203 or 4205, from any "multiemployer plan" (as defined in ERISA Section
3(37)). Except as required under Code Section 4980B or ERISA Section 601-609, no
Employee Plan provides life insurance, health or medical coverage to former
employees of the Helicon Companies.
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(b) QUALIFIED PLANS. Except as disclosed in SCHEDULE 3.13,
with respect to each Employee Plan, and after taking into consideration the
effect of the payments to be made with respect to the Employee Plans: (1) each
such Employee Plan that is intended to be tax-qualified is the subject of a
favorable determination letter (a copy of which has been provided or made
available to Buyer) except as described in SCHEDULE 3.13, and no such
determination letter has been revoked, and to the best of any Helicon Company's
knowledge, no revocation has been threatened, no event has occurred and no
circumstances exist that would adversely affect the tax-qualification of such
Employee Plan; (2) no such Employee Plan has been amended since the effective
date of its most recent determination letter in any respect that might adversely
affect its qualification; (3) no Employee Plan is subject to Section 302 or
Title IV of ERISA or Section 412 of the Code; (4) no non-exempt prohibited
transaction, within the definition of Section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject the Helicon Companies to any
material liability; (5) there is no termination or partial termination, or
requirement to provide security with respect to any Employee Plan; (6) the fair
market value of the assets of any Employee Plan would exceed the value of all
liabilities and obligations of such Employee Plan if such plan were to terminate
on the Closing Date; (7) the transactions contemplated by this Agreement will
not result in liability under ERISA to Helicon or the other Helicon Companies or
Buyer, or any of their respective ERISA Affiliates, or any entitlement to any
additional benefits or any acceleration of the time of payment or vesting of any
benefits under any Employee Plan for any employee of any Helicon Company; and
(8) at all times on or prior to the Closing, each Employee Plan that is intended
to be tax-qualified, satisfied all minimum coverage and minimum participation
requirements, if any, imposed on such Employee Plan by the applicable terms of
the Code and ERISA.
(c) PLAN ADMINISTRATION. Each Employee Plan and each
Compensation Arrangement has been operated and administered in all material
respects in accordance with its terms and all applicable laws, including but not
limited to ERISA and the Code. To the knowledge of the Helicon Companies, there
are no pending or threatened investigations by any governmental agency or other
claims (except claims for benefits payable in the normal operation of the Plan),
suits or proceedings against or involving any Plan or asserting any rights to or
claims for benefits under any Plan that could give rise to any material
liability and there are not any facts that could give rise to any material
liability in the event of any such investigation, claim, suit or proceeding.
(d) WELFARE PLAN FUNDING. The list of Employee Plans in
SCHEDULE 3.13 discloses whether each Plan that is an "employee welfare benefit
plan" as defined in section 3(1) of ERISA ("WELFARE PLAN") is (i) unfunded, (ii)
funded through a "welfare benefit fund," as such term is defined in section
419(e) of the Code, or other funding mechanism or (iii) insured. Other than
Welfare Plans provided under a collective bargaining agreement, each such
Welfare Plan may be amended or terminated without
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material liability to any Helicon Company (other than the payment of benefits
accruing prior to such termination) at any time after the Closing Date.
(e) LABOR UNIONS. As of the date of this Agreement, other than
as disclosed in SCHEDULE 3.13, none of the Helicon Companies is party to or
bound by any collective bargaining agreement. As of the date of this Agreement,
other than as disclosed in SCHEDULE 3.13, to the knowledge of Helicon, (1) none
of the employees of the Helicon Companies is presently a member of any
collective bargaining unit related to his or her employment and (2) no
collective bargaining unit has filed a petition for representation of any of the
employees of the Helicon Companies. The Helicon Companies have fulfilled their
obligations under the collective bargaining agreements set forth in SCHEDULE
3.13.
(f) All Helicon Companies and their ERISA Affiliates have
properly classified individuals providing services to any Helicon Company or any
ERISA Affiliates as employees or non-employees, except to the extent that a
misclassification would be immaterial.
(g) With respect to each Welfare Plan that is funded wholly or
partially through an insurance policy, there will be no material liability of
any Helicon Company or an ERISA Affiliate, as of Closing Date, under any such
insurance policy or ancillary agreement with respect to such insurance policy in
the nature of a retroactive rate adjustment loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
occurring prior to the Closing Date.
3.14 ENVIRONMENTAL LAWS. Except as disclosed in SCHEDULE 3.14 and
except for any such noncompliance of an insubstantial nature that has been
remedied as required by applicable Environmental Laws: (a) the Helicon
Companies' operations with respect to the Systems have complied and comply in
all material respects with all applicable Environmental Laws; (b) none of the
Helicon Companies has used the Real Property for the manufacture,
transportation, treatment, storage or disposal of Hazardous Substances except
for gasoline and diesel fuel and such use of Hazardous Substances (in cleaning
fluids, solvents and other similar substances) customary in the construction,
maintenance and operation of a cable television system and in amounts or under
circumstances that would not reasonably be expected to give rise to material
liability for remediation; and (c) to Helicon's knowledge, the Real Property
complies and has complied in all material respects with all applicable
Environmental Laws. Except as disclosed in SCHEDULE 3.14, as of the date of this
Agreement, no Environmental Claim has been filed or issued against the Helicon
Companies.
3.15 CLAIMS AND LITIGATION. Except as disclosed in SCHEDULE 3.15, there
is no claim, legal action, arbitration or other legal, governmental,
administrative or tax
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proceeding, nor any order, complaint, decree, or judgment, or to Helicon's
knowledge, investigation, dispute or controversy, in progress or pending, or to
Helicon's knowledge, threatened in writing against or relating to the Helicon
Companies, any of their respective directors, officers, employees or, to
Helicon's knowledge, agents with respect to their performance of duties in such
capacity, the Assets or the business or operations of any of the Systems other
than (i) proceedings generally affecting the cable television industry and not
specific to the Helicon Companies; (ii) claims and legal actions arising in the
ordinary course of business with respect to the payment by Subscribers for
services rendered by any of the Helicon Companies; (iii) non-material disputes
with respect to programming agreements; and (iv) claims or legal actions arising
in the ordinary course of business that are reasonably expected to be covered by
insurance policies held by the Helicon Companies (subject to applicable
deductibles).
3.16 COMPLIANCE WITH LAWS. Except as disclosed in SCHEDULE 3.16 and
except for any such noncompliance as has been remedied, each of the Helicon
Companies has complied in all material respects with, and the Systems and the
Assets are in compliance in all material respects with, all applicable Legal
Requirements. Helicon has delivered to Buyer complete and correct copies of all
material FCC forms that have been prepared since January 1, 1993, by or on
behalf of any of the Helicon Companies, to the extent in the possession of any
of the Helicon Companies, relating to rate regulation filed with any
Governmental Authority with respect to the Systems and copies of all material
correspondence with any Governmental Authority relating to rate regulations
generally and any other Rate Regulatory Matter or specific rates charged to
subscribers of the Systems.
3.17 TRANSACTIONS WITH AFFILIATES. Except to the extent disclosed in
the notes to the Financial Statements or as described in SCHEDULE 3.17, none of
the Helicon Companies has been involved in any business arrangement or business
relationship or is a party to any agreement, contract, commitment or transaction
with any Affiliate of any of the Helicon Companies (other than another Helicon
Company) and no Affiliate of any of the Helicon Companies (other than another
Helicon Company) owns any property or right, tangible or intangible, that is
used in the business of the Helicon Companies (other than in its capacity as a
direct or indirect equity or debt holder of the Helicon Companies).
3.18 BROKER. Neither Helicon nor any of the other Helicon Companies or
any Person acting on their behalf has incurred any liability for any finders' or
brokers' fees or commissions in connection with the transactions contemplated by
this Agreement and the Transaction Documents except that Sellers will pay any
amounts due Waller Capital Corporation.
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3.19 INVENTORY. Each Helicon Company has inventory, spare parts and
materials relating to the Systems of the type and nature and maintained at a
level consistent with past practice (the "INVENTORY"), and such Inventory will
be sufficient to operate their respective businesses in the ordinary course for
at least thirty (30) days after the Closing.
3.20 OVERBUILDS. Except as set forth in SCHEDULE 3.20 or except for
direct broadcast satellite service or Satellite Master Antenna Television, (i)
no construction programs have been undertaken by any Person to distribute cable
television services or other video programming services by wire or wireless in
any of the Franchise Areas and, to Helicon's knowledge, without investigation
but upon inquiry of its regional managers and as should reasonably be known to a
reasonable cable television operator, no such construction programs are proposed
or threatened to be undertaken; (ii) to Helicon's knowledge (subject to the same
limitation referred to in clause (i) above), no franchise or other applications
or requests of any Person have been filed or are pending or threatened, or
proposed which are reasonably likely to materially adversely impact any of the
Systems; (iii) there is no other Person within any of the Franchise Areas which
is providing or, to Helicon's knowledge (subject to the same limitation referred
to in clause (i) above), has applied for a franchise to provide cable television
services or other video programming by wire or wireless services to any of the
Franchise Areas in competition with any of the Helicon Companies; and (iv) none
of the Helicon Companies have received any written notice that any other Person
intends to provide cable television services or other video programming services
by wire or wireless in any of the Franchise Areas. Except as set forth on
SCHEDULE 3.8, no Helicon Company is, nor is any Affiliate of any Helicon
Company, a party to any agreement restricting the ability of any third party to
operate cable television systems or any other video programming distribution
business within any of the Franchise Areas.
3.21 YEAR 2000. Each Helicon Company has (i) initiated a review and
assessment of all areas within its business that could reasonably be expected to
be adversely affected by "YEAR 2000 MATTERS" (that is, the risk that computer
applications used by such Helicon Company may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan (the "YEAR 2000 PLAN") (a copy
of which has been delivered to Buyer) for addressing Year 2000 Matters on a
timely basis, and (iii) as of the date of this Agreement, commenced
implementation of the Year 2000 Plan.
3.22 DISCONNECTIONS. SCHEDULE 3.22 sets forth (i) the approximate
number of Subscribers which each of the Helicon Companies have disconnected from
service during each of the six (6) months prior to the date hereof and (ii) a
general description of the Helicon Companies' policies relating to the
connection and disconnection of Subscribers from service.
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3.23 BUDGETS. SCHEDULE 3.23 sets forth true, correct and complete
copies of the Helicon Companies' capital budgets for 1999. Helicon has
previously delivered to Charter a true, correct and complete copy of the Helicon
Companies' operating budget for 1999.
3.24 CURE. For all purposes under this Agreement, the existence or
occurrence of any events or circumstances which constitute or cause a breach of
a representation or warranty of Helicon (including Helicon's Disclosure
Schedules) on the date such representation or warranty is made shall be deemed
not to constitute a breach of such representation or warranty if such event or
circumstance is cured on or prior to the Closing Date or the earlier termination
of this Agreement.
SECTION 4: REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to any provisions of this Agreement limiting, qualifying or
excluding any of the representations or warranties made herein, each Seller
severally represents and warrants to the Charter Parties (with respect to such
Seller and not with respect to any other Seller) as set forth in this Section 4.
4.1 AUTHORITY OF SELLERS; AUTHORIZATION AND BINDING OBLIGATION. Such
Seller has the requisite corporate, partnership or other applicable power,
authority and legal capacity to execute, deliver and perform this Agreement and
the other Transaction Documents to which such Seller is a party according to
their respective terms. The execution, delivery, and performance by such Seller
of this Agreement and the other Transaction Documents to which such Seller is or
will become a party have been duly authorized by all necessary corporate,
partnership or other applicable action on the part of such Seller. This
Agreement and the other Transaction Documents to which such Seller is or will
become a party have been duly executed and delivered by such Seller (or, in the
case of Transaction Documents to be executed and delivered at Closing, when
executed and delivered will be duly executed and delivered) and constitute (or,
in the case of Transaction Documents to be executed and delivered at Closing,
when executed and delivered will constitute) the legal, valid, and binding
obligation of such Seller, enforceable against such Seller in accordance with
their terms, except as the enforceability of this Agreement and such other
Transaction Documents may be limited by Enforceability Exceptions.
4.2 ABSENCE OF CONFLICTING AGREEMENTS; CONSENTS. Except for the
expiration or termination of any applicable waiting period under the HSR Act, or
as set forth in SCHEDULE 4.2, the execution, delivery and performance by such
Seller of this Agreement and the other Transaction Documents to which such
Seller is a party: (a) do not require any consent of, declaration to, notice to,
or filing with any Governmental Authority or
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any other Person that has not been obtained; (b) will not conflict with any
provision of the Organizational Documents of such Seller as currently in effect;
(c) assuming receipt of the Consents set forth on SCHEDULE 3.4 or SCHEDULE 4.2,
will not conflict with, result in a breach of, or constitute a default under any
Legal Requirement to which such Seller is bound; (d) assuming receipt of the
Consents set forth on SCHEDULE 3.4 or SCHEDULE 4.2, will not conflict with,
constitute grounds for termination of, result in a material breach of,
constitute a material default under, or accelerate or permit the acceleration of
any performance required by the terms of any material agreement or instrument to
which such Seller is bound; and (e) assuming receipt of the Consents set forth
on SCHEDULE 3.4 or SCHEDULE 4.2, will not result in the creation of any
Encumbrance upon the Purchased Interests held by such Seller. Notwithstanding
the foregoing, no Seller makes any representation or warranty regarding any of
the foregoing that may result from the specific legal or regulatory status of
any Charter Party or as a result of any other facts that specifically relate to
the business or activities in which any Charter Party is or proposes to be
engaged other than the cable television business.
4.3 TITLE TO BII ASSETS. BII represents that it holds of record and
owns beneficially the GP Interest and has good and marketable title to the other
BII Assets, in each case, free and clear of all Encumbrances, subject to Legal
Restrictions.
4.4 TITLE TO THE LP INTERESTS AND THE PREFERRED INTERESTS. Each Limited
Partner represents that it holds of record and owns beneficially the LP
Interests and the Preferred Interests set forth by its name on SCHEDULE 3.3,
free and clear of all Encumbrances, subject to Legal Restrictions except as set
forth in SCHEDULE 4.2. BII represents, solely as of Closing, that it holds of
record and owns beneficially the LP Interest acquired pursuant to Section 6.9
hereof, free and clear of all Encumbrances, subject to Legal Restrictions.
4.5 BROKER. Neither such Seller nor any Person acting on its behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement and the
Transaction Documents except that Sellers will pay any amounts due Waller
Capital Corporation.
4.6 INVESTMENT PURPOSE. BII is acquiring the Preferred LLC Interest for
investment for its own account and not with a view to the sale or distribution
of any part thereof within the meaning of the Securities Act.
4.7 CURE. For all purposes under this Agreement, the existence or
occurrence of any events or circumstances which constitute or cause a breach of
a representation or warranty of such Seller (including Helicon's Disclosure
Schedules), on the date such representation or warranty is made shall be deemed
not to constitute a breach of such representation or warranty if such event or
circumstance is cured on or prior to the Closing Date or the earlier termination
of this Agreement.
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SECTION 5: REPRESENTATIONS AND WARRANTIES OF THE CHARTER PARTIES
The Charter Parties represent and warrant to each Seller as set forth
in this Section 5.
5.1 ORGANIZATION; AUTHORIZATION AND BINDING OBLIGATION.
(a Charter is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Delaware. Charter
has the requisite corporate power and authority to own, lease, and operate its
properties, to carry on its business in the places where such properties are now
owned, leased or operated and in the manner in which such business is now
conducted, and to execute, deliver and perform this Agreement and the other
Transaction Documents to which Charter is a party according to their respective
terms. Charter is duly qualified and in good standing as a foreign corporation
in each jurisdiction in which such qualification is required.
(b Each of Buyer and GP Buyer is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Each of Buyer and GP Buyer has the requisite power and
authority to own, lease, and operate its properties, to carry on its business in
the places where such properties are now owned, leased or operated and in the
manner in which such business is now conducted, and to execute, deliver and
perform this Agreement and the other Transaction Documents to which each of
Buyer and GP Buyer is a party according to their respective terms. Each of Buyer
and GP Buyer is duly qualified and in good standing as a foreign limited
liability company in each jurisdiction in which such qualification is required.
5.2 AUTHORIZATION AND BINDING OBLIGATION. The execution, delivery, and
performance by each Charter Party of this Agreement and the other Transaction
Documents to which Buyer is or will become a party have been duly authorized by
all necessary corporate, shareholder or other action on the part of such Charter
Party. This Agreement and the other Transaction Documents to which such Charter
Party is or will become a party have been duly executed and delivered by such
Charter Party (or, in the case of Transaction Documents to be executed and
delivered at Closing, when executed and delivered will be duly executed and
delivered) at Closing, when executed and delivered will be duly executed and
delivered) and constitute (or, in the case of Transaction Documents to be
executed and delivered at Closing, when executed and delivered will constitute)
the legal, valid, and binding obligation of each Charter Party, enforceable
against such Charter Party in accordance with their terms, except as the
enforceability of this Agreement and such other Transaction Documents may be
limited by Enforceability Exceptions.
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5.3 ABSENCE OF CONFLICTING AGREEMENTS; CONSENTS. Except for the
expiration or termination of any applicable waiting period under the HSR Act or
as set forth in SCHEDULE 5.3, and the filing by Charter with the SEC of any
reports required to be filed in connection with the consummation of the
transactions contemplated hereby, the execution, delivery and performance by the
Charter Parties of this Agreement and the other Transaction Documents to which
each such Charter Party is a party: (a) does not require any consent of, notice
or declaration to, or filing with any Governmental Authority or any other Person
that has not been obtained; (b) will not conflict with any provision of the
Organizational Documents of such Charter Party, as currently in effect; (c)
assuming receipt of the Consents set forth on SCHEDULE 5.3, will not conflict
with, result in a material breach of or constitute a material default under any
Legal Requirement to which such Charter Party is bound; and (d) assuming receipt
of the Consents set forth on SCHEDULE 5.3, will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of any material agreement or instrument to which such Charter Party is a
party or bound. Notwithstanding the foregoing, none of the Charter Parties makes
any representation or warranty regarding any of the foregoing that may result
from the specific legal or regulatory status of any Seller or any Helicon
Company or as a result of any other facts that specifically relate to the
business or activities in which any Seller or any Helicon Company is or proposes
to be engaged other than the cable television business.
5.4 CAPITAL STRUCTURE AND OPERATIONS OF GP BUYER. Prior to the Closing,
GP Buyer had no Subsidiaries and conducted no business other than the retention
of accountants, attorneys, financial advisors and other professionals and other
than actions taken in connection with the transactions contemplated hereby.
Charter represents that it owns beneficially all of GP Buyer's and Buyer's
issued and outstanding Equity Interests.
5.5 CLAIMS AND LITIGATION. Except as disclosed in SCHEDULE 5.5, there
is no claim, legal action, arbitration, or other legal, governmental,
administrative or tax proceeding, nor any order, complaint, decree or judgment
or, to the Charter Parties' knowledge, any investigation, dispute or
controversy, in progress or pending, or to the Charter Parties' knowledge
threatened in writing, against or relating to any Charter Party, any of their
respective directors, officers, employees or, to the Charter Parties' knowledge,
agents with respect to their performance of duties in such capacity, the assets
or business of such Charter Party or its Subsidiaries other than (i) proceedings
generally affecting the cable television industry and not specific to such
Charter Party or its Subsidiaries; (ii) claims and legal actions arising in the
ordinary course of business with respect to the payment by Subscribers for
services rendered by the Charter Parties or its Subsidiaries; and (iii) claims
or legal actions arising in the ordinary course of business
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that are reasonably expected to be covered by insurance policies held by the
Charter Parties and their Subsidiaries (subject to applicable deductibles).
5.6 FINANCIAL STATEMENTS. Charter has furnished Helicon with true and
complete copies of the audited financial statements and the unaudited financial
statements listed in SCHEDULE 5.6 (the "CHARTER FINANCIAL STATEMENTS") and such
Charter Financial Statements are by this reference incorporated into and deemed
a part of Charter's Disclosure Schedules. Except as disclosed in SCHEDULE 5.6
and except, in the case of the unaudited Charter Financial Statements, for the
omission of footnotes and changes resulting from customary and recurring
year-end adjustments (which will be in accordance with past practice and are not
expected to be material), the Charter Financial Statements: (1) have been
prepared from the books and records of the Charter Parties to which they relate,
with no material difference between such Charter Financial Statements and the
financial records maintained, and the accounting methods applied, by the Charter
Parties for tax purposes; (2) have been prepared in accordance with GAAP
consistently applied and maintained throughout the periods indicated (except as
indicated in the notes thereto); and (3) present fairly in all material respects
the financial condition of the Charter Parties to which they relate as at their
respective dates and the results of operations and with respect to the audited
Charter Financial Statements, the cash flows, for the periods then ended.
5.7 INVESTMENT PURPOSE; INVESTMENT COMPANY. Buyer is acquiring the
Purchased Interests for investment for its own account and not with a view to
the sale or distribution of any part thereof within the meaning of the
Securities Act. Buyer is not an "investment company" as defined in the
Investment Company Act of 1940, as amended.
5.8 AVAILABILITY OF PREFERRED LLC INTEREST AND FUNDS. As of the
Closing, Charter shall have taken all actions necessary with respect to the
approval and issuance of the Preferred LLC Interest, and Buyer shall have
available sufficient funds to enable it to consummate the transactions
contemplated hereby.
5.9 BROKER. No Charter Party nor any Person acting on behalf of any
Charter Party has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement
except as described in Section 11.1.
5.10 CURE. For all purposes under this Agreement, the existence or
occurrence of any events or circumstances which constitute or cause a breach of
a representation or warranty of the Charter Parties on the date such
representation or warranty is made shall be deemed not to constitute a breach of
such representation or warranty if such event or circumstance is cured on or
prior to the Closing Date or the earlier termination of this Agreement.
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5.11 TAX MATTERS CONCERNING GP BUYER. No election has ever been filed
or otherwise made with respect to GP Buyer that would cause GP Buyer to be
classified as other than a disregarded entity for federal and state income Tax
purposes with respect to taxable period(s) or portions thereof ending prior to
the Closing Date. Immediately following the consummation of the transactions
contemplated by this Agreement, if GP Buyer were incorporated, GP Buyer would
not be classified as an "investment company," within the meaning of Sections
721(b) and 351(e) of the Code.
SECTION 6: SPECIAL COVENANTS AND AGREEMENTS
6.1 OPERATION OF BUSINESS PRIOR TO THE CLOSING. Except as required by
applicable Legal Requirements or as provided in Schedule 6.1 or Section 6.1(c),
and except as consented to in writing by the Charter Parties between the date
hereof and the Closing Date, Helicon will operate and cause the Helicon
Companies to operate the Systems in the ordinary course of business (subject to,
and except as modified by, compliance with the following negative and
affirmative covenants and the other covenants set forth in this Section 6) and
abide by the following negative and affirmative covenants:
(a NEGATIVE COVENANTS. The Helicon Companies shall not do any
of the following:
(1 FRANCHISES. Fail to timely file a valid request
for renewal in accordance with Section 626(a) of the Cable Act, or fail to use
commercially reasonable efforts to renew on substantially the same or on other
commercially reasonable terms any Franchise that will expire after the date
hereof and prior to the date which is thirty months after the Closing Date in
accordance with its terms (it being understood that the Helicon Companies shall
not be required to take any steps necessary to obtain renewals of any Franchise
earlier than such steps are required to be taken by applicable FCC Regulations,
and obtaining renewals of any Franchise shall not be a condition precedent to
the Charter Parties' obligations hereunder).
(2 CONTRACTS. Modify or amend in any material
respect, except in the ordinary course of business, any Contract that shall
survive the Closing; or enter into any new Contracts that will be binding on the
Helicon Companies following the Closing except: (A) agreements for the provision
of services to customers; (B) the renewal or extension of any existing Contract
on its existing terms, in all material respects, in the ordinary course of
business; (C) contracts or commitments entered into in the ordinary course of
business that are terminable on not more than sixty days prior notice or that do
not involve post-Closing obligations in excess of Fifty Thousand Dollars
($50,000) in any one case or in excess of Five Hundred Thousand Dollars
($500,000) in
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the aggregate; or (D) with respect to utility pole attachments agreements,
Contracts with terms as customarily required by the utility whose poles are
utilized.
(3 DISPOSITION OF ASSETS. Sell, assign, lease, swap,
or otherwise transfer or dispose of any of the Assets, except as set forth in
SCHEDULE 6.1 and except for assets consumed or disposed of in the ordinary
course of business.
(4 ENCUMBRANCES. Create, assume or permit to exist
any Encumbrance upon the Assets, except for Permitted Encumbrances or
Encumbrances disclosed in Schedules 3.3, 3.6 or 3.9.
(5 INDEBTEDNESS. Other than Indebtedness in respect
of vehicle leases, permit the Helicon Companies to incur any additional
Indebtedness except to the extent repaid at or prior to Closing; PROVIDED that
any such incurrence shall be in the ordinary course of business and the Helicon
Companies shall give Buyer prior notice thereof.
(6 MARKETING PROGRAMS. Implement any new marketing
plans that are materially different from marketing plans previously implemented
by the Helicon Companies.
(b AFFIRMATIVE COVENANTS. Helicon shall do, and shall cause
the Helicon Companies to do, the following:
(1 ACCESS TO INFORMATION. Subject to the Charter
Parties' obligations hereunder to maintain the confidentiality of the
Confidentiality Information, allow Buyer and its authorized representatives
reasonable access during normal business hours to the Assets, physical plant,
offices, properties and records for the purpose of inspection, and furnish or
cause to be furnished to Buyer or its authorized representatives all information
with respect to the Assets or the Helicon Companies that Buyer may reasonably
request. Any investigation or request for information shall be conducted in such
a manner as not to interfere with the business or operations of the Systems.
(2 INSURANCE. Maintain the existing insurance
policies on the Systems and the Assets (or comparable replacement policies).
(3 BOOKS AND RECORDS. Maintain the Helicon Companies'
books and records in accordance with past practices.
(4 FINANCIAL INFORMATION. Furnish to Buyer, as
prepared by the Helicon Companies in the ordinary course of business from their
books and records maintained in accordance with past practices: (i) an unaudited
consolidated balance sheet
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and statement of operations for the Helicon Companies for each calendar quarter
within forty-five days after the end of such calendar quarter between the date
hereof and the Closing Date, (ii) an unaudited, unconsolidated monthly cash flow
statement for each region included in the Helicon Company's operations, within
forty-five days after the end of each month between the date hereof and the
Closing Date, and (iii) any other financial or operational information furnished
to the Helicon Companies' lenders.
(5 COMPLIANCE WITH LAWS. Comply in all material
respects with all Franchises and Legal Requirements applicable to the Helicon
Companies and the operation of the Systems.
(6 KEEP ORGANIZATION INTACT. Except with respect to
any voluntary departure of any of the Helicon Companies' employees between the
date hereof and Closing, use its commercially reasonable efforts to preserve
intact its business and organization relating to the Systems and preserve for
Buyer the goodwill of the Helicon Companies' suppliers, customers and others
having business relations with it.
(c CERTAIN PERMITTED ACTIONS. Notwithstanding anything in this
Agreement (including Sections 6.1(a) and (b) above) to the contrary, the Charter
Parties consent and agree as follows:
(1 CONTRACTUAL COMMITMENTS. The Helicon Companies
shall comply in all material respects with all of their contractual commitments
under their existing Contracts and under any Contracts entered into after the
date of this Agreement in compliance with Section 6.1(a)(2) or with the Charter
Parties' consent (in each case, as such Contracts may be in effect from time to
time in accordance with Section 6.1(a)(2) or with the Charter Parties' consent).
The Helicon Companies may take such actions as are contemplated by the other
Sections of this Agreement (excluding Sections 6.1(a) and (b)) and otherwise
comply with their obligations under the other Sections of this Agreement
(excluding Sections 6.1(a) and (b)).
(2 CAPITAL EXPENDITURES. The Helicon Companies shall
make routine capital expenditures in a manner substantially consistent with the
capital budget set forth in SCHEDULE 3.23.
(3 PENDING ACQUISITIONS. The Helicon Companies may
consummate the transactions set forth in SCHEDULE 6.1, subject to the provisions
set forth in SCHEDULE 6.1. At Closing, the Cash Consideration shall be increased
by the amounts paid by the Helicon Companies between February 28, 1999 and
Closing as purchase price to the sellers to consummate the transactions
described in SCHEDULE 6.1.
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(4 SALE OF INTERNET BUSINESS. The Helicon Companies
may proceed with the sale of their Internet business, PROVIDED, HOWEVER, if the
sale is consummated prior to Closing, the Cash Consideration shall be decreased
at Closing by the net amount (after payment of related expenses and liabilities)
of any consideration payable to the Helicon Companies in connection with such
sale; and PROVIDED, FURTHER, if the sale is not consummated prior to Closing,
Adjustments Liabilities shall not include (i) the Debt Obligations identified on
SCHEDULE 3.6 as having been incurred with respect to the Internet business, and
(ii) related expenses and liabilities.
(5 RESALE OF LONG DISTANCE SERVICE. The Helicon
Companies may continue with the resale of long distance service as provided in
the agreement therefore listed in SCHEDULE 3.8 hereto.
(6 EXCLUDED ASSETS. The Helicon Companies may, prior
to Closing, (i) assign each of the Excluded Assets to any of the Sellers, its
designees or any other Person, or (ii) otherwise provide for the discharge or
termination of any Excluded Asset comprising a contractual arrangement described
on EXHIBIT B; PROVIDED, HOWEVER, that such assignments, either individually or
in the aggregate, do not result in any adverse Tax consequence to any of the
Helicon Companies which is not included in Adjustment Liabilities in the
computation of Closing Net Liabilities.
6.2 CONFIDENTIALITY; PRESS RELEASE.
(a The Helicon Companies and the Sellers may from time to time
in the course of this transaction disclose to the Charter Parties information
and material concerning the Sellers, the Helicon Companies, the Assets and
Systems, including proprietary information, contracts, marketing information,
technical information, product or service concepts, subscriber information,
rates, financial information ideas, concepts and research and development, and
any analysis, compilations, studies or other documents prepared by or on behalf
of the Charter Parties in respect thereof (hereafter collectively referred to as
"CONFIDENTIAL INFORMATION"). The term "Confidential Information" does not
include any item of information that (1) is publicly known at the time of its
disclosure, (2) is lawfully received from a third party not bound in a
confidential relationship with a party hereto, (3) is published or otherwise
made known to the public by any source other than a party bound by the
provisions hereof, or (4) was generated by the Charter Parties independently.
The Charter Parties agree that, except as required by applicable law,
Confidential Information received from the Helicon Companies or the Sellers
shall be used solely in connection with the transaction contemplated by this
Agreement. Each Charter Party, except as required by applicable law, shall treat
confidentially and not directly or indirectly, divulge, reveal, report, publish,
transfer or disclose, for any purpose whatsoever (other than to its investors,
financing sources and agents, each of whom shall maintain the confidentiality of
such
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Confidential Information for the purpose of consummating the transactions
contemplated by this Agreement), all or any portion of the Confidential
Information disclosed to it by the Helicon Companies or the Sellers. In the
event of a breach of the covenants contained in this Section 6.2, the Helicon
Companies and the Sellers shall be entitled to seek injunctive relief as well as
any and all other remedies at law or equity. If the Closing does not occur, the
Confidential Information, except for that portion which consists of analysis,
compilations, studies or other documents prepared by or on behalf of the Charter
Parties shall be destroyed.
(b No party will issue any press release or make any other
public announcements concerning this Agreement or the transaction contemplated
hereby except in consultation with the other parties, except for disclosures
required by law. With respect to press releases or any other public
announcements required by law, the party intending to make such release or
disclosure shall provide the other parties with an advance copy and reasonable
opportunity to review.
6.3 COOPERATION: COMMERCIALLY REASONABLE EFFORTS. The parties shall
cooperate with each other and their respective counsel and accountants in all
commercially reasonable respects in connection with any actions required to be
taken as part of their respective obligations under this Agreement, and
otherwise use their commercially reasonable efforts to consummate the
transactions contemplated hereby and to fulfill their obligations hereunder as
expeditiously as practicable. Charter shall provide to Helicon and Sellers such
information relating to Charter and its Subsidiaries and their businesses and
operations as Helicon and Sellers shall reasonably request. Helicon shall use
commercially reasonable efforts to cause its accountants to cooperate, at the
Charter Parties' expense, with any reasonable request of the Charter Parties
with respect to the inclusion of the Helicon Companies' financial statements and
such accountants' report thereon in any filing with the SEC or any other
Governmental Authority.
6.4 CONSENTS.
(a Following the execution hereof and (if necessary) following
the Closing, Helicon shall use commercially reasonable efforts, and shall cause
the Helicon Companies to use commercially reasonable efforts, to obtain as
expeditiously as possible all Consents required to be obtained by the Helicon
Companies or Sellers, including (i) Consents under the Franchises, Licenses and
Contracts of the Helicon Companies and (ii) Consents of the Subordinated
Holders. In the event Helicon cannot obtain the Consent of a Subordinated
Holder, Helicon shall use commercially reasonable efforts to obtain an extension
with respect to any action of such Subordinated Holder that may prevent, hinder
or delay the Closing. Helicon shall, and shall cause the Helicon Companies to,
prepare and file, or cause to be prepared and filed, within fifteen (15) days
after the date hereof, all applications required to be filed with the FCC and
any
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Franchising Authority (except for all FCC Forms 394, which shall be filed within
five (5) days of the date hereof), that are necessary for the transfer of
control to Charter in connection with the consummation of the transactions
contemplated by this Agreement of the Franchises and the Licenses identified in
SCHEDULE 3.4, subject to receipt from Charter of its respective portions of such
applications, which portions the Charter Parties have prepared and are
delivering to Helicon on the date hereof. Subject to the other provisions of
this Section 6.4, if, notwithstanding their commercially reasonable efforts,
Helicon and the other Helicon Companies are unable to obtain any of the
Consents, none of the Helicon Companies nor Sellers shall be liable to any of
the Charter Parties for any breach of covenant, and after the Closing, Sellers
shall not have any obligation with respect to obtaining any Consents or any
liability for the failure of such Consents to be obtained. Nothing herein shall
require the expenditure or payment of any funds (other than in respect of normal
and usual attorneys fees, filing fees or other normal costs of doing business)
or the giving of any other consideration by Sellers or any Helicon Company.
(b Each of the Charter Parties agrees to cooperate with the
Helicon Companies and Sellers in all commercially reasonable respects in
obtaining any necessary Consents. The parties shall use commercially reasonable
efforts to overcome any opposition to obtaining any Consents. Without limiting
the foregoing, if in connection with the process of obtaining any Consent, a
Governmental Authority or other Person imposes any condition or any change to a
Franchise, License or Contract to which such Consent relates that would be
applicable to any Charter Party or any Helicon Company as a requirement for
granting its Consent, Buyer may negotiate jointly with Helicon with such
Governmental Authority or other Person, as appropriate, with respect to such
condition or change, and each agrees that neither the Helicon Companies nor the
Charter Parties shall have any obligation to bear any monetary obligations to a
Governmental Authority or other Person as a condition to obtaining any required
Consent therefrom; PROVIDED, HOWEVER, that either may elect, in its sole
discretion, to satisfy such monetary obligations, in which case, the Charter
Parties will accept (and agree that Helicon may cause any Helicon Company to
accept) any condition or change in the Franchise, License or Contract to which
such Consent relates to the extent provided herein. The Charter Parties will
comply with any reasonable request (as determined in their sole discretion) to
fulfill any non-monetary obligations in connection with the granting of a
Consent to a transfer of a Franchise. The Charter Parties shall promptly furnish
to any Governmental Authority or other Person from whom a Consent is requested
such accurate and complete information regarding the Charter Parties and their
Subsidiaries including financial information concerning the Charter Parties and
other information relating to the cable and other media operations of the
Charter Parties, as such Governmental Authority or other Person may reasonably
require in connection with obtaining any Consent, and Buyer shall promptly
furnish to Helicon a copy of any such information provided to any Governmental
Authority or other Person, and any other information concerning the Charter
Parties as Helicon may reasonably request in
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connection with obtaining any Consent. To the extent Helicon is required to
supply such information as to the Charter Parties and their Subsidiaries to
Persons from whom Consents are sought, Helicon may supply such information and
shall have no obligation to the Charter Parties with respect to the disclosure
or use of such information by such Persons. It is understood and agreed that
nothing contained in this Section 6.4(b) shall prevent the Charter Parties (or
their employees, agents, representatives and any other Person acting on behalf
of the Charter Parties) from making statements or inquiries to, attending
meetings of, making presentations to, or from responding to requests initiated
by Governmental Authorities or other Persons from whom a Consent is sought, and
the Charter Parties shall use commercially reasonable efforts to apprise Helicon
of all such requests.
6.5 HSR ACT FILING. As soon as practicable after the execution of this
Agreement, but in any event no later than thirty days after such execution, the
parties will each complete and file, or cause to be completed and filed, any
notification and report required to be filed under the HSR Act; and each such
filing shall request early termination of the waiting period imposed by the HSR
Act. The parties shall use commercially reasonable efforts to respond as
promptly as reasonably practicable to any inquiry received from the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "ANTITRUST DIVISION") for additional information or documentation
and to respond as promptly as reasonably practicable to all inquiries and
requests received from any Governmental Authority in connection with antitrust
matters. The parties shall use commercially reasonable efforts to overcome any
objections which may be raised by the FTC, the Antitrust Division or any other
Governmental Authority having jurisdiction over antitrust matters. The fees
relating to the filings required by the HSR Act shall be shared equally by
Charter, on the one hand, and Helicon, on the other hand.
6.6 ABILITY TO CONSUMMATE TRANSACTIONS.
(a No Charter Party will take any action that does, or could
reasonably be expected to, disqualify Charter to be the transferee of control of
the Helicon Companies as the holder of the Franchises and the owner and operator
of the Assets and Systems.
(b None of the parties hereto will take any action that is
inconsistent with its respective obligations under this Agreement or which does,
or would reasonably be expected to, materially hinder or delay the consummation
of the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, at all times between the date hereof and the
Closing Date, each Charter Party will take all necessary or advisable actions to
ensure, and each Charter Party will ensure, that Charter is able to deliver the
Preferred LLC Interest at Closing, and that Buyer is able to deliver
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the Cash Consideration at Closing, and each Seller will take all necessary or
advisable actions to ensure, and each Seller will ensure, that such Seller will
be able to sell, transfer, deliver its respective Purchased Interest, at
Closing.
6.7 CONTINUATION OR REFINANCING OF THE DEBT OBLIGATIONS.
(a The Charter Parties acknowledge and agree that all
obligations of the Helicon Companies with respect to the debt instruments that
are listed in SCHEDULE 3.6 (including all principal, accrued and unpaid interest
and all other amounts) shall remain obligations of the Helicon Companies through
and after Closing, and each of the Charter Parties will cooperate with the
Helicon Companies with respect to any information on or assurances by the
Charter Parties that shall be reasonably requested by any of the holders of such
debt instruments with respect to the continuation of such obligations subsequent
to Closing; PROVIDED, HOWEVER, that if, and only to the extent that, any of the
holders of such debt instruments shall, in accordance with the terms thereof,
demand payment as a condition of the grant of their Consent to the consummation
hereof, the Charter Companies shall take such actions as shall be necessary to
effect the refinancing of the Debt Obligations held by such holders on the
Closing Date. Notwithstanding any other provision hereof, the Charter Parties
shall bear and pay any amounts in the nature of prepayment penalties or other
fees or expenses that are required to be paid under the terms of the debt
instruments that are listed in SCHEDULE 3.6 with respect to the assumption of
the Debt Obligations, or the refinancing or satisfaction thereof, or the change
of control of the Helicon Companies.
(b The Charter Parties shall release and hold harmless the
Sellers and Baum at the Closing from any further obligations with respect to the
debt instruments that are listed in SCHEDULE 3.6, such release being
substantially in the form attached hereto as EXHIBIT D.
6.8 RETENTION AND ACCESS TO THE HELICON COMPANIES' RECORDS. Except as
provided in Section 6.10(c)(1), Sellers shall, for a period of five years from
the Closing Date or such shorter period as is required by statute, have access
to, and the right to copy, at their expense, during usual business hours upon
reasonable prior notice to Buyer, all of the books and records relating to the
Helicon Companies, Assets and Systems that were transferred to Buyer pursuant to
this Agreement. Buyer shall retain and preserve all such books and records for
such five year period or such shorter period as is allowed by statute.
Subsequent to such five year period or such or such shorter period as is allowed
by statute, Buyer shall only destroy such books and records and subsequent to
thirty days' notice to Sellers of their right to remove and retain such books
and records or to copy such books and records prior to their destruction;
PROVIDED, HOWEVER, that Buyer shall retain or deliver to the Sellers all books
and records related to any ongoing litigation or audit or investigation by a
Governmental Authority.
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6.9 PURCHASE AND EXERCISE OF WARRANTS. BII shall purchase all of the
outstanding Warrants from the Subordinated Holders pursuant to its rights as
Baum's assignee under the Call Agreement in exchange for cash or the issuance of
a note with full recourse to BII and guaranteed by Baum and shall exercise the
Warrants and pay to Helicon an aggregate exercise price in cash of $3,628,250.
6.10 TAX MATTERS. The following provisions shall govern the allocation
of responsibility between the Charter Parties and Sellers for certain tax
matters following the Closing Date:
(a TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Helicon
Corp. shall prepare or cause to be prepared and file or cause to be filed all
Tax Returns for the Helicon Companies (i) that are due on or before the Closing
Date, or (ii) that relate to taxable periods ending on or prior to the Closing
Date but are required to be filed after the Closing Date. Such Tax Returns shall
be prepared in accordance with each Helicon Company's past custom and practice,
and allocations of items of income and gain and loss and deduction shall be made
using the closing of the books method. In the case of any Helicon Company that
is a partnership or limited liability company, such Tax Returns shall be
prepared in accordance with the Organizational Documents of such Helicon Company
as in effect on the Closing Date. In preparing each Helicon Company's Tax
Returns, Helicon Corp. shall consult with Buyer in good faith and shall provide
Buyer with drafts of such Tax Returns (together with the relevant back-up
information) for review at least ten days prior to filing.
(b TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of the Helicon Companies for Tax periods which begin before the
Closing Date and end after the Closing Date. Such Tax Returns shall be prepared
in accordance with each Helicon Company's past custom and practice. In preparing
such Tax Returns, Buyer shall consult with Helicon Corp. in good faith and shall
provide Helicon Corp. with drafts of such Tax Returns (together with the
relevant back-up information) for review at least ten days prior to filing.
(c COOPERATION ON TAX MATTERS.
(1 The Charter Parties and Helicon Corp. shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section 6.10 and
any audit, litigation, or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation, or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any
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material provided hereunder. The Charter Parties and Helicon Corp. agree (A) to
retain all books and records with respect to Tax matters pertinent to the
Helicon Companies relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by any Charter Party or Helicon Corp., any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Buyer or Helicon
Corp., as the case may be, shall allow the other party to take possession of
such books and records to the extent they would otherwise be destroyed or
discarded.
(2 The Charter Parties and Helicon Corp. further
agree, upon request, to use commercially reasonable efforts to obtain any
certificate or other document from any Governmental Authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed (including Taxes with respect to the transactions contemplated
hereby).
(3 The Charter Parties and the Partners agree that if
any of them receives any notice of an audit or examination from any Governmental
Authority with respect to Taxes of any Helicon Company for any taxable period or
portion thereof ending on or prior to the Closing Date, then the recipient of
such notice shall, within three (3) days of the receipt thereof, notify and
provide copies of such notice to the other party, as the case may be, in
accordance with the notice provisions of Section 11.2.
(4 The Charter Parties further agree that immediately
after the Closing, BII shall be relieved of its responsibilities with respect to
post-Closing matters as the "tax matters partner," within the meaning of Section
6231(a)(7) of the Code, of Helicon and THGLP, and that the Charter Parties shall
take any and all actions required to be taken to effectuate the same.
(d SECTION 754 ELECTIONS; ALLOCATION OF PURCHASE PRICE. (1) To
the extent not already in effect, each Helicon Company that is treated as a
partnership for federal income tax purposes shall timely file an election under
Section 754 of the Code so that such entities shall be able to adjust the tax
basis of their assets (collectively, the "PARTNERSHIP ASSETS") under Section
743(b) of the Code as a result of the transactions contemplated herein.
(2) The aggregate amount of the Cash Consideration
and any liabilities of the Helicon Companies (the "PURCHASE CONSIDERATION")
shall be allocated among the Partnership Assets in an allocation agreement (the
"ALLOCATION AGREEMENT") to be prepared in accordance with the rules under
Sections 743(b), 751, 755 and 1060 of the Code. Buyer shall deliver a draft of
the Allocation Agreement to Helicon Corp. at
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least thirty (30) days prior to the Closing Date for approval and consent, and
Buyer and Helicon Corp. shall mutually agree upon the Allocation Agreement prior
to the Closing Date. In this regard, Buyer and Helicon Corp. agree that for
purposes of such Allocation Agreement seventy-eight percent (78%) of the
Purchase Consideration shall be allocated to the Franchises and twenty-two
percent (22%) of the Purchase Consideration shall be allocated to the
Partnership Assets that are tangible assets. Neither Buyer nor Helicon Corp.
shall unreasonably withhold its approval and consent with respect to the
Allocation Agreement. Buyer and Sellers agree that the Allocation Agreement
shall be amended to reflect any post-Closing adjustments determined under
Section 2.6 of this Agreement. Unless otherwise required by applicable law,
Buyer, Sellers and the Helicon Companies agree to act, and cause their
respective affiliates to act, in accordance with the computations and
allocations contained in the Allocation Agreement in any relevant Tax Returns or
similar filings (including any forms or reports required to be filed pursuant to
Section 1060 of the Code ("1060 Forms")), to cooperate in the preparation of any
1060 Forms, to file such 1060 Forms in the manner required by applicable law and
to not take any position inconsistent with such Allocation Agreement upon
examination of any tax refund or refund claim, in any litigation or otherwise.
(e CERTAIN TAXES. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest but excluding any income tax) incurred in connection with the
transactions consummated pursuant to this Agreement shall be borne equally by
the Charter Parties and the Sellers. If and to the extent that such Taxes and
fees are included in Adjustment Liabilities pursuant to Section 2.4(b)(2),
Seller's share of such Taxes and fees shall be paid by the Helicon Companies.
The Charter Parties and Helicon Corp. will cooperate in all reasonable respects
to prepare and file all necessary Tax Returns and other documentation with
respect to all such transfer, documentary, sales, use, stamp, registration and
other Taxes and fees.
(f The Charter Parties agree that they will not, and will not
cause or permit any of their Affiliates or any Helicon Company to, amend any Tax
Return of any Helicon Company with respect to any taxable period or portion
thereof ending on or prior to the Closing Date without the prior written consent
of Helicon Corp. Nothing in this Section 6.10(f) shall be construed to affect
the Buyer's rights pursuant to Section 6.10(h) herein.
(g From and after the date of this Agreement, Helicon Corp.
and each Helicon Company shall not without the prior written consent of the
Buyer (which consent shall not be unreasonably withheld) make, or cause or
permit to be made, any Tax election that would adversely affect Buyer in any
material respect.
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(h CONTESTS. (1) In the case of an audit or administrative
proceeding that relates to taxable periods ending on or before the Closing Date
with respect to any income Tax Return of the Helicon Companies, Helicon Corp.
(as agent for and on behalf of the Sellers) shall have the right at its expense
to participate in and control the conduct of such audit or proceeding; the
Charter Parties also may participate in any such audit or proceeding and, if
Helicon Corp. (as agent for and on behalf of the Sellers) does not assume the
defense of any such audit or proceeding, the Charter Parties may defend the same
in such manner as they may deem appropriate, including, but not limited to,
settling such audit after giving ten (10) days prior written notice to the
Partners setting forth the terms and conditions of settlement. In the event that
issues relating to a potential adjustment are required to be dealt with in the
same proceeding as separate issues relating to a potential adjustment for which
the Charter Parties would be liable, the Charter Parties shall have the right,
at their expense, to control the audit or proceeding with respect to the latter
issues.
(2) Neither the Charter Parties nor Helicon Corp. (as
agent for and on behalf of the Sellers) shall enter into any compromise or agree
to settle any claim pursuant to any Tax audit or proceeding which would
adversely affect the other party for such year or a subsequent year without the
written consent of the other party, which consent may not be unreasonably
withheld. The Charter Parties and Helicon Corp. (as agent for and on behalf of
the Sellers) agree to cooperate, and the Charter Parties agree to cause the
Helicon Companies to cooperate, in the defense against or compromise of any
claim in any audit or proceeding.
(i The Charter Parties agree that they will not, and will not
cause or permit any of their Affiliates to, file or otherwise make any election
with respect to GP Buyer that would cause GP Buyer to be classified as an entity
other than a partnership for federal and state income Tax purposes with respect
to post-Closing Tax periods.
6.11 HELICON NAME. Helicon Corp. and Helicon Group Ltd. retain the
right to use the name "Helicon" after the Closing, and the Charter Parties agree
to change, within one year after the Closing, the name of each Helicon Company
include any variant of "Helicon" to a name that does not include any variant of
"Helicon."
6.12 RELEASES. Except as expressly provided in Section 10 or 6.13
hereof, with respect to the transactions contemplated by this Agreement, after
the Closing, (a) no Charter Party nor any of its respective Affiliates will have
any claim (other than claims for fraud) against or be entitled to enforce any
provision of the Partnership Agreement against, any Seller nor any of such
Seller's Affiliates, or any of their respective present and former officers,
directors, stockholders, partners, representatives or agents, and all such
claims (except claims made pursuant to Section 10 and claims for fraud) are
hereby waived and released, and (b) no Seller nor any of such Seller's
Affiliates will have any
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rights or any claim (other than claims for fraud), under or be entitled to
enforce any provision of the Partnership Agreement against, any Charter Party,
any of its Affiliates, or any of their respective present and former officers,
directors, stockholders, partners, representatives or agents, and all such
claims (except claims made pursuant to Section 10 or 6.13, and claims for fraud)
are hereby waived and released.
6.13 EXCULPATION AND INDEMNIFICATION. After the Closing, Buyer, GP
Buyer and the Helicon Companies will be bound by and will assume the same
obligations to satisfy (and Buyer and GP Buyer will cause the Helicon Companies
to continue to satisfy) the rights of exculpation, indemnification and
advancement of expenses to which the present and former directors, officers,
employees and agents of the Helicon Companies and the Sellers are entitled with
respect to any matter existing or occurring prior to the Closing and/or with
respect to this Agreement and the Transaction Documents, under each such Helicon
Company's existing Organizational Documents or resolution of Helicon's Advisory
Committee, in accordance with the terms and conditions of any such exculpation
and indemnification provisions as in effect on the date of this Agreement.
6.14 EMPLOYEE MATTERS.
(a Except as otherwise provided in or required by any
employment agreement between any Helicon Company and any employee, all employees
of the Helicon Companies who continue in employment following the Closing shall
be employed at the same salary or hourly rate as in effect immediately prior to
Closing without material reduction for a period of six months following the
Closing and shall be employed on such terms and conditions as are substantially
similar in the aggregate to the terms and conditions of employment of Buyer's
employees. Each such employee shall receive credit for all purposes (other than
benefit accrual purposes under any defined benefit retirement plan) under any
Employee Plan or Compensation Arrangement of the Buyer for past service with any
Helicon Company and, to the extent credited under any Employee Plan or
Compensation Arrangement of any Helicon Company, for past service with any
predecessor employer.
(b Buyer shall offer group health plan coverage to all of the
employees of the Helicon Companies and to the spouse and dependents of such
employees who become employed by Buyer or any ERISA Affiliate of the Buyer as of
the Closing on terms and conditions generally applicable to all of Buyer's
similarly situated employees. For purposes of providing such coverage, Buyer
shall waive all pre-existing condition limitations for all such employees
covered by the health care plan of any Helicon Company as of the Closing and
shall provide such health care coverage effective as of the Closing without the
application of any eligibility period for coverage. In addition, Buyer shall
credit all employee payments toward deductible out-of-pocket and co-payment
obligation limits under the Helicon Companies' health care plans for the
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plan year which includes the Closing Date as if such payments had been made for
similar purposes under Buyer's health care plans during the plan year which
includes the Closing Date, with respect to employees of the Helicon Companies
and the spouse and any dependents of such employees who become employed by Buyer
as of the Closing Date.
(c Buyer shall assume full responsibility and liability for
offering and providing "continuation coverage" to any "covered employee" and any
"qualified beneficiary" who is covered by a "group health plan" sponsored or
contributed to by any of the Helicon Companies who has experienced a "qualifying
event" or is receiving "continuation coverage" on or prior to the closing.
"Continuation coverage," "covered employee," "qualified beneficiary,"
"qualifying event" and "group health plan" all shall have the meanings given
such terms under Section 4980B of the Code and Section 601 et seq. of ERISA. For
purposes of this Section, each employee at any Helicon Company and each employee
of Helicon Corp. who experiences a loss of health care coverage as a result of
the transactions contemplated by this Agreement together with their spouse and
dependents, if any, shall be deemed eligible for continuation coverage as
provided herein.
6.15 ASSIGNMENT OF CERTAIN ARRANGEMENTS WITH AFFILIATES.
(a) Prior to Closing Helicon Corp. will assign the Management
Agreements to BII except that Helicon Corp. shall retain the right to receive
the deferred management fees thereunder, which deferred management fees shall
comprise Adjustment Liabilities. The Management Agreements shall be included at
Closing in the BII Assets. At Closing, GP Buyer shall pay to Helicon Corp. the
amount of such deferred management fees, in satisfaction in full of Helicon
Corp.'s right to receive such deferred management fees.
(b) Prior to Closing, subject to the receipt of any Consents,
Helicon Corp. will assign to Helicon, and Helicon will assume the programming
agreements that have been entered into by Helicon Corp. as manager, as described
in Schedules 3.8 and 3.17 hereof.
6.16 PUT. Charter shall cause to be delivered at Closing to BII with
respect to the Preferred LLC Interest, the put agreement (the "PUT AGREEMENT"),
substantially in the form attached hereto as EXHIBIT E, duly executed by Paul
Allen, Charter's controlling stockholder, which agreement shall entitle each
holder of all or part of the units of the Preferred LLC Interest, at his option
at any time until and through the fifth anniversary of the Closing Date, to put
to Mr. Allen or his designee such number of units of such Preferred LLC Interest
as such holder shall elect, for an amount equal to the number of such "put"
units multiplied by the original issue price of such units, plus any accrued and
unpaid dividends on such "put" units. On the date hereof, Charter is executing
and delivering option agreements, (the "OPTION AGREEMENTS"), granting certain
rights to BII
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and three other Partners in the event of an initial public offering of the
common stock of Charter or one of its affiliates.
6.17 GUARANTY BY CHARTER. Subject to the provisions of this Section
6.17, Charter hereby fully, unconditionally and irrevocably guarantees to
Sellers the due and punctual payment of the Cash Consideration and any other
monetary obligations of Buyer and the due and punctual performance of all other
obligations of Buyer or GP Buyer, all in accordance with the terms of this
Agreement. Charter hereby acknowledges that, with respect to all of Buyer's and
GP Buyer's obligations to pay money, including the Cash Consideration, this
guaranty shall be a guaranty of payment and performance and not of collection
and shall not be conditioned or contingent upon the pursuit of any remedies
against Buyer or GP Buyer. Charter hereby waives diligence, demand of payment,
filing of claims with a court in the event of merger or bankruptcy of Buyer or
GP Buyer, any right to require a proceeding first against Buyer or GP Buyer, the
benefit of discussion, protest or notice and all demands whatsoever, and
covenants that this guaranty will not be discharged as to any obligation except
by satisfaction of such obligation in full. Until the Sellers have been paid in
full any amounts due and owing to Sellers under this Agreement, Charter hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against Buyer and GP Buyer that arise from the existence, payment,
performance or enforcement of its obligations under this Agreement, including
any right of reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of Sellers against Buyer or GP
Buyer, or any collateral which Sellers hereafter acquire, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including the right to take or receive from Buyer or GP Buyer, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. To the fullest
extent permitted by applicable law, the obligations of Charter hereunder shall
not be affected by (a) the failure of the applicable obligee to assert any claim
or demand or to enforce any right or remedy against Charter pursuant to the
provisions of this Agreement or otherwise, (b) any rescission, waiver, amendment
or modification of, or any release from any of the terms or provisions of this
Agreement or the invalidity or unenforceability (in whole or in part) of this
Agreement, unless consented to in writing by Charter and Sellers and (c) any
change in the existence (corporate or otherwise) of Buyer, Charter or any of the
Sellers or any insolvency, bankruptcy, reorganization or similar proceeding
affecting any of them or their assets. If any amount shall be paid to Charter in
violation of the preceding sentence and the obligations of Buyer or GP Buyer
under this Agreement shall not have been discharged in full, such amount shall
be deemed to have been paid to Charter for the benefit of, and held in trust for
the benefit of, Sellers, and shall forthwith be paid to Sellers. Charter
acknowledges that it will receive direct and indirect benefits from the
consummation of the transactions contemplated by this Agreement and that the
waivers set forth in this Section 6.17 are knowingly made in contemplation of
such benefits. Nothing contained in this Section 6.17 is intended to or
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shall impair, as among Charter and Sellers, the obligations of Charter, which
are absolute and unconditional, upon failure by Buyer or GP Buyer to perform
their respective obligations under this Agreement, including the obligation to
pay to Sellers the Cash Consideration and any other monetary obligations of
Buyer when payable in accordance with the terms of this Agreement, or is
intended to or shall affect the relative rights of Sellers and creditors of
Charter, nor shall anything herein prevent Sellers from exercising all remedies
otherwise permitted by applicable law.
6.18 DISCLOSURE SCHEDULES. The parties acknowledge and agree that (i)
Helicon's Disclosure Schedules and Charter's Disclosure Schedules may include
certain items and information solely for informational purposes for the
convenience of the parties hereto, and (ii) the disclosure of any matter in
Helicon's Disclosure Schedules or Charter's Disclosure Schedules shall not be
deemed to constitute an acknowledgment by the Helicon Parties, in this case of
Helicon's Disclosure Schedules, or the Charter Parties, in the case of Charter's
Disclosure Schedules, that the matter is material.
6.19 FURTHER ASSURANCES. After the date hereof the parties shall take
any commercially reasonable actions and execute any other documents that may be
reasonably necessary or desirable to the implementation and consummation of this
Agreement upon the reasonable request of the other party, at the expense of the
requesting party.
6.20 ENVIRONMENTAL REPORTS. At any time after the date hereof, Buyer
shall have the right to engage an environmental consultant to conduct a Phase I
environmental audit and to prepare a Phase I environmental report, and if
recommended in such Phase I environmental report, a Phase II environmental audit
and Phase II environmental report for each Real Property listed on SCHEDULE 3.9.
The cost of Phase I and Phase II environmental audits and reports shall be borne
by Buyer. The Helicon Companies shall cooperate with Buyer, in connection with
such Phase I and Phase II environmental audits and reports, including providing
all reasonable access to their respective properties and facilities.
6.21 YEAR 2000 MATTERS. The Helicon Companies shall have taken
commercially reasonable actions to implement the Year 2000 Plan and to complete
implementation of the Year 2000 Plan as soon as is reasonably practicable. The
Helicon Companies shall cooperate with the Charter Parties prior to the Closing
with respect to the Year 2000 Matters. Such cooperation shall include providing
the Charter Parties with status reports as the Charter Parties may reasonably
request regarding Year 2000 Matters.
6.22 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BAUM. By his
execution here below in joinder to this Agreement with respect to this Section
6.22, Baum agrees as follows:
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(a) Baum represents and warrants to the Charter Parties: (i)
that his joinder hereto and any Transaction Document to which he will become a
party have been duly executed and delivered by him (or, in the case of
Transaction Documents to be executed and delivered at Closing, when executed and
delivered will be duly executed and delivered) and constitute (or, in the case
of Transaction Documents to be executed and delivered at Closing, when executed
and delivered will constitute) his legal, valid, and binding obligation,
enforceable against him in accordance with their terms, except as the
enforceability of this Agreement and such other Transaction Document may be
limited by Enforceability Exceptions; and (ii) that his performance of his
obligations under this Section 6.22 does not require any consent of, declaration
to, notice to, or filing with any Governmental Authority or any other Person
that has not been obtained, will not conflict with, result in a breach of, or
constitute a default under any Legal Requirement to which he is bound, and will
not conflict with, result in a material breach of, or constitute a material
default under any material agreement or instrument to which he is bound.
(b) Baum represents and warrants to the Charter Parties that
Baum holds all legal and beneficial rights to the THGLP Note free and clear, and
will transfer such note to Buyer at Closing free and clear of all Encumbrances,
subject to Legal Restrictions.
(c) Baum covenants to perform his obligations under Sections
2.2(c), 8.2(c), and 8.3(b)(1) hereof.
(d) Baum, Sellers and the Charter Parties agree that for
purposes of Sections 7.1(b) and 10.5 hereof, Baum's representations and
warranties in (i) subsections (a) and (b) above shall comprise representations
and warranties of Sellers under Section 4 hereof, and (ii) subsection (b) above
shall comprise representations and warranties of Sellers under Section 4.4
hereof.
(e) After the Closing, Baum agrees to indemnify and hold the
Charter Parties harmless against and with respect to, and shall reimburse Buyer
for any and all Losses resulting from any untrue representation or breach of
warranty by Baum set forth in subsections (a) or (b) above, or the
nonfulfillment of any covenant by Baum in subsection (c) above or in any
Transaction Document to which Baum is a party; PROVIDED, HOWEVER, that the
foregoing indemnity will be subject to the limitations in Section 10.5 hereof as
if Baum comprised a Seller hereunder, and PROVIDED, FURTHER, that to implement
such foregoing indemnity, Baum shall comprise an "Indemnifying Party" under
Section 10.6 hereof.
SECTION 7: CONDITIONS TO OBLIGATIONS OF THE CHARTER PARTIES AND SELLERS
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7.1 CONDITIONS TO OBLIGATIONS OF THE CHARTER PARTIES. All obligations
of the Charter Parties at the Closing hereunder are subject to the fulfillment
prior to or at the Closing of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES OF HELICON. As to the
representations and warranties of Helicon set forth in Section 3, (1) each of
those representations and warranties set forth in Section 3 which is expressly
stated to be made solely as of the date of this Agreement or another specified
date shall be true and correct in all respects as of such date, without regard
to the materiality or Material Adverse Effect qualifiers set forth therein, and
(2) each of the other representations and warranties of Helicon set forth in
Section 3 shall be true and correct in all respects at and as of the time of the
Closing as though made at and as of that time, without regard to the materiality
or Material Adverse Effect qualifiers set forth therein (except for
representations and warranties with respect to the delivery of documents to
Buyer or the listing of documents on a Schedule hereto), provided that for
purposes of each of clauses (1) and (2) above, the representations and
warranties shall be deemed true and correct in all respects to the extent that
the aggregate effect of the inaccuracies in such representations and warranties
as of the applicable times does not constitute a Material Adverse Effect, when
compared with the state of facts that would exist if all such representations
and warranties were true in all respects as of the applicable times.
(b) REPRESENTATIONS AND WARRANTIES OF SELLERS. As to the
representations and warranties of Sellers set forth in Section 4, (1) each of
those representations and warranties set forth in Section 4 which is expressly
stated to be made solely as of the date of this Agreement or another specified
date shall be true and correct in all respects as of such date, without regard
to the materiality or Material Adverse Effect qualifiers set forth therein, and
(2) each of the other representations and warranties of Sellers set forth in
Section 4 shall be true and correct in all respects at and as of the time of the
Closing as though made at and as of that time, without regard to the
materiality, or Material Adverse Effect qualifiers set forth therein (except for
representations and warranties with respect to the delivery of documents to
Buyer or the listing of documents on a Schedule hereto), except in each case of
clauses (1) and (2) to the extent that the aggregate effect of the inaccuracies
in such representations and warranties as of the applicable times does not
constitute a Material Adverse Effect, when compared with the state of facts that
would exist if all such representations and warranties were true in all respects
as of the applicable times.
(c) COVENANTS. The Helicon Parties, the Sellers and Baum shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by them
prior to or at the Closing.
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(d) CONSENTS. (i) The aggregate number of Equivalent
Subscribers as of the Closing, in those Franchise Areas that are Transferable
Franchise Areas shall be at least ninety percent (90%) of the aggregate number
of Equivalent Subscribers in all Franchise Areas as of the Closing, (ii) one
hundred twenty (120) days shall have elapsed and no extensions of such 120-day
period shall have been granted since the date of filing of the FCC Form 394 with
respect to any Franchise Consent which has not been obtained; and (iii) all
other Required Consents shall have been obtained.
(e) HART-SCOTT-RODINO. The requisite waiting period, if any,
under the HSR Act shall have expired or been terminated.
(f) JUDGMENT. There shall not be in effect on the date on
which the Closing is to occur any judgment, decree, order or other prohibition
having the force of law that would prevent or make unlawful the Closing,
provided that the Charter Parties shall have used commercially reasonable
efforts to prevent the entry of any such judgment, decree, order or other legal
prohibition and to appeal as expeditiously as possible any such judgment,
decree, order or other legal prohibition that may be entered.
(g) DELIVERIES. The Helicon Parties shall have made or stand
willing to make all the deliveries to Buyer described in Section 8.2.
(h) MATERIAL ADVERSE CHANGE. No event shall have occurred
between the date of this Agreement and the date on which the Closing is to occur
that has had a Material Adverse Effect.
(i) PURCHASE AND EXERCISE OF WARRANTS. BII (a) shall have
purchased all of the outstanding Warrants from the Subordinated Holders pursuant
to its rights as Baum's assignee under the Call Agreement and (b) shall have
exercised the Warrants.
7.2 CONDITIONS TO OBLIGATIONS OF SELLERS.
All obligations of each Seller at the Closing hereunder are
subject to the fulfillment prior to or at the Closing of each of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Charter Parties set forth in Section 5 shall be true and
complete in all material respects at and as of the Closing Date as though made
at and as of that time.
(b) COVENANTS. The Charter Parties shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by them prior to or at the
Closing.
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(c) CONSENTS. (i) The aggregate number of Equivalent
Subscribers as of the Closing, in those Franchise Areas that are Transferable
Franchise Areas shall be at least ninety percent (90%) of the aggregate number
of Equivalent Subscribers in all Franchise Areas as of the Closing, (ii) one
hundred twenty (120) days shall have elapsed and no extensions of such 120-day
period shall have been granted since the date of filing of the FCC Form 394 with
respect to any Franchise Consent which has not been obtained; and (iii) all
Required Consents shall have been obtained.
(d) HART-SCOTT-RODINO. The requisite waiting period, if any,
under the HSR Act shall have expired or been terminated.
(e) JUDGMENT. There shall not be in effect on the date on
which the Closing is to occur any judgment, decree, order or other prohibition
having the force of law that would prevent or make unlawful the Closing,
provided that Helicon Parties shall have used commercially reasonable efforts to
prevent the entry of any such judgment, decree, order or other legal prohibition
and to appeal as expeditiously as possible any such judgment, decree, order or
other legal prohibition that may be entered.
(f) RELEASE FROM DEBT INSTRUMENTS. Sellers and Baum shall have
been released as provided in Section 6.7(b) by the Charter Parties from any
further obligations with respect to the debt instruments that are listed in
SCHEDULE 3.6.
(g) DELIVERIES. The Charter Parties shall have made or stand
willing to make all the deliveries described in Section 8.3.
SECTION 8: CLOSING AND CLOSING DELIVERIES
8.1 CLOSING.
(a) CLOSING DATE.
(1) Subject to satisfaction or, to the extent
permitted by law, waiver, of the closing conditions described in Section 7, and
subject to Section 8.1(a)(2), the Closing shall take place on a date specified
by the mutual agreement of Helicon and Buyer, or in the absence of such
agreement, on the last business day of such calendar month in which the
conditions set forth in Sections 7.1(d) and (e) and Sections 7.2(c) and (d)
shall have been satisfied or waived; PROVIDED, HOWEVER, that if the last
business day of such calendar month in which such conditions shall have been
satisfied or waived shall be beyond the Upset Date, then the Closing shall occur
on the Upset Date.
(2) If on the date on which the Closing would
otherwise be required to take place pursuant to Section 8.1(a)(1), (A) there
shall be in effect any
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judgment, decree, or order that would prevent or make unlawful the Closing, or
(B) any other circumstance beyond the reasonable control of the Helicon Parties
or the Charter Parties shall exist that would prevent the Closing or the
satisfaction of any of the conditions precedent to any party set forth in
Section 7, then either Helicon or Buyer may, at its option, postpone the date on
which the Closing is required to take place until such date, to be set by the
party that elects to postpone the date for Closing pursuant to this subsection
(2) on at least five business days' written notice to the other party, as soon
as practicable after such judgment, decree, or order ceases to be in effect, or
such other circumstance ceases to exist; PROVIDED, HOWEVER, that any
postponement of the date on which the Closing is required to take place to a
date beyond the Upset Date shall require the consent of both Helicon and Buyer.
(b) CLOSING PLACE. The Closing shall be held at the offices of
Paul, Hastings, Janofsky & Walker LLP, 399 Park Avenue, 31st Floor, New York,
New York 10022, or any other place or time as Helicon and Buyer shall mutually
agree.
8.2 DELIVERY BY SELLERS. The Sellers shall deliver or cause to be
delivered to the Charter Parties the following:
(a) BII ASSETS. An assignment agreement providing for the
assignment and contribution of the BII Assets by BII to GP Buyer, in a form
reasonably satisfactory to GP Buyer, together with any certificates representing
the GP Interest.
(b) PURCHASED INTERESTS. An assignment agreement providing for
the assignment of the LP Interests and the Preferred Interests by the Limited
Partners to Buyer, in a form reasonably satisfactory to Buyer, together with any
certificates representing the LP Interests or the Preferred Interests, duly
endorsed for transfer.
(c) THGLP NOTE. An assignment agreement providing for the
assignment of the THGLP Note by Buyer, in a form reasonably satisfactory to
Buyer, together with the original THGLP Note.
(d) OFFICER'S CERTIFICATE OF HELICON AND BII. A certificate
executed by BII, on its own behalf and in its capacity as the general partner of
Helicon, dated as of the Closing Date, certifying that the closing conditions
specified in Sections 7.1(a) and (c) have been satisfied as to Helicon or BII,
except as disclosed in such certificate.
(e) SELLERS' CERTIFICATE. A certificate executed by Sellers,
dated as of the Closing Date, certifying that the closing conditions specified
in Sections 7.1(b) and (c) have been satisfied as to Sellers and Baum, except as
disclosed in such certificate.
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(f) SECRETARIES' CERTIFICATES. A certificate executed by
Helicon and BII, dated as of the Closing Date, (1) certifying that the
resolutions, as attached to said certificate, were duly adopted by BII, on its
own behalf and in its capacity as the general partner of Helicon, as the case
may be, authorizing and approving the execution by such party of this Agreement
and the other Transaction Documents to which such party is a party and the
consummation of the transactions contemplated hereby and thereby and that such
resolutions remain in full force and effect; and (2) providing, as attachments
thereto, Certificates of Good Standing for Helicon and each of the other Helicon
Companies certified by an appropriate state official of the State of their
organization, all certified by such state officials as of a date not more than
fifteen days before the Closing Date.
(g) COMPLIANCE WITH FIRPTA. A certificate executed by each
Seller, in a form reasonably satisfactory to the Buyer, pursuant to Section
1.1445-2(b)(2) of the Treasury Regulations, certifying that such Seller is not a
foreign person.
(h) CONSENTS. Copies of Consents which have been obtained by
Helicon or Sellers prior to the Closing.
(i) INDEMNITY AGREEMENT. The Indemnity Agreement, duly
executed by Helicon Corp. (as agent for and on behalf of Sellers) and the Escrow
Agent.
(j) AMENDED LLC AGREEMENT. The Amended LLC Agreement duly
executed by BII.
(k) RESIGNATIONS. Written resignations, effective on the
Closing Date, of all officers, managers and directors of the Helicon Companies.
(l) TERMINATIONS. Written terminations, effective on the
Closing Date, of all management and other similar agreements, as listed in
SCHEDULE 3.17, between any of the Sellers and any of the Helicon Companies,
except as provided in Section 6.15 hereof.
(m) BANK ACCOUNTS. True and complete information regarding
each Helicon Company's bank accounts containing cash deposits as of the Closing
Date and the names of all authorized signatories on all such accounts.
(n) ORGANIZATIONAL, FINANCIAL, AND TAX RECORDS. All corporate,
partnership or limited liability company records (including minute books and
stock books and registers) and financial and tax records of each of the Helicon
Companies that are not located at one of the offices or sites included in the
Real Property.
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(o) OPINIONS OF COUNSEL. (i) An opinion of Dow, Lohnes &
Albertson, PLLC, counsel to Helicon, dated as of the Closing Date, in form and
substance reasonably satisfactory to Buyer; and (ii) an opinion of counsel to
certain Partners, dated as of the Closing Date, in form and substance reasonably
satisfactory to Buyer.
(p) PUT AGREEMENT. The Put Agreement duly executed by BII.
8.3 DELIVERY BY THE CHARTER PARTIES. Prior to or at the Closing, the
Charter Parties shall deliver to Sellers the following:
(a) ASSUMPTION AGREEMENTS
(1) An assumption agreement providing for the
assumption by GP Buyer of the BII Assets, in a form reasonably satisfactory to
BII.
(2) An assumption agreement providing for the
assumption by Buyer of the LP Interests and the Preferred Interests, in a form
reasonably satisfactory to Sellers.
(3) An assumption agreement providing for the
assumption by GP Buyer of the Management Agreements, in a form reasonably
satisfactory to Helicon Corp.
(b) PURCHASE CONSIDERATION.
(1) The purchase price for the THGLP Note, as set
forth in Section 2.2(c) hereof, by wire transfer of immediately available funds
to an account designated by Baum by written notice to Buyer not less than two
days prior to Closing.
(2) As provided in Section 2.5, the payments to the
Escrow Agent, if the Partners do not elect to deliver the Letters of Credit, by
wire or accounts transfer of immediately available funds to one or more accounts
designated by the Escrow Agent, and the Estimated Cash Consideration, less the
payments to the Escrow Agent, to the Partners in accordance with the allocation
agreed to among them pursuant to Section 2.3 hereof, by wire or accounts
transfer of immediately available funds to one or more accounts designated by
the Partners, in each case by written notice to Buyer not less than two days
prior to the Closing.
(c) OFFICERS' CERTIFICATE. A certificate executed by each of
the Charter Parties, dated as of the Closing Date, certifying that the closing
conditions specified in Sections 7.2(a) and (b) have been satisfied, except as
disclosed in said certificate.
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(d) SECRETARIES' CERTIFICATE. A certificate executed by each
of the Charter Parties, dated as of the Closing Date, (1) certifying that the
resolutions, as attached to said certificate, were duly adopted by the Board of
Directors of such Charter Party, authorizing and approving the execution by such
Charter Party of this Agreement and the other Transaction Documents to which
such Charter Party is a party and the consummation of the transactions
contemplated hereby and thereby and that such resolutions remain in full force
and effect; and (2) providing, as attachments thereto, a Certificate of Good
Standing for such Charter Party certified by an appropriate state official of
the State of Delaware, certified by such state official as of a date not more
than fifteen days before the Closing Date.
(e) AMENDED LLC AGREEMENT. The Amended LLC Agreement duly
executed by Charter and GP Buyer.
(f) INDEMNITY AGREEMENT. The Indemnity Agreement, duly
executed by Buyer (as agent for and on behalf of the Charter Parties), and the
Escrow Agent.
(g) OPINION OF COUNSEL. An opinion of Paul, Hastings, Janofsky
& Walker LLP, counsel to Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Partners.
(h) PUT AGREEMENT. The Put Agreement executed by Paul G.
Allen.
SECTION 9: TERMINATION
9.1 AGREEMENT BETWEEN HELICON AND BUYER. This Agreement may be
terminated at any time prior to the Closing by agreement between Helicon and
Buyer.
9.2 TERMINATION BY HELICON. This Agreement may be terminated at any
time prior to the Closing by Helicon, and the BII Contribution and the purchase
and sale of the Purchased Interests abandoned, upon written notice to Buyer,
upon the occurrence of any of the following:
(a) CONDITIONS. If on any date determined for the Closing in
accordance with Section 8.1 if each condition set forth in Section 7.1 has been
satisfied (or will be satisfied by the delivery of documents at the Closing) or
waived in writing on such date and either a condition set forth in Section 7.2
has not been satisfied (or will not be satisfied by the delivery of documents at
the Closing) or waived in writing on such date or a Charter Party has
nonetheless refused to consummate the Closing. Notwithstanding the foregoing,
Helicon may not rely on the failure of any condition set forth in Section 7.2 to
be satisfied if such failure was principally caused by any Helicon Party's
failure to act in good faith or a breach of or failure to perform any of its
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representations, warranties, covenants or other obligations in accordance with
the terms of this Agreement.
(b) UPSET DATE. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by Helicon Party's failure to act in good faith or a breach
of or failure to perform any of its representations, warranties, covenants or
other obligations in accordance with the terms of this Agreement.
(c) CLOSING EQUIVALENT SUBSCRIBERS. If the Closing Equivalent
Subscribers shall be less than 150,000, PROVIDED, that termination pursuant to
this Section 9.2(c) shall not be effective, and shall be void ab initio, in the
event that Buyer delivers notice to Helicon that Buyer is willing to close
notwithstanding the failure of the Closing Equivalent Subscribers to be at least
150,000; PROVIDED, FURTHER, that, if Buyer elects to close as provided in the
immediately foregoing proviso, than notwithstanding the actual number of Closing
Equivalent Subscribers or any other provision of this Agreement, the Estimated
Cash Consideration payable by Buyer at such Closing shall be an amount equal to
Four Hundred Eighty-Four Million Five Hundred Thousand Dollars ($484,500,000)
decreased by the amount of the Closing Net Liabilities pursuant to Section
2.4(b) and adjusted pursuant to Section 2.4(c).
9.3 TERMINATION BY BUYER. This Agreement may be terminated at any time
prior to the Closing by Buyer, and the BII Contribution and purchase and sale of
the Purchased Interests abandoned, upon written notice to Helicon, upon the
occurrence of any of the following:
(a) CONDITIONS. If on any date determined for the Closing in
accordance with Section 8.1 if each condition set forth in Section 7.2 has been
satisfied (or will be satisfied by the delivery of documents at the Closing) or
waived in writing on such date and either a condition set forth in Section 7.1
has not been satisfied (or will not be satisfied by the delivery of documents at
the Closing) or waived in writing on such date or any Helicon Party has
nonetheless refused to consummate the Closing. Notwithstanding the foregoing,
Buyer may not rely on the failure of any condition set forth in Section 7.1 to
be satisfied if such failure was principally caused by any Charter Party's
failure to act in good faith or a breach of or failure to perform any of its
representations, warranties, covenants or other obligations in accordance with
the terms of this Agreement.
(b) UPSET DATE. If the Closing shall not have occurred on or
prior to the Upset Date, unless the failure of the Closing to occur was
principally caused by any Charter Party's failure to act in good faith or a
breach of or failure to perform any of its
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representations, warranties, covenants or other obligations in accordance with
the terms of this Agreement.
(c) CLOSING EQUIVALENT SUBSCRIBERS. If the Closing Equivalent
Subscribers shall be less than 150,000.
9.4 EFFECT OF TERMINATION. If this Agreement is terminated as provided
in this Section 9, then this Agreement will forthwith become null and void and
there will be no liability on the part of any party to any other party or any
other Person in respect thereof, provided that:
(a) SURVIVING OBLIGATIONS. The obligations of the parties
described in Sections 6.2, 9.4 and 11.1 (and all other provisions of this
Agreement relating to expenses) will survive any such termination.
(b) WITHDRAWAL OF APPLICATIONS. All filings, applications and
other submissions relating to the consummation of the transaction contemplated
hereby shall, to the extent practicable, be withdrawn from the Governmental
Authority or other Person to whom made.
(c) WILLFUL BREACH BY THE CHARTER PARTIES. No such termination
will relieve Buyer from liability for a willful breach by the Charter Parties of
this Agreement, and in such event the Helicon Parties shall have all rights and
remedies available at law and equity, including the remedy of specific
performance.
(d) WILLFUL BREACH BY THE HELICON PARTIES. No such termination
will relieve the Helicon Parties from liability for a willful breach of this
Agreement, and in such event the Charter Parties shall have all rights and
remedies available at law or equity, including the remedy of specific
performance.
(e) NO RECOURSE. Anything in this Agreement or applicable law
to the contrary notwithstanding, in the event this Agreement is terminated as
provided in this Section 9:
(1) No Charter Party will have any claim or recourse
against Baum, any of the Sellers, or any of their or the Helicon Parties'
respective officers, directors, shareholders, partners, employees, agents or
Affiliates (other than the Helicon Companies) as a result of the breach of any
representation, warranty, covenant or agreement of any Helicon Party contained
herein or otherwise arising out of or in connection with the transactions
contemplated by this Agreement or the business or operations of the Helicon
Companies prior to the Closing. The Charter Parties' sole recourse shall be
against the Helicon Companies.
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(2) No Helicon Party will have any claim or recourse
against any of the Charter Parties' respective officers, directors,
shareholders, partners, employees, agents or Affiliates (other than the Charter
Parties) as a result of the breach of any representation, warranty, covenant or
agreement of any Charter Party contained herein or otherwise arising out of or
in connection with the transactions contemplated by this Agreement or the
compliance by the Charter Parties with their covenants prior to the Closing. The
Helicon Parties' sole recourse shall be against the Charter Parties.
9.5 ATTORNEY'S FEES. Notwithstanding any provision in this Agreement
that may limit or qualify a party's remedies, in the event of a default by any
party that results in a lawsuit or other proceeding for any remedy available
under this Agreement, the prevailing party shall be entitled to reimbursement
from the defaulting party of its reasonable legal fees and expenses (whether
incurred in arbitration, at trial, or on appeal).
SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN
REMEDIES
10.1 SURVIVAL. All representations, warranties and covenants set forth
herein will survive the Closing, provided that all claims made in respect of
such representations, warranties and covenants will be subject to any applicable
limitations set forth in this Section 10.
10.2 INDEMNIFICATION BY SELLERS. After the Closing, but subject to
Section 10.5, the Sellers agree to indemnify and hold the Charter Parties
harmless against and with respect to, and shall reimburse Buyer for:
(a) any and all Losses resulting from any untrue
representation or breach of warranty by Helicon or the nonfulfillment of any
covenant to be performed at or prior to Closing by Helicon contained in this
Agreement or any other Transaction Document to which Helicon is a party; and
(b) any and all Losses resulting from any untrue
representation or breach of warranty by such Seller or the nonfulfillment of any
covenant by such Seller contained in this Agreement or any other Transaction
Document to which such Seller is a party.
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For purposes of this Section 10, each representation and
warranty (whether made as of the date of this Agreement or made on and as of the
Closing Date) contained in this Agreement for which indemnification is sought
hereunder shall be read (including for purposes of determining whether a breach
of such representation or warranty has occurred) without regard to, and as if
such representation or warranty did not contain materiality or Material Adverse
Effect qualifications that may be contained therein (except for representations
and warranties with respect to the delivery of documents to Buyer or the listing
of documents on a Schedule hereto).
10.3 INDEMNIFICATION BY THE CHARTER PARTIES. After the Closing, but
subject to Section 10.5, the Charter Parties jointly and severally agree to
indemnify and hold Sellers harmless against and with respect to, and shall
reimburse Sellers for any and all Losses resulting from any untrue
representation or breach of warranty by any Charter Party or the nonfulfillment
of any covenant by any Charter Party contained in this Agreement or any other
Transaction Document to which such Charter Party is a party.
10.4 INDEMNITY AGREEMENT. At the Closing, Buyer (as agent for and on
behalf of the Charter Parties), Helicon Corp. (as agent for and on behalf of
Sellers), and the Escrow Agent shall execute the Indemnity Agreement, in
accordance with which Buyer will deposit the Indemnity Fund with or, at the
Sellers' option, the Sellers will deliver the Letters of Credit to the Escrow
Agent on the Closing Date in order to provide a fund for, and the exclusive
source for, the payment of any indemnification to which any Charter Party is
entitled under this Section 10 (such escrow, the "INDEMNITY FUND"); PROVIDED,
HOWEVER, that the Indemnity Fund shall not be the exclusive source for the
payment of any indemnification to which any Charter Party is entitled as a
result of a breach of the representations and warranties set forth in Section
4.3 or 4.4.
(a) The Indemnity Fund will be administered in accordance
with the provisions of this Section 10 and the Indemnity Agreement.
(b) On the first business day following the twelve-month
anniversary of the Closing Date, the Indemnity Fund, less any amount subject to
an outstanding claim by the Charter Parties, shall be released from escrow and
paid over to the Partners. Thereafter, any remaining Indemnity Fund shall be
released from escrow and paid over to Sellers, in accordance with the Indemnity
Agreement.
10.5 CERTAIN LIMITATIONS ON INDEMNIFICATION OBLIGATIONS.
Notwithstanding anything in this Agreement to the contrary:
(a) The following limitations shall apply to any of the
Charter Parties or any of the Sellers, as the Claimant, with respect to its
claims against the Sellers or the Charter Parties, as the Indemnifying Party,
for indemnity for matters described in Section
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10.2 or 10.3, as the case may be, other than any claim by Sellers regarding the
nonfulfillment of the Charter Parties' obligation to pay the Cash Consideration
or issue the Preferred LLC Interest (in which event the following limitations
shall not apply):
(1) The Indemnifying Party will not be required to
indemnify or otherwise be liable to the Claimant for matters described in
Section 10.2 or 10.3 (as the case may be) unless and until the aggregate amount
of all Losses of the Claimant arising therefrom for which the Indemnifying Party
would have indemnification liability to the Claimant but for this Section
10.5(a)(1), exceeds, and then only to the extent of the excess above, $400,000;
PROVIDED, HOWEVER, that this Section 10.5(a)(1) shall not apply to any amount
payable to Buyer or Sellers pursuant to Section 2.6, or as a result of a breach
of any of the representations and warranties set forth in Sections 4.3 or 4.4.
(2) No Indemnifying Party will be required to
indemnify or otherwise be liable to the Claimant with respect to any Losses
arising under Section 10.2 or 10.3 (as the case may be) unless the Claimant
gives the Indemnifying Party written notice of a claim pursuant to Section 10.2
or 10.3 (as the case may be) on or prior to the date that is twelve months after
the Closing Date, PROVIDED, that such twelve-month limitation shall not apply in
the case of any breach of any of the representations and warranties set forth in
Sections 4.3 or 4.4; and
(3) Except for a claim of a breach of any of the
representations and warranties set forth in Sections 4.3 and 4.4, the sole and
exclusive remedy available to the Claimant shall be a claim for indemnity
pursuant to the terms of this Section 10.
(4) The amount payable to the Claimant by the
Indemnifying Party in respect of a Loss shall be computed net of any insurance
payments received with respect thereto that reduces the amount of such Loss that
would otherwise be sustained. The parties hereto agree to use commercially
reasonable efforts to collect any and all insurance proceeds to which it may be
entitled in respect of any Loss prior to seeking indemnity as Claimant from the
Indemnifying Party.
(5) No party shall have any liability or obligation
(for indemnification or otherwise) arising as a result of any other party's
waiver of any closing condition, nor shall any adjustment be made to the Cash
Consideration in respect of the foregoing.
(6) No Indemnifying Party will have any liability or
obligation for any inaccuracy in any representation or warranty made by such
party in this Agreement (1) which did not exist as of the date of this Agreement
and which arose other than by reason of any breach by a Indemnifying Party of
any covenant or agreement of
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such party set forth in this Agreement, or (2) if such inaccuracy does not exist
at the time of the Closing.
(b) Notwithstanding anything in this Agreement to the
contrary, the following additional limitations shall apply with respect to
claims against the Sellers, as the Indemnifying Party, by the Charter Parties,
as Claimants, for indemnity for any matter described in Section 10.2:
(1) Anything in this Agreement or applicable law to
the contrary notwithstanding, other than claims (i) with respect to the
Indemnity Fund as provided for in this Agreement and (ii) for breaches of
representations and warranties contained in Sections 4.3 and 4.4, no Seller, its
Affiliates or any of their respective officers, directors, shareholders,
members, partners, employees or agents shall have any obligation or liability to
any Charter Party under this Section 10 or otherwise, and no Charter Party will
have any claim or recourse against Seller, its Affiliates or any of their
respective officers, directors, shareholders, members, partners, employees or
agents as a result of the breach of any representation, warranty, covenant or
agreement of any Helicon Party or any Seller contained herein or otherwise
arising out of or in connection with the transactions contemplated by this
Agreement or the Transaction Documents or the business or operations of the
Helicon Companies prior to the Closing.
(2) All payments required to be made by Sellers or
any Seller in respect of their indemnification obligations under this Section 10
shall be made solely from the Indemnity Fund except for any misrepresentation or
breach by any Seller of any representations and warranties by such Seller in
Section 4.3 or 4.4 hereof, in which event such Seller shall be solely liable
with respect to any indemnity due the Charter Parties under Section 10.2(b)
above.
(3) Sellers shall not be liable with respect to any
Loss to the extent that the amount of such Loss was included as an Adjustment
Liability in the computation of Closing Net Liabilities in accordance with
Section 2.
(4) No Seller will have any liability or obligation
for any inaccuracy in any representation or warranty made by any Helicon Party
in this Agreement which relates to any Excluded Asset.
(5) Sellers shall have no obligation to indemnify or
otherwise be liable to the Charter Parties with respect to any claim for breach
of any representation or warranty by any of the Helicon Parties or otherwise,
arising from any presence of Hazardous Substances on any of the Real Property
described on Schedule 3.9 to the extent that such presence of Hazardous
Substances shall have been disclosed or revealed to the Charter Parties in any
environmental assessments undertaken between the date
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hereof and the Closing Date; PROVIDED, HOWEVER, that notwithstanding the
foregoing, the representations and warranties on environmental matters by
Helicon in Section 3.14, unqualified by the results of such environmental
assessments, shall continue to comprise a closing condition under Section 7.1(a)
hereof.
(6) No Seller will have any liability or obligation
for any untrue representation or breach of warranty with respect to inaccuracy
in any representation or warranty set forth in Section 3.20 that exists as of
the Closing Date that did not exist as of the date of this Agreement.
(c) The foregoing limitations shall not apply with respect
to claims arising following the Closing relating to any breach of the terms of
the Amended LLC Agreement, the Put Agreement, Option Agreement or the release
from Debt Obligations.
10.6 PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "CLAIMANT")
shall promptly give notice to the party from which indemnification is claimed
(the "INDEMNIFYING PARTY") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim and the amount thereof (if known and quantifiable); PROVIDED, HOWEVER,
that the failure to give such notice shall not impair the Claimant's rights
under this Section 10 unless such failure to give such notice shall have
materially impaired the Indemnifying Party's ability to defend against such
third-party claim.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity.
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in or
assume control of the defense of such claim, and the Claimant shall cooperate
fully with the Indemnifying Party, subject to
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reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnifying Party; provided that notwithstanding the
foregoing, if such claim is from a Franchising Authority or other Governmental
Authority and any of the Charter Parties are seeking indemnification against the
Sellers in respect of such claim, the Charter Party may retain control of the
defense of such claim, but the Sellers shall have the right, at their own
expense, to participate in the defense of such claim, and the Charter Party
shall cooperate with the Sellers in defending such claim and keep the Sellers
informed of all material strategies and developments therein. The Charter
Parties may not settle any such claim by a Franchising Authority or other
Governmental Authority for which the Sellers would be liable without the consent
of the Sellers, which shall not be unreasonably withheld. Claimant will not
enter into any settlement of such claim which could result in indemnification
liability without the Indemnifying Party's prior written consent (which shall
not be unreasonably withheld) without the Indemnifying Party's prior written
consent (not to be unreasonably withheld or delayed). Any such settlement will
be binding upon the Charter Parties and Sellers for purposes of determining
whether any indemnification payment is required pursuant to this Section 10.
10.7 TREATMENT OF INDEMNIFICATION PAYMENTS. The Charter Parties and
Sellers will treat all payments made pursuant to this Section 10 (including all
payments made to the Charter Parties out of the Indemnity Fund but excluding the
release of any Indemnity Fund to Sellers) as an adjustment to the Cash
Consideration for all purposes hereof, except to the extent the laws of a
particular jurisdiction provide otherwise, in which case such payments shall be
made in an amount sufficient to indemnify the relevant party on an after-Tax
basis.
SECTION 11: MISCELLANEOUS
11.1 FEES AND EXPENSES. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives. Sellers shall bear and pay any amounts payable to Waller
Capital Corporation in connection with this Agreement and the transaction
contemplated hereby.
11.2 NOTICES. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be in writing, may be
sent by telecopy (with automatic machine confirmation), delivered by personal
delivery, or sent by commercial delivery service or certified mail, return
receipt requested, shall be deemed to have been given on the date of actual
receipt, which may be conclusively evidenced by the date set forth in the
records of any commercial delivery service or on the return receipt, and shall
be addressed to the recipient at the address specified below, or with
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respect to any party, to any other address that such party may from time to time
designate in a writing delivered in accordance with this Section 11.2:
<TABLE>
<S> <C>
IF TO THE CHARTER PARTIES: Charter Communications, Inc.
12444 Powerscourt Drive, Suite 100
St. Louis, Missouri 63131
Attention: Jerald L. Kent, President & C.E.O.
(with a copy to Curtis S. Shaw, General Counsel)
Telephone: 314-965-0555
Telecopier: 314-965-8793
with copy (which shall not constitute Paul, Hastings, Janofsky & Walker LLP
notice) to: 399 Park Avenue, 31st Floor
New York, New York 10022
Attention: Neil A. Torpey, Esq.
Telephone: 212-318-6000
Telecopier: 212-319-4090
IF TO HELICON (prior to the Closing) OR HELICON To Helicon Corp.'s address as set forth on Exhibit F
CORP. (after the Closing): hereto.
with copies (which shall not constitute Dow, Lohnes & Albertson, PLLC
notice) to: 1200 New Hampshire Avenue, N.W.,
Suite 800
Washington, D.C. 20036
Attention: Leonard J. Baxt, Esq.
Telephone: 202-776-2528
Telecopier: 202-776-2222
and
Becker & Company LLC
551 Madison Avenue
New York, NY 10022
Attention: Stuart Becker
Telephone: 212-223-9800
Telecopier: 212-223-0072
IF TO A SELLER: At the address specified for such Seller on the
attached EXHIBIT F
</TABLE>
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<PAGE>
11.3 BENEFIT AND BINDING EFFECT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns; provided that (a) neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any Helicon Party
without the prior written consent of the Charter Parties (which consent shall
not be unreasonably withheld or delayed), and (b) neither this Agreement nor any
of the rights, interests or obligations hereunder may be assigned by the Charter
Parties without the prior written consent of the Helicon Parties (prior to the
Closing) or the Sellers (after the Closing) (which consent shall not be
unreasonably withheld or delayed); PROVIDED, HOWEVER, that Buyer may assign its
rights, interests or obligations hereunder to an Affiliate without the prior
written consent of the Helicon Parties or the Seller, as the case may be;
PROVIDED, HOWEVER, (i) such assignment does not hinder or delay the consummation
of the transactions contemplated hereby and by the other Transaction Documents
and (ii) Charter may not assign its obligations under Section 6.17, which shall
remain in full force and effect notwithstanding any such assignment. Consent
shall be deemed to be reasonably withheld if the consenting party reasonably
determines that the assignment would be reasonably likely to hinder or delay the
Closing. This Agreement is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
11.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
11.5 ENTIRE AGREEMENT. This Agreement, the Disclosure Schedules and the
Exhibits hereto, and the other Transaction Documents to be delivered by the
parties pursuant to this Agreement, collectively represent the entire
understanding and agreement between the Helicon Parties and the Charter Parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, understandings and negotiations between the parties. The Charter
Parties acknowledge that none of the Helicon Parties has made any, or makes any,
promises, representations, warranties, covenants or undertakings, express or
implied, other than those expressly set forth in this Agreement.
11.6 AMENDMENTS; WAIVER OF COMPLIANCE. This Agreement may be amended
and any provision of this Agreement may be waived; provided that any such
amendment or waiver (a) will be binding upon any Helicon Party prior to the
Closing only if such amendment or waiver is set forth in a writing executed by
such Helicon Party, (b) will be binding upon Baum or each Seller after the
Closing only if such amendment or waiver is set forth in a writing executed by
Baum or each Seller, as the case may be, and (c) will be
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<PAGE>
binding upon any Charter Party only if such amendment or waiver is set forth in
a writing executed by such Charter Party.
11.7 AGENCY APPOINTMENTS BY THE SELLERS AND THE CHARTER PARTIES.
(a) Each Seller hereby irrevocably constitutes and appoints
Helicon (for all periods prior to the Closing) and Helicon Corp. (for all
periods after the Closing) as the true and lawful attorney-in-fact and agent of
such Seller (in such capacity, Helicon and Helicon Corp. are referred to as
"SELLERS' AGENT"), to act for such Seller in Seller's name, place and stead with
respect to all matters relating to this Agreement and the other Transaction
Documents and all of the transactions contemplated hereby and thereby, including
without limiting the generality of the foregoing, to execute and deliver all
waivers, consents, approvals and notices to and receive all notices provided or
permitted hereby or thereby; to waive, modify or amend any of the terms of this
Agreement and the other Transaction Documents and to make all endorsements
thereon provided or permitted under this Agreement or the other Transaction
Documents; to receive all payments or other funds provided or permitted and to
give all receipts, acquittances, discharges and acknowledgments in respect
thereof; to pay all expenses relating to the transactions contemplated by this
Agreement and the other Transaction Documents; to represent such Seller in any
proceedings hereunder prior to the Closing; to represent such Seller in
indemnification proceedings hereunder; to execute, acknowledge, certify,
deliver, file and/or record any and all instruments and other documents; and to
take any and all other actions in connection with the execution, delivery and
performance of this Agreement and the other Transaction Documents and the
transactions contemplated hereby or thereby as Sellers' Agent, in its sole
discretion, may deem necessary, appropriate or convenient in connection
therewith. Each Seller agrees that any action that may be taken by Helicon under
this Agreement prior to the Closing may be taken by BII, on Helicon's behalf as
its general partner, in Helicon's sole discretion.
(b) Each Charter Party hereby irrevocably constitutes and
appoints Buyer as the true and lawful attorney-in-fact and agent of such Charter
Party (in such capacity, Buyer is referred to as the "CHARTER AGENT"), to act
for such Charter Party in such Charter Party's name, place and stead with
respect to all matters relating to this Agreement and the other Transaction
Documents and all of the transactions contemplated hereby and thereby, including
without limiting the generality of the foregoing, to execute and deliver all
waivers, consents, approvals and notices to and receive all notices provided or
permitted hereby or thereby; to waive, modify or amend any of the terms of this
Agreement and the other Transaction Documents and to make all endorsements
thereon provided or permitted under this Agreement or the other Transaction
Documents; to receive all payments or other funds provided or permitted and to
give all receipts, acquittances, discharges and acknowledgments in respect
thereof; to pay all expenses relating to the transactions contemplated by this
Agreement and the other Transaction Documents; to represent such Charter Party
in any proceedings hereunder prior to the
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<PAGE>
Closing; to represent such Charter Party in indemnification proceedings
hereunder; to execute, acknowledge, certify, deliver, file and/or record any and
all instruments and other documents; and to take any and all other actions in
connection with the execution, delivery and performance of this Agreement and
the other Transaction Documents and the transactions contemplated hereby or
thereby as Charter Agent, in its sole discretion, may deem necessary,
appropriate or convenient in connection therewith.
11.8 CONSENT AND AGREEMENT OF SELLERS. Each Seller consents to the
execution, delivery and performance of this Agreement by Helicon, BII, Baum and
each other Seller, and to the taking by each other Helicon Party and each
Helicon Company of all actions contemplated by this Agreement to be taken by
such Person. Subject to the terms and conditions of this Agreement, each Seller
agrees to consummate the transactions contemplated by this Agreement in
accordance with its terms, as this Agreement may be amended pursuant to Section
11.6.
11.9 SPECIFIC PERFORMANCE. The parties recognize in the event that any
Helicon Party or any Charter Party, as the case may be, should refuse to perform
under the provisions of this Agreement, monetary damages alone will not be
adequate. The Charter Parties and the Helicon Parties shall therefore each be
entitled, in addition to any other remedies which may be available, including
monetary damages, to obtain specific performance of the terms of this Agreement.
In the event of any action to enforce this Agreement specifically, the parties
hereto each waive the defense that there is an adequate remedy at law.
11.10 COUNTERPARTS. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES ON FOLLOWING PAGES]
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by each of the
Helicon Parties and each of the Charter Parties as of the date first written
above.
CHARTER: BUYER:
CHARTER COMMUNICATIONS, INC. CHARTER COMMUNICATIONS, LLC
By: /s/ Curtis S. Shaw By: /s/ Curtis S. Shaw
Name: Curtis S. Shaw Name: Curtis S. Shaw
Title: Senior Vice President Title: Senior Vice President
GP BUYER: HELICON:
CHARTER HELICON, LLC HELICON PARTNERS I, L.P.
By: BAUM INVESTMENTS, INC., its general
partner
By: /s/Curtis S. Shaw
Name: Curtis S. Shaw
Title:: Senior Vice President By: /s/ Theodore B. Baum
Name: Theodore B. Baum
Title: President
BII:
BAUM INVESTMENTS, INC.
By: /s/ Theodore B. Baum
Name: Theodore B. Baum
Title: President
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<PAGE>
LIMITED PARTNERS:
HELICON CORP. HELICON GROUP LTD.
By: /s/ Theodore B. Baum By: /s/ Theodore B. Baum
Name: Theodore B. Baum Name: Theodore B. Baum
Title: President Title: President
TREDD INVESTORS, a general TREDD INVESTORS TWO, a general
partnership partnership
By: /s/ Theodore B. Baum By: /s/ Theodore B. Baum
Name:____________________________ Name:____________________________
Title:___________________________ Title:___________________________
ROBERTS CABLE CORPORATION GAK CABLE INC.
By: /s/ Herbert J. Roberts By: /s/ Gregory A. Kriser
Name: Herbert J. Roberts Name: Gregory A. Kriser
Title: President Title: President
GIMBEL CABLE CORP. BAUM INVESTMENTS, INC.
By: /s/ Thomas L. Gimbel By: /s/ Theodore B. Baum
Name: Thomas L. Gimbel Name: Theodore B. Baum
Title: President Title: President
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<PAGE>
JOINDER BY THEODORE B. BAUM
The undersigned, Theodore B. Baum, hereby affirms and evidences his
agreement to the provisions of Section 6.22 of the foregoing Purchase Agreement.
/s/ Theodore B. Baum Date: March 22, 1999
THEODORE B. BAUM
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<PAGE>
TABLE OF CONTENTS
Page No.
--------
SECTION 1: CERTAIN DEFINITIONS 3
1.1 Terms Defined in this Section 3
"Accounts Receivable" 3
"Adjustment Time" 3
"Affiliate" 3
"Amended LLC Agreement" 3
"Assets" 3
"Basic Subscriber" 3
"Baum 3
"BII Assets" 3
"Bulk Subscriber" 3
"Cable Act" 4
"Call Agreement" 4
"Charter's Disclosure Schedules" 4
"Charter Parties" 4
"Closing" 4
"Closing Date" 4
"Code" 4
"Compensation Arrangement" 4
"Consents" 5
"Contracts" 5
"Copyright Act" 5
"Employee Plan" 5
"Encumbrances" 5
"Enforceability Exceptions" 5
"Environmental Claim" 5
"Environmental Law" 6
"Equity Interests" 6
"Equivalent Subscribers" 6
"ERISA" 6
"ERISA Affiliate" 6
"Escrow Agent" 7
"Excluded Assets" 7
"FCC" 7
"FCC License" 7
"FCC Regulations" 7
"Franchise" 7
"Franchise Area" 7
-i-
<PAGE>
"Franchise/FCC Consent" 7
"Franchising Authorities" 7
"GAAP" 7
"GP Interest" 7
"Governmental Authority" 7
"Hazardous Substance" 8
"HCC" 8
"Helicon Companies" 8
"Helicon Corp." 8
"Helicon's Disclosure Schedules" 8
"Helicon Parties" 8
"HPIAC" 8
"HSR Act" 8
"Indebtedness" 8
"Indemnity Agreement" 9
"Indemnity Fund" 9
"Intangibles" 9
"Legal Requirements" 9
"Legal Restrictions" 9
"Letters of Credit" 9
"Licenses" 9
"Limited Partners" 10
"Loss"or "Losses" 10
"LP Interests" 10
"Management Agreements" 10
"Material Adverse Effect" 10
"Material Contract" 10
"Organizational Documents" 10
"Partners" 10
"Partnership Agreement" 10
"Permitted Encumbrances" 10
"Person" 11
"Preferred Interests" 11
"Preferred LLC Interest" 11
"Purchased Interests" 11
"Rate Regulatory Matter" 11
"Real Property" 12
"Required Consents" 12
"SEC" 12
"Securities Act" 12
"Sellers" 12
"Subordinated Holders" 12
-ii-
<PAGE>
"Subscriber" 12
"Subsidiary" 12
"Systems" 13
"Tangible Personal Property" 13
"Tax" 13
"Tax Return" 13
"THGLP" 13
"THGLP Note" 13
"Transaction Documents" 13
"Transferable Franchise Area" 13
"Upset Date" 14
"Warrants" 14
1.2 Terms Defined Elsewhere in this Agreement 14
1.3 Rules of Construction 16
SECTION 2: CONTRIBUTION OF BII ASSETS; SALE AND PURCHASE OF PURCHASED
INTERESTS; CASH CONSIDERATION 16
2.1 Contribution 16
2.2 Agreement to Sell and Buy Purchased Interests 16
2.3 Cash Consideration for LP Interests and Preferred Interests 17
2.4 Cash Consideration Adjustments 17
2.5 Payments at Closing 19
2.6 Post-Closing Payment of Cash Consideration Adjustments 20
SECTION 3: REPRESENTATIONS AND WARRANTIES OF THE HELICON COMPANIES 21
3.1 Organization and Authority of Helicon 21
3.2 Authorization and Binding Obligation 22
3.3 Organization and Ownership of Helicon Companies 22
3.4 Absence of Conflicting Agreements; Consents 23
3.5 Financial Statements 23
3.6 Debt Obligations; Absence of Undisclosed Liabilities 24
3.7 Absence of Certain Changes 24
3.8 Franchises, Licenses, Material Contracts 25
3.9 Title to and Condition of Real Property and Tangible
Personal Property 26
3.10 Intangibles 27
3.11 Information Regarding the Systems 27
3.12 Taxes 29
3.13 Employee Matters 31
3.14 Environmental Laws 33
3.15 Claims and Litigation 33
3.16 Compliance With Laws 34
-iii-
<PAGE>
3.17 Transactions with Affiliates 34
3.18 Broker 34
3.19 Inventory 34
3.20 Overbuilds 35
3.21 Year 2000 35
3.22 Disconnections 35
3.23 Budgets 36
3.24 Cure 36
SECTION 4: REPRESENTATIONS AND WARRANTIES OF SELLERS 36
4.1 Authority of Sellers; Authorization and Binding Obligation 36
4.2 Absence of Conflicting Agreements; Consents 36
4.3 Title to BII Assets 37
4.4 Title to the LP Interests and the Preferred Interests 37
4.5 Broker 37
4.6 Investment Purpose 37
4.7 Cure 37
SECTION 5: REPRESENTATIONS AND WARRANTIES OF THE CHARTER PARTIES 38
5.1 Organization; Authorization and Binding Obligation 38
5.2 Authorization and Binding Obligation 38
5.3 Absence of Conflicting Agreements; Consents 39
5.4 Capital Structure and Operations of GP Buyer 39
5.5 Claims and Litigation 39
5.6 Financial Statements 40
5.7 Investment Purpose; Investment Company 40
5.8 Availability of Preferred LLC Interest and Funds 40
5.9 Broker 40
5.10 Cure 40
SECTION 6: SPECIAL COVENANTS AND AGREEMENTS 41
6.1 Operation of Business Prior to the Closing 41
6.2 Confidentiality; Press Release 44
6.3 Cooperation: Commercially Reasonable Efforts 45
6.4 Consents 45
6.5 HSR Act Filing 47
6.6 Ability to Consummate Transactions 47
6.7 Continuation or Refinancing of the Debt Obligations 48
6.8 Retention and Access to the Helicon Companies'Records 48
6.9 Purchase and Exercise of Warrants 48
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<PAGE>
6.10 Tax Matters 49
6.11 Helicon Name 52
6.12 Releases 52
6.13 Exculpation and Indemnification 53
6.14 Employee Matters 53
6.15 Assignment of Certain Arrangements with Affiliates 54
6.16 Put 54
6.17 Guaranty by Charter 55
6.18 Disclosure Schedules 56
6.19 Further Assurances 56
6.20 Environmental Reports 56
6.21 Year 2000 Matters 56
6.22 Representations, Warranties and Covenants of Baum 56
SECTION 7: CONDITIONS TO OBLIGATIONS OF THE CHARTER PARTIES AND SELLERS 58
7.1 Conditions to Obligations of the Charter Parties 58
7.2 Conditions to Obligations of Sellers 59
SECTION 8: CLOSING AND CLOSING DELIVERIES 60
8.1 Closing 60
8.2 Delivery by Sellers 61
8.3 Delivery by the Charter Parties 63
SECTION 9: TERMINATION 64
9.1 Agreement between Helicon and Buyer 64
9.2 Termination by Helicon 64
9.3 Termination by Buyer 65
9.4 Effect of Termination 66
9.5 Attorney's Fees 67
SECTION 10: SURVIVAL OF REPRESENTATIONS AND WARRANTIES;INDEMNIFICATION;
CERTAIN REMEDIES 67
10.1 Survival 67
10.2 Indemnification by Sellers 67
10.3 Indemnification by the Charter Parties 68
10.4 Indemnity Agreement 68
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<PAGE>
10.5 Certain Limitations on Indemnification Obligations 68
10.6 Procedure for Indemnification 71
10.7 Treatment of Indemnification Payments 72
SECTION 11: MISCELLANEOUS 72
11.1 Fees and Expenses 72
11.2 Notices 72
11.3 Benefit and Binding Effect 73
11.4 GOVERNING LAW 74
11.5 Entire Agreement 74
11.6 Amendments; Waiver of Compliance 74
11.7 Agency Appointments by the Sellers and the Charter Parties 75
11.8 Consent and Agreement of Sellers 76
11.9 Specific Performance 76
11.10 Counterparts 76
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<PAGE>
PURCHASE AGREEMENT
DATED MARCH 22, 1999
AMONG
CHARTER COMMUNICATIONS, INC.,
CHARTER COMMUNICATIONS, LLC,
CHARTER HELICON, LLC,
HELICON PARTNERS I, L.P.,
BAUM INVESTMENTS, INC., AND
HELICON'S LIMITED PARTNERS
===============================================
LIST OF EXHIBITS AND SCHEDULES
(THE FOLLOWING EXHIBITS AND SCHEDULES HAVE BEEN OMITTED AND WILL BE
SUPPLEMENTALLY PROVIDED TO THE SECURITIES AND EXCHANGE
COMMISSION UPON THEIR REQUEST.)
-----------------------------------------------
EXHIBITS:
Exhibit A -- Form of Amended LLC Agreement
Exhibit B -- Excluded Assets
Exhibit C -- Form of Indemnity Agreement
Exhibit D -- Form of Release of Debt Obligations
Exhibit E -- Form of Put Agreement
Exhibit F -- Sellers' Addresses
SCHEDULES:
Schedule 3.3 -- Ownership of the Helicon Companies
Schedule 3.4 -- Helicon Conflicts; Consents
Schedule 3.5 -- Financial Statements
Schedule 3.6 -- Debt Obligations
Schedule 3.7 -- Occurrence of Certain Changes
Schedule 3.8 -- Franchises, Licenses, Contracts
Schedule 3.9 -- Real Property and Tangible Personal Property;
Encumbrances
Schedule 3.10 -- Intangibles
Schedule 3.11 -- Systems Information
Schedule 3.12 -- Tax Matters
Schedule 3.13 -- Employee Matters
Schedule 3.14 -- Environmental Matters
Schedule 3.15 -- Claims and Litigation
Schedule 3.16 -- Compliance with Laws
Schedule 3.17 -- Transactions with Affiliates
Schedule 3.20 -- Overbuilds
Schedule 3.22 -- Disconnections
Schedule 3.23 -- Budgets
Schedule 4.2 -- Sellers' Conflicts; Consents
Schedule 5.3 -- Charter Consents
Schedule 5.5 -- Claims and Litigation
Schedule 5.6 -- Charter Financial Statements
Schedule 6.1 -- Ordinary Course Operations and Permitted
Exceptions
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000915767
<NAME> THE HELICON GROUP, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 10,833
<SECURITIES> 0
<RECEIVABLES> 1,007
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,521
<PP&E> 96,558
<DEPRECIATION> (59,400)
<TOTAL-ASSETS> 81,001
<CURRENT-LIABILITIES> 9,761
<BONDS> 152,264
0
0
<COMMON> 0
<OTHER-SE> (85,903)
<TOTAL-LIABILITY-AND-EQUITY> 81,001
<SALES> 0
<TOTAL-REVENUES> 13,611
<CGS> 0
<TOTAL-COSTS> 11,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,118
<INCOME-PRETAX> (1,766)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,766)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,766)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000915772
<NAME> HELICON CAPITAL CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 0
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<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1
<TOTAL-LIABILITY-AND-EQUITY> 1
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
